EXHIBIT 1.1
2,500,000 Shares of Common Stock
CONCENTRIC NETWORK CORPORATION
UNDERWRITING AGREEMENT
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February __, 1999
BEAR, XXXXXXX & CO. INC.,
BANCBOSTON XXXXXXXXX XXXXXXXX,
CIBC XXXXXXXXXXX CORP., and
FIRST UNION CAPITAL MARKETS
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
Concentric Network Corporation, a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 2,500,000 shares (the
"Firm Shares") of its common stock, par value $0.001 per share (the "Common
Stock") and, for the sole purpose of covering over-allotments in connection with
the sale of the Firm Shares, at the option of the Underwriters, up to an
additional 375,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares". The Shares are more fully described in the Registration
Statement referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") in accordance with the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations of the Commission
thereunder (the "Regulations") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-3 (No. 333-_____) for the
registration of the Shares under the Act. The Company and the transactions
contemplated by this Agreement meet all of the requirements for using Form S-3
under the Act. All of the Shares have been duly registered under the Act
pursuant to the initial registration statement, or if an abbreviated
registration statement has been, or is proposed to be, filed pursuant to Rule
462(b) of the Regulations (the "Rule 462(b) Registration Statement"), all of the
Shares have been or will be, on the date of this Agreement, duly registered
under the Act pursuant to the initial registration statement and the Rule 462(b)
Registration Statement. Such registration statement, including the prospectus,
financial statements and schedules, exhibits and all other documents filed as a
part thereof, as amended at the time of effectiveness of the registration
statement, including any information deemed to be a part thereof as of the time
of
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effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of the
Regulations is herein called the "Registration Statement" and the prospectus, in
the form first filed with the Commission pursuant to Rule 424(b) of the
Regulations or filed as part of the Registration Statement at the time of
effectiveness if no Rule 434 or Rule 424(b) filing is required, is herein called
the "Prospectus". If the Company has filed or proposes to file a Rule 462
Registration Statement, then any reference herein to the term "Registration
Statement" shall include such Rule 462 Registration Statement. The term
"preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations. All references in this Agreement to
(i) the Registration Statement, the Rule 462(b) Registration Statement, a
preliminary prospectus, the Prospectus or a term sheet that complies with Rule
434, or any amendments or supplements to any of the foregoing, shall include any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("XXXXX") and shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) the Prospectus shall be deemed to include the
"electronic Prospectus" provided for use in connection with the offering of the
Shares as contemplated by Section 4(g) of this Agreement. The term "Offering
Memorandum" as used in this Agreement shall mean the Offering Memorandum
consisting of the Prospectus and a Canadian wrap-around used in connection with
the offering of the Shares in Canada.
(b) The Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any Preliminary Prospectus,
or instituted proceedings for that purpose, and 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. When the Registration
Statement became or becomes, as the case may be, effective (the "Effective
Date") and at all times subsequent thereto up to and at the Closing Date (as
hereinafter defined), any later date on which Additional Shares are to be
purchased (the "Additional Closing Date") and when any post-effective amendment
to the Registration Statement becomes effective or any amendment or supplement
to the Prospectus is filed with the Commission, (i) the Registration Statement
and Prospectus, and any amendments or supplements thereto, will contain all
statements which are required to be stated therein by, and will in all material
respects conform to the requirements of, the Act and the Rules and Regulations,
and (ii) neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The foregoing representations and
warranties in this section 2(b) do not apply to any statements or omissions made
in reliance on and in conformity with the information contained in the fourth
paragraph of the section of the Prospectus entitled "Underwriting" and the
information in the last paragraph on the front cover page of the Prospectus.
The Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus, the Offering Memorandum or any other
materials, if any, permitted by the Act.
(c) The Company and its subsidiaries have been duly incorporated and
each is validly existing as a corporation in good standing under the laws of the
State of Delaware and (with respect to each of the subsidiaries) the State of
[California/Delaware], with full corporate
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power and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement. The Company and the
subsidiaries are duly qualified to do business as a foreign corporation in
good standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect on
the business, properties, financial condition or results of operations of the
Company and the subsidiaries (a "Material Adverse Effect"). None of the
Subsidiaries are "Significant Subsidiaries" as defined in Rule 1-02 of
Regulation S-X of the Act. Other than the subsidiaries, the Company does not
own, directly or indirectly, any shares of stock or any other equity or long-
term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity, with the
exception of a less than 20% interest in Unified Gamers Online, LLC. Complete
and correct copies of the certificates of incorporation and of the bylaws of
the Company and all amendments thereto have been delivered to the
Representatives, and except as set forth in the exhibits to the Registration
Statement no changes therein will be made subsequent to the date hereof and
prior to the Closing Date or, if later, the Additional Closing Date.
(d) The Company has full power and authority (corporate and otherwise)
to enter into this Agreement and to perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement on the part of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by applicable laws or
equitable principles and except as enforcement hereof may be limited by
applicable bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles. The performance of this Agreement
by the Company and the consummation by the Company of the transactions herein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any material indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company is a party or by which its properties are bound,
or (ii) the certificate of incorporation, as amended, or bylaws, as amended, of
the Company or (iii) any law, order, rule, regulation, writ, injunction or
decree of any court or governmental agency or body to which the Company is
subject. The Company is not required to obtain or make (as the case may be) any
consent, approval, authorization, order, designation or filing by or with any
court or regulatory, administrative or other governmental agency or body as a
requirement for the consummation by the Company of the transactions herein
contemplated, except such as may be required under the Exchange Act or under
state securities or blue sky ("Blue Sky") laws or under the rules and
regulations of the National Association of Securities Dealers, Inc. ("NASD") or
under applicable Canadian securities law.
(e) Except as set forth in the Prospectus, there is not pending or, to
the Company's knowledge, threatened, any action, suit, claim, proceeding or
investigation against the Company or any of its officers or any of its
properties, assets or rights before any court or governmental agency or body or
otherwise which might result in a Material Adverse Effect or have a material
adverse effect on the Company's properties, assets or rights, or prevent
consummation of the transactions contemplated hereby. There are no statutes,
rules, regulations, agreements, contracts, leases or documents that are required
to be described in the Prospectus, or
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to be filed as exhibits to the Registration Statement by the Act or by the
Rules and Regulations that have not been accurately described in all material
respects in the Prospectus or filed as exhibits to the Registration Statement.
(f) Except as set forth in the Prospectus, all outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of any
preemptive right, resale right, right of first refusal or similar right. The
authorized and outstanding capital stock of the Company conforms in all material
respects to the description thereof contained in the Registration Statement, the
Offering Memorandum and the Prospectus (and such description correctly states
the substance of the provisions of the instruments defining the capital stock of
the Company). The Shares have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by the
Company against payment therefor in accordance with the terms of this Agreement,
will be duly and validly issued and fully paid and nonassessable. Except as set
forth in the Prospectus, no preemptive right, co-sale right, right of first
refusal or other similar rights of securityholders exists with respect to any of
the Shares or the issue and sale thereof other than those that have been
expressly waived prior to the date hereof. No holder of securities of the
Company has the right, which has not been satisfied or waived, to cause the
Company to include such holder's securities in the Registration Statement. No
further approval or authorization of any securityholder, the Board of Directors
or any duly appointed committee thereof or others is required for the issuance
and sale or transfer of the Shares to the Underwriters, except as may be
required under the Act, the Exchange Act or under state securities or Blue Sky
laws. Except as disclosed in or contemplated by the Prospectus, the Offering
Memorandum and the financial statements of the Company, and the related notes
thereto, included in the Prospectus and the Offering Memorandum, the Company
does not have outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible securities
or obligations. The description of the Company's stock option and other plans
or arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus and the Offering Memorandum accurately
and fairly presents, in all material respects, the information required to be
shown with respect to such plans, arrangements, options and rights.
(g) To the Company's knowledge, Ernst & Young LLP (the "Accountants"),
who have examined the financial statements, together with the related schedules
and notes, of the Company filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are independent
public accountants within the meaning of the Act and the Rules and Regulations.
The financial statements of the Company, together with the related notes,
forming part of the Registration Statement, the Offering Memorandum and the
Prospectus, fairly present the financial position and the results of operations
of the Company at the respective dates and for the respective periods to which
they apply. All financial statements, together with the related notes, filed
with the Commission as part of the Registration Statement have been prepared in
accordance with generally accepted accounting principles as in effect in the
United States consistently applied throughout the periods involved except as may
be otherwise stated in the Registration Statement. The selected and summary
financial and statistical data included in
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the Registration Statement present fairly, in all material respects, the
information shown therein and have been compiled on a basis consistent with
the financial statements presented therein. No other financial statements or
schedules are required by the Act or the Rules and Regulations to be included
in the Registration Statement.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement, the Offering Memorandum and the Prospectus,
there has not been (i) any material adverse change, or any development which, in
the Company's reasonable judgment, is likely to cause a material adverse change,
in the business, properties or assets described or referred to in the
Registration Statement, or the results of operations, condition (financial or
otherwise), business or operations of the Company, (ii) any transaction which is
material to the Company, except transactions in the ordinary course of business,
(iii) any obligation, direct or contingent, incurred by the Company, which is
material to the Company, except obligations incurred in the ordinary course of
business, (iv) any change in the capital stock or outstanding indebtedness of
the Company which is material to the Company, or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company. The Company does not have any material contingent obligation which is
not disclosed in the Registration Statement and which would be required to be
disclosed under the Rules and Regulations.
(i) Except as set forth in the Prospectus and the Offering Memorandum,
(i) the Company has good and marketable title to all material properties and
assets described in the Prospectus and the Offering Memorandum as owned by it,
free and clear of any pledge, lien, security interest, charge, encumbrance,
claim, equitable interest, or restriction, (ii) the agreements to which the
Company is a party described in the Prospectus and the Offering Memorandum are
valid agreements, enforceable against the Company in accordance with their
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles, and,
to the Company's knowledge, the other contracting party or parties thereto are
not in material breach or default under any of such agreements and (iii) the
Company has valid and enforceable leases for the properties described in the
Prospectus and the Offering Memorandum as leased by it, and such leases conform
in all material respects to the description thereof, if any, set forth in the
Registration Statement.
(j) Except as set forth in the Prospectus, the Company now holds and
at the Closing Date and any later Additional Closing Date, as the case may be,
will hold, all licenses, certificates, approvals and permits from all state,
United States, foreign and other regulatory authorities that are material to the
conduct of the business of the Company (as such business is currently
conducted), except for such licenses, certificates, approvals and permits the
failure of which to hold would not have a Material Adverse Effect), all of which
are valid and in full force and effect (and there is no proceeding pending or,
to the knowledge of the Company, threatened which may cause any such license,
certificate, approval or permit to be withdrawn, cancelled, suspended or not
renewed). The Company is not in violation of its certificate of incorporation,
as amended, or bylaws, as amended, or, except for defaults or violations which
would not have a Material Adverse Effect, in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
bond, debenture, note or other evidence of
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indebtedness or in any contract, indenture, mortgage, loan agreement, joint
venture or other agreement or instrument to which it is a party or by which it
or any of its properties are bound, or in violation of any law, order, rule,
regulation, writ, injunction or decree of any court or governmental agency or
body.
(k) The Company has filed on a timely basis all necessary federal,
state and foreign income, franchise and other tax returns and has paid all taxes
shown thereon as due, and the Company has no knowledge of any tax deficiency
which has been or might be asserted against the Company which might have a
Material Adverse Effect. All material tax liabilities are adequately provided
for within the financial statements of the Company.
(l) The Company maintains insurance of the types and in the amounts
adequate for its business as presently conducted and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering product liability and real and personal
property owned or leased against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which insurance is in
full force and effect.
(m) The Company is not involved in any labor dispute or disturbance
and, to the knowledge of the Company, no such dispute or disturbance is
threatened.
(n) Except as described in the Prospectus, the Company owns or
possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, tradenames, copyrights, manufacturing processes, formulae, trade
secrets, know-how, franchises, and other material intangible property and assets
(collectively, "Intellectual Property") necessary to the conduct of its
businesses as conducted and as proposed to be conducted as described in the
Prospectus and the Offering Memorandum. The Company has no knowledge that it
lacks or will be unable to obtain any rights or licenses to use any of the
Intellectual Property necessary to conduct the business now conducted or
proposed to be conducted by it as described in the Prospectus and the Offering
Memorandum, except as described in the Prospectus and the Offering Memorandum.
The Prospectus and the Offering Memorandum fairly and accurately describe the
Company's rights with respect to the Intellectual Property. Except as described
in the Prospectus, the Company has not received any written notice of
infringement or of conflict with rights or claims of others with respect to any
Intellectual Property which could result in any material adverse effect on the
Company. The Company is not aware of any patents of others which are infringed
upon by potential products or processes referred to in the Prospectus and the
Offering Memorandum in such a manner as to materially and adversely affect the
Company, except as described in the Prospectus and the Offering Memorandum.
(o) The Company is conducting its business in compliance with all of
the laws, rules and regulations of the jurisdictions in which it is conducting
business except as disclosed in the Registration Statement and the Prospectus or
where failure to be so in compliance would not have a material adverse effect on
the Company.
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(p) The Company is not an "investment company," or a "promoter" or
"principal underwriter" for a registered investment company, as such terms are
defined in the Investment Company Act of 1940, as amended.
(q) The Company has not incurred any liability for a fee, commission,
or other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than the
underwriting discounts and commissions contemplated hereby.
(r) The Company is (i) in compliance with any and all applicable
United States, state and local environmental laws, rules, regulations, treaties,
statutes and codes promulgated by any and all governmental authorities relating
to the protection of human health and safety, the environment or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business as currently conducted,
and (iii) is in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permit licenses or other approvals would not,
individually or in the aggregate, have a Material Adverse Effect. No action,
proceeding, revocation proceeding, writ, injunction or claim is pending or
threatened relating to the Environmental Laws or to the Company's activities
involving Hazardous Materials. "Hazardous Materials" means any material or
substance (i) that is prohibited or regulated by any environmental law, rule,
regulation, order, treaty, statute or code promulgated by any governmental
authority, or any amendment or modification thereto, or (ii) that has been
designated or regulated by any governmental authority as radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment.
(s) To the Company's knowledge, the Company has not engaged in the
generation, use, manufacture, transportation or storage of any Hazardous
Materials on any of the Company's properties or former properties, except where
such use, manufacture, transportation or storage is in compliance with
Environmental Laws, or to the extent such activity could be reasonably expected
not to have a material adverse effect on the Company. To the Company's
knowledge, no Hazardous Materials have been treated or disposed of on any of the
Company's properties or on properties formerly owned or leased by the Company
during the time of such ownership or lease, except in compliance with
Environmental Laws, or those that could reasonably be expected not to have a
material adverse effect on the Company.
(t) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any foreign, United States or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States.
(u) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on The Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from The Nasdaq National Market, nor has the Company received any
notification that the Commission or the National
7
Association of Securities Dealers, Inc. ("NASD") is contemplating terminating
such registration or listing.
(v) Neither the Company nor, to its knowledge, any of its officers,
directors or affiliates has taken, and at the Closing Date and at any later
Additional Closing Date, neither the Company nor, to its knowledge, any of its
officers, directors or affiliates will have taken, directly or indirectly, any
action which has constituted, or might reasonably be expected to constitute, the
stabilization or manipulation of the price of sale or resale of the Shares.
(w) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, or any later Additional Closing Date, as the
case may be, and (ii) completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
(x) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(y) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.
2. Purchase, Sale and Delivery of the Shares.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $______, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Shares shall be made at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, or at such other place
as shall be agreed upon by you and the Company, at 10:00 A.M. on the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Regulations, the third or
fourth business day (as
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permitted under Rule 15c6-1 under the Exchange Act) after the day that this
Agreement is executed and delivered), or such other time not later than ten
business days after such date as shall be agreed upon by you and the Company
(such time and date of payment and delivery being herein called the "Closing
Date"). Payment shall be made to the Company by wire transfer of immediately
available funds, against delivery to you for the respective accounts of the
Underwriters of certificates for the Firm Shares to be purchased by them.
Certificates for the Firm Shares shall be registered in such name or names and
in such authorized denominations as you may request in writing at least two
full business days prior to the Closing Date. The Company will permit you to
examine and package such certificates for delivery at least one full business
day prior to the Closing Date. If you so elect, delivery of the Firm Shares
purchased from the Company may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by you.
(c) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 375,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at
any time, in whole or in part, on or before the thirtieth day following the date
of the Prospectus, by written notice by you to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised and the date and time, as reasonably determined by you, when the
Additional Shares are to be delivered (such date and time being herein sometimes
referred to as the "Additional Closing Date"); provided, however, that the
Additional Closing Date shall not be earlier than the Closing Date or earlier
than the second full business day after the date on which the option shall have
been exercised nor later than the eighth full business day after the date on
which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 9 hereof). Certificates
for the Additional Shares shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Additional Closing Date. The Company will permit you
to examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date. If you so elect, delivery of the
Additional Shares purchased from the Company may be made by credit through full
fast transfer to the accounts at The Depository Trust Company designated by you.
The number of Additional Shares to be sold to each Underwriter shall
be the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to the total number of Firm Shares being purchased
from the Company, subject, however, to such adjustments to eliminate any
fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by wire transfer in
immediately available funds at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, or such other location as may
be mutually acceptable, upon delivery of the certificates for the Additional
Shares to you for the respective accounts of the Underwriters.
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3. Offering. Upon your authorization of the release of the Firm
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Shares, the Underwriters propose to offer the Shares for sale to the public upon
the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
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the Underwriters that:
(a) If the Registration Statement has not yet been declared effective
the Company will use its best efforts to cause the Registration Statement and
any amendments thereto to become effective as promptly as possible, and if Rule
430A is used or the filing of the Prospectus is otherwise required under Rule
424(b) or Rule 434, the Company will file the Prospectus (properly completed if
Rule 430A has been used) pursuant to Rule 424(b) or Rule 434 within the
prescribed time period and will provide evidence satisfactory to you of such
timely filing. If the Company elects to rely on Rule 434, the Company will
prepare and file a term sheet that complies with the requirements of Rule 434.
The Company will notify you immediately (and, if requested by you,
will confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any post-
effective amendment thereto or of the initiation, or the threatening, of any
proceedings therefor and (v) of the receipt of any comments from the Commission.
If the Commission shall propose or enter a stop order at any time, the Company
will make every reasonable effort to prevent the issuance of any such stop order
and, if issued, to obtain the lifting of such order as soon as possible. The
Company will not file any amendment to the Registration Statement or any
amendment of or supplement to the Prospectus (including the prospectus required
to be filed pursuant to Rule 424(b)or Rule 434) that differs from the prospectus
on file at the time of the effectiveness of the Registration Statement before or
after the effective date of the Registration Statement to which you shall
reasonably object in writing after being timely furnished in advance a copy
thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would, in the judgment
of the Underwriters or the Company, include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at any
time to amend or supplement the Prospectus or Registration Statement to comply
with the Act or the Regulations, the Company will notify you promptly and
prepare and file with the Commission an appropriate amendment or supplement (in
form and substance satisfactory to you) which will correct such statement or
omission and will use its best efforts to have any amendment to the Registration
Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you two conformed copies of
the Registration Statement, including exhibits and all amendments thereto, and
will maintain in the
10
Company's files manually signed copies of such documents for at least five
years from the date of filing. The Company will promptly deliver to each of
the Underwriters such number of copies of any preliminary prospectus, the
Prospectus, the Registration Statement, the Offering Memorandum, and all
amendments of and supplements to such documents, if any, as you may reasonably
request.
(d) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process. The Company will promptly advise you of the
receipt by the Company of any notification with respect to suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and will use every reasonable
effort to obtain the withdrawal of any order of suspension as soon as possible.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) The Company shall engage and maintain, at its expense, a registrar
and transfer agent for the Common Stock.
(g) The Company shall cause to be prepared and delivered, at its
expense, within one business day from the effective date of this Agreement, to
Bear, Xxxxxxx & Co. Inc., BancBoston Xxxxxxxxx Xxxxxxxx, CIBC Xxxxxxxxxxx Corp.,
and First Union Capital Markets an "electronic Prospectus" to be used by the
Underwriters in connection with the offering and sale of the Shares. As used
herein, the term "electronic Prospectus" means a form of Prospectus, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in an electronic format, satisfactory to Bear, Xxxxxxx &
Co. Inc., that may be transmitted electronically by Bear, Xxxxxxx & Co. Inc. and
the other Underwriters to offerees and purchasers of the Shares for at least
during the period when the Prospectus is required to be delivered under the Act
or the Exchange Act ("the Prospectus Delivery Period"); (ii) it shall disclose
the same information as the paper Prospectus and Prospectus filed pursuant to
XXXXX, except to the extent that graphic and image material cannot be
disseminated electronically, in which case such graphic and image material shall
be replaced in the electronic Prospectus with a fair and accurate narrative
description or tabular representation of such material, as appropriate; and
(iii) it shall be in or convertible into a paper format or an electronic format,
satisfactory to Bear, Xxxxxxx & Co. Inc., that will allow investors to store and
have continuously ready access to the Prospectus at any future time, without
charge to investors (other than any fee charged for subscription to the system
as a whole and for on-line time). Such electronic Prospectus may consist of a
Rule 434 preliminary prospectus, together with the applicable term sheet,
provided that it otherwise satisfies the format and conditions described in the
immediately preceding sentence. The
11
Company hereby confirms that it has included or will include in the Prospectus
filed pursuant to XXXXX or otherwise with the Commission and in the
Registration Statement at the time it was declared effective an undertaking
that, upon receipt of a request by an investor or his or her representative
within the Prospectus Delivery Period, the Company shall transmit or cause to
be transmitted promptly, without charge, a paper copy of the Prospectus.
(h) During the period of 90 days following the date of the Prospectus,
the Company will not, without the prior written consent of Bear, Xxxxxxx & Co.
Inc. (which consent may be withheld at the sole discretion of Bear, Xxxxxxx &
Co. Inc.), directly or indirectly, issue, sell, offer, contract or grant any
option to sell, pledge, transfer or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the Act in
respect of, any shares of Common Stock, options or warrants to acquire shares of
the Common Stock or securities exchangeable or exercisable for or convertible
into shares of Common Stock (other than as contemplated by this Agreement with
respect to the Shares); provided, however, that the Company may (i) issue shares
of its Common Stock or options to purchase its Common Stock, or Common Stock
upon exercise of options, pursuant to any stock option, warrant, stock bonus or
other stock plan or arrangement described in the Prospectus, or (ii) issue
shares of Common Stock in connection with acquisitions by the Company, but only
if the holders of such shares, options, warrants or shares issued upon exercise
of such options, agree in writing not to sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge, transfer,
or establish an open "put equivalent position" within the meaning of Rule 16a-
1(h) under the Exchange Act, or otherwise dispose of any such shares or options
during such 90 day period without the prior written consent of Bear, Xxxxxxx &
Co. Inc. (which consent may be withheld at the sole discretion of the Bear,
Xxxxxxx & Co. Inc.).
(i) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports or other communications to its shareholders; and (ii) all reports,
financial statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange.
(j) The Company will apply the proceeds from the sale of the Shares as
set forth under "Use of Proceeds" in the Prospectus.
(k) The Company will use its best efforts to cause the Shares to be
qualified for inclusion in the Nasdaq National Market.
(l) The Company will file with the Commission in its periodic reports
pursuant to Section 13 or 15 of the Exchange Act such information as may be
required pursuant to Rule 463 of the Regulations.
Bear, Xxxxxxx & Co. Inc., on behalf of the several Underwriters, may,
in its sole discretion, waive in writing the performance by the Company of any
one or more of the foregoing covenants or extend the time for their performance.
5. Payment of Expenses. Whether or not the transactions contemplated
-------------------
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder,
12
including those in connection with (i) preparing, printing, duplicating,
filing and distributing the Registration Statement, as originally filed and
all amendments thereof (including all exhibits thereto), the Offering
Memorandum (including fees relating to the filing of reports in Canada), any
preliminary prospectus, the Prospectus and any amendments or supplements
thereto (including, without limitation, fees and expenses of the Company's
accountants and counsel), the underwriting documents (including this
Agreement, the Master Agreement Among Underwriters and the Master Selling
Agreement) and all other documents related to the public offering of the
Shares (including those supplied to the Underwriters in quantities as
hereinabove stated), (ii) the issuance, transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon, (iii)
the qualification of the Shares under state or foreign securities or Blue Sky
laws or regulations, including the costs of printing and mailing a preliminary
and final "Blue Sky Survey" and the fees of counsel for the Underwriters and
such counsel's disbursements in relation thereto, (iv) quotation of the Shares
on the Nasdaq National Market, (v) filing fees of the Commission and the
National Association of Securities Dealers, Inc.; (vi) the cost of printing
certificates representing the Shares and (vii) the cost and charges of any
transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Xxxxxxx, Phleger & Xxxxxxxx
LLP ("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York time, on the date of this Agreement, or at such later
time and date as shall have been consented to in writing by you; if the Company
shall have elected to rely upon Rule 430A or Rule 434 of the Regulations, the
Prospectus shall have been filed with the Commission in a timely fashion in
accordance with Section 4(a) hereof; and, at or prior to the Closing Date no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date you shall have received the opinion of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for the Company, dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) Each of the Company and the subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and the State of __________,
respectively;
(ii) Each of the Company and the subsidiaries has the corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus;
13
(iii) Each of the Company and the subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction, if any, in which the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company or the subsidiaries. To such
counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein, the issued and outstanding
shares of capital stock of the Company have been duly and validly issued
and are fully paid and nonassessable, and, to such counsel's knowledge,
unless otherwise described in the Prospectus, will not have been issued in
violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right;
(v) The Firm Shares or the Additional Shares, as the case may
be, to be issued by the Company pursuant to the terms of this Agreement
have been duly authorized and, upon issuance and delivery against payment
therefor in accordance with the terms hereof, will be duly and validly
issued and fully paid and nonassessable, and, to the knowledge of such
counsel, will not have been issued in violation of or subject to any
preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders;
(vi) The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by it hereunder;
(vii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company;
(viii) The Registration Statement has become effective under the
Act and, to such counsel's knowledge, 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
threatened by the Commission under the Act;
(ix) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements and
notes thereto (including supporting schedules) and financial or statistical
data derived therefrom as to which such counsel need express no opinion),
as of the effective date of the Registration Statement, complied as to form
in all material respects with the requirements of the Act and the
applicable Rules and Regulations;
(x) The information in the Prospectus under the caption
"Description of Capital Stock," to the extent that it constitutes matters
of law or legal conclusions, has been reviewed by such counsel and is
accurate in all material respects and presents fairly
14
that which must be shown; and the forms of certificates evidencing the
Common Stock and filed as exhibits to the Registration Statement comply
with the applicable law of the State of Delaware;
(xi) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes are
accurate and fairly present the information required to be presented by the
Act and the applicable Rules and Regulations in all material respects;
(xii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement which are not described or referred to therein or filed as
required;
(xiii) The performance of this Agreement and the consummation of
the transactions herein contemplated (other than performance of the
Company's indemnification obligations hereunder, concerning which no
opinion need be expressed) will not (a) result in any violation of the
Company's charter or bylaws or (b) to such counsel's knowledge, result in a
material breach or violation of any of the terms and provisions of, or
constitute a default under, any material bond, debenture, note or other
evidence of indebtedness, or under any material lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement
or instrument known to such counsel to which the Company is a party or by
which its properties are bound, or any applicable statute, rule or
regulation known to such counsel or, to such counsel's knowledge, any
order, writ or decree of any court, government or governmental agency or
governmental body having jurisdiction over the Company or over any of their
properties or operations;
(xiv) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or
governmental body having jurisdiction over the Company, or over any of its
properties or operations is necessary in connection with the consummation
by the Company of the transactions herein contemplated, except such as have
been obtained under the Act or such as may be required under state or other
securities or Blue Sky laws in connection with the purchase and the
distribution of the Shares by the Underwriters;
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company of a
character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations, other than those
described therein;
(xvi) To such counsel's knowledge, the Company is not presently
(a) in material violation of its charter or bylaws, or (b) in material
breach of any applicable statute, rule or regulation known to such counsel
or, to such counsel's knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company or over
any of its properties or operations except where such violation or breach
would not materially adversely affect the Company;
15
(xvii) The Company is not (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act, or (ii) a "holding company" or a "subsidiary
company" or an "affiliate" of a holding company within the meaning of the
Holding Company Act; and
(xviii) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or other
securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights known to such counsel to registration of such shares of Common Stock
or other securities, because of the filing of the Registration Statement by
the Company have, with respect to the offering contemplated thereby, waived
such rights or such rights have expired by reason of lapse of time
following notification of the Company's intent to file the Registration
Statement.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and on the Closing
Date and on any later date on which Additional Shares are to be purchased, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements and notes thereto including supporting schedules and other
financial and statistical information derived therefrom, as to which such
counsel need express no comment) 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 at the Closing Date
or any later date on which the Additional Shares are to be purchased, as the
case may be, the Registration Statement, the Prospectus and any amendment or
supplement thereto (except as aforesaid) contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States, the State of Delaware or the
State of New York upon opinions of local counsel, and as to questions of fact
upon representations or certificates of officers of the Company, and of
government officials, in which case their opinion is to state that they are so
relying and that they have no knowledge of any material misstatement or
inaccuracy in any such opinion, representation or certificate. Copies of any
opinion, representation or certificate so relied upon shall be delivered to you,
as Representatives of the Underwriters, and to Underwriters' Counsel.
(c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to you and to Underwriters' Counsel, and the Underwriters
shall have received from said Underwriters' Counsel a favorable opinion, dated
as of the Closing Date with respect to the issuance and sale of
16
the Shares, the Registration Statement, the Offering Memorandum and the
Prospectus and such other related matters as you may reasonably require, and
the Company shall have furnished to Underwriters' Counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(d) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date to the effect that (i) the condition set forth in subsection (a) of
this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information is
given in the Registration Statement, the Offering Memorandum and the Prospectus,
the Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and there has
not been any Material Adverse Change, or any development involving a Material
Adverse Change, except in each case as described in or contemplated by the
Prospectus.
(e) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from Ernst & Young LLP, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the financial statements and schedules of the Company
included or incorporated by reference in the Registration Statement and the
Prospectus and covered by their opinion therein comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations of the Commission thereunder; (iii)
on the basis of procedures consisting of a reading of the latest available
unaudited interim consolidated financial statements of the Company, and its
subsidiaries, a reading of the minutes of meetings and consents of the
shareholders and boards of directors of the Company and its subsidiaries and the
committees of such boards subsequent to December 31, 1998, inquiries of officers
and other employees of the Company and its subsidiaries who have responsibility
for financial and accounting matters of the Company and its subsidiaries with
respect to transactions and events subsequent to December 31, 1998 and other
specified procedures and inquiries to a date not more than five days prior to
the date of such letter, nothing has come to their attention that would cause
them to believe that: (A) the unaudited consolidated financial statements and
schedules of the Company presented in the Registration Statement and the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder or that such unaudited consolidated
financial statements are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited consolidated financial statements included in the
Registration Statement and the Prospectus; (B) with respect to the period
subsequent to December 31, 1998, there were, as of the date of the
17
most recent available monthly consolidated financial statements of the Company
and its subsidiaries, if any, and as of a specified date not more than five
days prior to the date of such letter, any changes in the capital stock or
long-term indebtedness of the Company or any decrease in the net current
assets or stockholders' equity of the Company, in each case as compared with
the amounts shown in the most recent balance sheet presented in the
Registration Statement and the Prospectus, except for changes or decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter; or (C) that during the period
from December 31, 1998 to the date of the most recent available monthly
consolidated financial statements of the Company and its subsidiaries, if any,
and to a specified date not more than five days prior to the date of such
letter, there was any decrease, as compared with the corresponding period in
the prior fiscal year, in total revenues, or total or per share net income,
except for decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such letter; and
(iv) stating that they have compared specific dollar amounts, numbers of
shares, percentages of revenues and earnings, and other financial information
pertaining to the Company and its subsidiaries set forth in the Registration
Statement, the Offering Memorandum and the Prospectus, which have been
specified by you prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages, and information may be derived from the general
accounting and financial records of the Company and its subsidiaries or from
schedules furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
specified by you set forth in such letter, and found them to be in agreement.
(f) Prior to the Closing Date the Company shall have furnished to you
such further information, certificates and documents as you may reasonably
request.
(g) You shall have received from each person who is a director,
officer or 5% stockholder of the Company an agreement in the form of Exhibit A
hereto, and such agreement shall be in full force and effect on the Closing
Date.
(h) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the
18
Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including
but not limited to attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus or
the Offering Memorandum, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will
not be liable in any such case to the extent but only to the extent that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through you expressly for use therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have including under
this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus or the Offering Memorandum, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through you expressly for use
therein; provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder. This indemnity will be in
addition to any liability which any Underwriter may otherwise have including
under this Agreement. The Company acknowledges that the statements set forth in
the table in the first paragraph and the third paragraph under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by
19
or on behalf of any Underwriter expressly for use in the registration
statement relating to the Shares as originally filed or in any amendment
thereof, any related preliminary prospectus or the Prospectus or in any
amendment thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in circumstances
------------
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the offering of the Shares or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but
20
also the relative fault of the Company and the Underwriters in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and (y) the underwriting
discounts and commissions received by the Underwriters, respectively, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and of the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable
to the Shares purchased by such Underwriter hereunder, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 8 and the preceding sentence, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 8,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the 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) of this Section 8. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 8 or
otherwise. No party shall be liable for contribution with respect to any
action or claim settled without its consent; provided, however, that such
consent was not unreasonably withheld.
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number
21
of Firm Shares or Additional Shares, to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to the respective
proportions which the numbers of Firm Shares set forth opposite their
respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any non-
defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
-----------------------------------------
(a) This Agreement shall become effective, upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
public offering price or the purchase price
22
per Share has not been agreed upon prior to 5:00 P.M., New York time, on the
fifth full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company
by notifying you or by you notifying the Company. Notwithstanding the
foregoing, the provisions of this Section 11 and of Sections 1, 5, 7 and 8
hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case
may be, if (A) any domestic or international event or act or occurrence has
materially disrupted, or in your reasonable opinion will in the immediate future
materially disrupt, the market for the Company's securities or securities in
general; or (B) if trading on the New York or American Stock Exchanges or on
Nasdaq shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required, on the New York or American Stock Exchanges or on Nasdaq by the New
York or American Stock Exchanges or Nasdaq or by order of the Commission or any
other governmental authority having jurisdiction; or (C) if a banking moratorium
has been declared by a state or federal authority or if any new restriction
materially adversely affecting the distribution of the Firm Shares or the
Additional Shares, as the case may be, shall have become effective; or (D) (i)
if the United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been such
change in political, financial or economic conditions if the effect of any such
event in (i) or (ii) as in your judgment makes it impracticable or inadvisable
to proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all out-
of-pocket expenses (including the fees and expenses of their counsel), incurred
by the Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, X.X. 00000, Attention: Equity Syndicate, with a copy to Xxxxxxx,
Phleger & Xxxxxxxx LLP, Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxxxxx, XX 00000,
Attention: Xxxx X. Xxxxxx, Esq.; if sent to the Company, shall be mailed,
delivered, or telegraphed and confirmed in writing to the Company, 0000 Xxxxxxxx
Xxxxxx, Xxx Xxxx,
00
Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, with a copy to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, XX 00000-0000, Attention: Xxxxx X. Xxxxx, Esq.
13. Parties. This Agreement shall insure solely to the benefit of, and
-------
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. Counterparts. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
16. Headings. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
24
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
CONCENTRIC NETWORK CORPORATION
By:
-------------------------------------
Xxxxx Xxxxxxxx
Chief Executive Officer and President
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
BANCBOSTON XXXXXXXXX XXXXXXXX
CIBC XXXXXXXXXXX CORP.
FIRST UNION CAPITAL MARKETS
By Bear, Xxxxxxx & Co. Inc.
By:
-----------------------------
Authorized Signatory
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
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SCHEDULE I
Name of Firm Number of Shares
Bear, Xxxxxxx & Co. Inc. ........................
BancBoston Xxxxxxxxx Xxxxxxxx....................
CIBC Xxxxxxxxxxx Corp. ..........................
First Union Capital Markets......................
Total......................................... 2,500,000
26
EXHIBIT A
A-1
