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EXHIBIT 1.1
6,500,000 SHARES
STAR TELECOMMUNICATIONS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
March , 0000
XXXXXXXXX & XXXXX LLC
XXXX. XXXXX & SONS INCORPORATED
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Star Telecommunications, Inc., a Delaware corporation (herein called the
Company), proposes to issue and sell 5,500,000 shares of its authorized but
unissued Common Stock, $.001 par value (herein called the Common Stock), and the
stockholders of the Company named in Part A of Schedule II hereto (the
"Underwritten Selling Stockholders") propose to sell an aggregate of 1,000,000
shares of Common Stock of the Company (said 6,500,000 shares of Common Stock
being herein called the Underwritten Stock). The Company proposes to grant to
the Underwriters (as hereinafter defined) an option to purchase up to 789,660
additional shares of Common Stock (the "Company Option Stock") and a certain
stockholder of the Company named in Part B of Schedule II hereto (the
"Additional Selling Stockholder") proposes to grant to the Underwriters an
option to purchase up to 185,340 additional shares of Common Stock (the
"Additional Selling Stockholder Option Stock") said 975,000 shares of Common
Stock being herein called Option Stock (herein called the Option Stock and with
the Underwritten Stock herein collectively called the Stock). The Common Stock
is more fully described in the Registration Statement and the Prospectus
hereinafter mentioned. The Underwritten Selling Stockholders and the Additional
Selling Stockholder are hereinafter referred to as "Selling Stockholders".
The Company and the Selling Stockholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-1 (No. 333- ), including the related preliminary prospectus, for
the registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, all exhibits and financial statements, all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, in the form in which it became effective, and any
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registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or the effectiveness of such amendment)
such prospectus as so supplemented or amended. The term Preliminary Prospectus
as used in this Agreement shall mean each preliminary prospectus included in
such registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
(a) Each of the Company and the Selling Stockholders listed in Part A of
Schedule II hereby severally represents and warrants as follows; provided that
the Selling Stockholders make the following representations and warranties
severally and to their knowledge after due inquiry:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and as being
conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned
or leased or the nature of the business transacted by it makes
qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole).
(ii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
materially adverse change or any development including a prospective
material adverse change in the business, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of
business, neither the Company nor any of its subsidiaries has entered into
any material transaction not referred to in the Registration Statement and
the Prospectus.
(iii) Each part of the Registration Statement and the Prospectus
comply, and on the Closing Date (as hereinafter defined) and any later date
on which Option Stock is to be purchased, the Prospectus will comply, in
all material respects, with the provisions of the Securities Act and the
rules and regulations of the Commission thereunder; on the Effective Date,
the Registration Statement did not contain any untrue statement of a
material fact and did not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not and, on the
Closing Date and any later date on which Option Stock is to be purchased,
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
subparagraph (iii) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
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conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus.
(iv) The outstanding capital stock of the Company and its subsidiaries
has been validly authorized, is fully paid and nonassessable, was issued in
compliance with applicable federal and state securities laws, and was
issued free of any preemptive right, right of first refusal or similar
right. The Stock is duly and validly authorized, is (or, in the case of
shares of the Stock to be sold by the Company, will be, when issued and
sold to the Underwriters as provided herein) duly and validly issued, fully
paid and nonassessable and conforms to the description thereof in the
Prospectus. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the transfer and
sale of the Stock to be sold by the Selling Stockholders or the issuance
and sale of the Stock as contemplated herein. No preemptive right, or right
of refusal in favor, exists with respect to the Stock, or the issue and
sale thereof, or with respect to the exercise of options or other rights to
purchase securities of the Company after the sale of the Stock pursuant to
the Certificate of Incorporation or Bylaws of the Company. There is no
contractual preemptive right that has not been waived, right of first
refusal or right of co-sale which exists with respect to the Stock being
sold by the Selling Stockholders or the issue and sale of the Stock.
(v) The Registration Statement and Prospectus comply as to form in all
material respects with the requirements of the Securities Act and with
rules and regulations of the Commission thereunder.
(vi) All holders of securities of the Company and its subsidiaries
having rights to the registration of shares of Common Stock, or other
securities, because of the filing of the Registration Statement by the
Company have 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.
(vii) The issue and sale by the Company and the Selling Stockholders
of the shares of Stock sold by the Company and the Selling Stockholders as
contemplated by the Underwriting Agreement will not conflict with, or
result in a breach of, the Articles of Incorporation or Bylaws of the
Company or any agreement or instrument to which the Company is a party or
any applicable law or regulation, or any order, writ, injunction or decree,
of any jurisdiction, court or governmental instrumentality.
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in the Underwriting Agreement, except such as
have been (or will before the Closing Date 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 Stock by
the Underwriters.
(ix) This Agreement has been duly authorized, executed and delivered
by the Company and the Selling Stockholders and constitutes a valid and
binding obligation of each of them enforceable in accordance with its
terms.
(x) Prior to the Closing Date the Stock to be issued and sold by the
Company will be approved for listing on the Nasdaq National Market by the
National Association of Securities Dealers, Inc.
(xi) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida), relating to issuers
doing business with the Government of Cuba or with any person or affiliate
located in Cuba.
(xii) The Company and its subsidiaries have all necessary consents,
authorizations approvals, orders, certificates and permits of and from, and
have made all declarations and filings with, all U.S. and foreign, federal
state or provincial, local and other governmental authorities, all self-
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regulatory organizations and all courts and other tribunals, to own, lease,
license and use its properties and assets and to conduct its business in
the manner described in the Prospectus, except to the extent that the
failure to obtain or file xxxx not have material adverse effect on the
Company and its subsidiaries, taken as a whole and except as otherwise
described in the Prospectus. Neither the Company nor any of its
subsidiaries have received any notice of proceedings relating to, and does
not have reason to believe that any governmental body or agency is
considering limiting, suspending, modifying or revoking, any such consent,
authorization, approval, order, certificate or permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company or its
subsidiaries, taken as a whole.
(xiii) The Company and its subsidiaries have all necessary
applications, statements, reports, information, forms, consents,
authorizations, approvals, orders, certificates and permits ("Licenses") of
and from all United States federal or state authorities, including the FCC
and State Public Utilities Commissions to own, lease, license and use its
properties and assets and to conduct its business in the manner described
in the Prospectus, except to the extent that the failure to obtain or file
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and except as described in the Prospectus.
(xiv) The Licenses are in full force and effect without conditions
that would have a material adverse effect on the Company's or its
subsidiaries' operations except for such conditions that would have a
material adverse effect on the Company's or its subsidiaries' operations
except for such conditions imposed generally by the FCC upon such licenses
or conditions stated on the face of the Licenses, (ii) all express
conditions in the Licenses have been satisfied where the failure to satisfy
such conditions would have a material adverse effect on the Company's or
its subsidiaries' operations as described in the Registration Statement and
the Prospectus, and (iii) neither the Company nor any of its subsidiaries
have received any notification that any revocation or limitation of the
Licenses is threatened or pending that would have a material adverse effect
on the Company's or its subsidiaries operations as described in the
Registration Statement and Prospectus.
(xv) The Licenses are validly issued. The Company and its subsidiaries
have filed with the FCC all applications, statements, reports, information,
forms, or any other document required under the Communications Act, except
where the failure to so file would not have a material adverse effect on
the Company's and its subsidiaries' ability to provide its services as
described in the Registration Statement and the Prospectus and such filings
or submissions were in compliance with applicable laws or regulations when
filed or submitted and no deficiencies have been asserted by the FCC with
respect to such filings or submissions except where the deficiency is of
such a nature that failure to cure any such deficiency would not have a
material adverse effect on the Company's and its subsidiaries ability to
provide its services as described in the Registration Statement and
Prospectus, and, the information contained in such filings or submissions
was, in all material respects, accurate, complete and up-to-date at the
time the filings or submissions were made.
(xvi) With respect to matters relating to the regulation of long
distance telecommunications carriers administered by United States federal
or state authorities, including, and not limited to, the FCC and State
Public Utilities Commissions, the execution and delivery by the Company of,
and the performance by the Company of its obligations under, this Agreement
will not contravene any provisions of applicable law or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations under this
Agreement.
(xvii) There is no proceeding, formal or informal complaint or
investigation before the FCC against the Company or any of its subsidiaries
or any of the Licenses or based on any violation or
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alleged violation by the Company or any of its subsidiaries of the
Communications Act except for proceedings affecting the industry generally
to which neither the Company nor any of its subsidiaries is a specific
party.
(xviii) Neither the execution, delivery and performance of the
Underwriting Agreement by the Company and the Selling Stockholders not the
stock issuance and sale described in the Registration Statement and
Prospectus, will conflict with, violate or require any authorization,
approval, or consent under the Commissions Act or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or cause any forfeiture or impairment of, any of the Licenses.
(xix) The Company owns or possesses adequate licenses or other rights
to use all patents, copyrights, trademarks, service marks, trade names,
technology and know-how necessary (in any material respect) to conduct its
business in the manner described in the Prospectus and, except as disclosed
in the Prospectus, the Company has not received any notice of infringement
or conflict with (and knows of no infringement or conflict with) asserted
rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names, technology or know-how which could result in
any material adverse effect on the Company, taken as a whole; and, except
as disclosed in the Prospectus, the discoveries, inventions, products or
processes of the Company referred to in the Prospectus do not, to the
knowledge of the Company, infringe or conflict with any right or patent of
any third party, or any discovery, invention, product or process which is
the subject of a patent application filed by any third party, known to the
Company which could have a material adverse effect on the Company, taken as
a whole.
(xx) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent, or employee of the Company has, directly or
indirectly, while acting on behalf of the Company, (i) used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; (ii) made any unlawful
contribution to any candidate for foreign or domestic office, or to any
foreign or domestic government officials or employees or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof or to foreign or domestic political parties or campaigns from
corporate funds, or failed to disclose fully any contribution in violation
of law; (iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any other unlawful payment.
(xxi) Neither the Company nor, to the Company's knowledge, any
employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds which constitutes a violation by
the Company of any law, rule or regulation or of a character required to be
disclosed in the Prospectus.
(xxii) With respect to state certificates of public convenience and
necessity of other operating authorizations issued by state and public
utility commissions or similar state governmental agencies (collectively
"PUCs" and individually a "PUC") (such PUC certificates and authorizations
are hereinafter referred to collectively as the "State Authorizations")
held by the Company and its subsidiaries, such State Authorizations are in
full force and effect and are unimpaired by any act or omission of the
Company or any of its employees or agents or the Company's subsidiaries, in
each case except where such authorization is not required or where the
failure to so hold any such State Authorization would not have a material
adverse effect on the Company or its business, properties, business
prospects, condition (financial or otherwise) or results of operations. The
State Authorizations are all of the licenses, authorizations, consents and
approvals necessary from the PUCs in order to allow the Company and its
subsidiaries to own its assets and carry on its business as currently being
conducted, except where the failure to so hold any State Authorizations
would not have a material adverse effect on the Company or its
subsidiaries, or its business, properties, business prospects, condition
(financial or otherwise) or results of opera-
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tions. To the best of the Company's knowledge, there are no proceedings of
any kind, including but not limited to rulemaking proceedings of general
applicability in the industry or industries in which the Company operates,
by or before any PUC, now pending or threatened, which, if adversely
determined, would have a material adverse effect on the Company or its
business, properties, business prospects, condition (financial or
otherwise) or results of operations. Neither the execution and delivery of
this Agreement and the Pricing Agreement or the consummation of the
transactions contemplated herein and therein and in the Registration
Statement will conflict with or result in a breach of, or require any
authorization, approval or consent under the Communications Act of 1934, as
amended, or the rules of the Federal Communications Commission (the "FCC")
or the communications statutes of any state or the policies or rules of any
PUC. All applications, reports and other filings required by the FCC or any
PUC to be filed as of the date hereof with respect to any FCC license or
the State Authorizations, as the case may be, have been duly and currently
filed as of the date hereof, except where the failure to so file would not
have a material adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations.
(xxiii) The Company and its subsidiaries have filed with the
applicable foreign and domestic regulatory authorities each and every
statement, report, information or form required by any applicable law,
regulation or order, except where the failure to so file would not have a
material adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations, and all such filings or submissions were in compliance with
applicable laws when filed, and no deficiencies have been asserted by any
regulatory commission, agency or authority with respect to such filings or
submissions, except where the failure to so file or cure any such
deficiency would not have a material adverse effect on the Company or its
business, properties, business prospects, condition (financial or
otherwise) or results of operations. The Company and its subsidiaries have
maintained in full force and effect all licenses and permits necessary or
proper for the conduct of its business, except where the failure to do so
would not have a material adverse effect on the Company or its business,
properties, business prospects, condition (financial or otherwise) or
results of operations, and neither the Company nor any of its subsidiaries
have received any notification that any revocation or limitation thereof is
threatened or pending that would have such an effect. Except as disclosed
in the Registration Statement and the Prospectus, there is not pending any
change under any law, regulation, license or permit that would have a
material adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations. Neither the Company nor any or its subsidiaries have received
any notice of, or, to the knowledge of the Company and its subsidiaries,
been threatened with or is under investigation with respect to, a violation
or a possible violation of any provision of any law, regulation or order,
except such violation or violations as would not have a material adverse
effect on the Company or its business, properties, business
prospects,.condition (financial or otherwise) or results of operations.
(xxiv) There is no legal or governmental proceeding pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or its subsidiaries is subject
that is required to be described in the Registration Statement or the
Prospectus and is not so described; or any statute, regulation, contract or
other document that is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed.
(xxv) The Company and its subsidiaries have all necessary consents,
authorizations, approvals, orders, certificates and permits of and from,
and has made all declarations and filings with, all governmental
authorities, to own, lease, license and use its properties and assets and
to conduct its business in the manner described in the Prospectus, except
to the extent that the failure to obtain or file such would not have a
material adverse effect on the Company.
(xxvi) The Company and its subsidiaries (i) are in compliance with
applicable laws and regulations relating to the protection of human health
and safety, the environment or hazardous
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or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required under applicable Environmental Laws to conduct its business, and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance, failure to receive or
failure to comply would not have a material adverse effect on the Company.
(xxvii) The Company is not, and upon receipt and pending application
of the net proceeds from the sale of the Stock to be sold by the Company in
the manner described in the Prospectus will not be, an "investment company"
or an "affiliated person" of or "promoter" or "principal underwriter" for
an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
(xxviii) No action has been taken by the Company or any of its
subsidiaries or any of the Selling Stockholders which would constitute a
violation of any noncompetition (or similar) agreement between Xxxxxxxxxxx
X. Xxxxxxxx and any other.
(b) Each Selling Stockholder, severally and not jointly, hereby represents
and warrants as follows:
(i) Such Selling Stockholder has full power and authority to enter
into this Agreement and the Agreement and Power of Attorney. All
authorizations and consents necessary for the execution and delivery by
such Selling Stockholder of the Agreement and Power of Attorney, and for
the execution of this Agreement on behalf of such Selling Stockholder, have
been given. Each of the Agreement and Power of Attorney and this Agreement
has been duly authorized, executed and delivered by or on behalf of such
Selling Stockholder and constitutes a valid and binding agreement of such
Selling Stockholder and is enforceable against such Selling Stockholder in
accordance with the terms thereof and hereof.
(ii) Such Selling Stockholder now has, and at the time of delivery
thereof hereunder will have , (1) good and marketable title to the Shares
to be sold by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances and claims whatsoever (other than pursuant to the
Agreement and Power of Attorney); and (2) full legal right and power, and
all authorizations and approvals required by law, to sell, transfer and
deliver such Shares to the Underwriters hereunder and to make the
representations, warranties and agreements made by such Selling Stockholder
herein. Upon the delivery of and payment for such Shares hereunder, such
Selling Stockholder will deliver good and marketable title thereto, free
and clear of all liens, encumbrances and claims whatsoever.
(iii) On the Closing Date or Option Closing Date, as the case may be,
all stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares
to be sold by such Selling Stockholder to the several Underwriters
hereunder will have been fully paid or provided for by such Selling
Stockholder and all laws imposing such taxes will have been fully complied
with.
(iv) The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of
such Selling Stockholder pursuant to the terms or provisions of, or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the acceleration of any obligation
under, if such Selling Stockholder is a corporation or partnership, the
organization documents of such Selling Stockholder, or, as to all such
Selling Stockholders, any contract or other agreement to which such Selling
Stockholder is a party or by which such Selling Stockholder or any of its
property is bound or affected, or under any ruling, decree, judgment,
order, statute, jurisdiction over such Selling Stockholder or the property
of such Selling Stockholder.
(v) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for
the consummation by such Selling
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Stockholder of the transactions on its part contemplated herein and in the
Agreement and Power of Attorney, except such as have been obtained under
the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the
Shares to be sold by such Selling Stockholder.
(vi) Other than as permitted by the Act and the Rules and Regulations,
such Selling Stockholder has not distributed and will not distribute any
preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares. Such Selling
Stockholder has not taken, directly or indirectly, any action designed, or
which might reasonably be expected, to cause or result in, under the Act or
otherwise, or which has caused or resulted in, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(vii) Neither such Selling Stockholder nor any of such Selling
Stockholder's affiliates directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, or has any other association (within the meaning of Article I,
Section 1(m) of the by-laws of the NASD) or affiliation with, any member
firm of the NASD.
(viii) Certificates in negotiable form for the Shares to be sold
hereunder by such Selling Stockholder have been placed in custody, for the
purpose of making delivery of such Shares under this Agreement, under the
Agreement and Power of Attorney which appoints and
as custodian (the "Custodian") for each Selling
Stockholder. Such Selling Stockholder agrees that the Shares represented by
the certificates held in custody for him or it under the Agreement and
Power of Attorney are for the benefit of and coupled with and subject to
the interest hereunder of the Custodian, the Attorney-in-Fact, the
Underwriters, each other Selling Stockholder and the Company, that the
arrangements made by such Selling Stockholder for such custody and the
appointment of the Custodian and the Attorney-in -Fact by such Selling
Stockholder are irrevocable, and that the obligations of such Selling
Stockholder hereunder shall not be terminated by operation of law, whether
by the death, disability, incapacity or liquidation of any Selling
Stockholder or the occurrence of any other event. If any Selling
Stockholder should die, become disabled or incapacitated or be liquidated
or if any other such event should occur before the delivery of the Shares
hereunder, certificates for the Shares shall be delivered by the Custodian
in accordance with the terms and conditions of this Agreement and actions
taken by the Attorney-in-Fact and the Custodian pursuant to the Agreement
and Power of Attorney, shall be as valid as if such death, liquidation,
incapacity or other event had not occurred, regardless of whether or not
the Custodian or the Attorney-in-Fact, or either of them, shall have
received notice thereof.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
5,500,000 shares of the Underwritten Stock to the several Underwriters, each
Selling Stockholder agrees to sell to the several Underwriters the number of
shares of Underwritten Stock set forth in Part A of Schedule II opposite the
name of such Selling Stockholder, and each of the Underwriters agrees to
purchase from the Company and the Selling Stockholders the respective aggregate
number of shares of Underwritten Stock set forth opposite its name in Schedule
I. The price at which such shares of Underwritten Stock shall be sold by the
Company and the Selling Stockholders and purchased by the several Underwriters
shall be $ per share. The obligation of each Underwriter to the Company and
each of the Selling Stockholders shall be to purchase from the Company and the
Selling Stockholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by each of the Company and the Selling Stockholders pursuant to
this Agreement as the number of shares of the Underwritten Stock set forth
opposite the name of such Underwriter in Schedule I hereto represents of the
total number of shares of the Underwritten Stock
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to be purchased by all Underwriters pursuant to this Agreement, as adjusted by
you in such manner as you deem advisable to avoid fractional shares. In making
this Agreement, each Underwriter is contracting severally and not jointly;
except as provided in paragraphs (b) and (c) of this Section 3, the agreement of
each Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8 or 9 hereof) to purchase and pay for
the number of shares of the Stock agreed to be purchased by such Underwriter or
Underwriters, the Company or the Selling Stockholders shall immediately give
notice thereof to you, and the non-defaulting Underwriters shall have the right
within 24 hours after the receipt by you of such notice to purchase, or procure
one or more other Underwriters to purchase, in such proportions as may be agreed
upon between you and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Stockholders shall have the right, within 24 hours next
succeeding the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to you for purchase of such shares and
portion on the terms herein set forth. In any such case, either you or the
Company and the Selling Stockholders shall have the right to postpone the
Closing Date determined as provided in Section 5 hereof for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
said Section 5 in order that any necessary changes in the Registration
Statement, the Prospectus or any other documents or arrangements may be made. If
neither the non-defaulting Underwriters nor the Company and the Selling
Stockholders shall make arrangements within the 24-hour periods stated above for
the purchase of all the shares of the Stock which the defaulting Underwriter or
Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company
or the Selling Stockholders to any non-defaulting Underwriter and without any
liability on the part of any non-defaulting Underwriter to the Company or the
Selling Stockholders. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the several Underwriters to purchase, severally and not
jointly, up to 789,660 in the aggregate of the Company Option Stock from the
Company, and the Additional Selling Stockholder grants an option to the
Underwriters to purchase, severally and not jointly, up to 185,340 shares in the
aggregate of the Additional Option Stock from the Additional Selling
Stockholder, at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said options may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made as provided in Section 5 hereof. The number of shares of the
Option Stock to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Stock to be purchased by the several
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Underwriters as such Underwriter is purchasing of the Underwritten Stock, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
The number of shares of Option Stock to be purchased from the Company and from
the Additional Selling Stockholder shall be allocated between the Company and
the Additional Selling Stockholder in the same proportion as the maximum number
of shares of Company Option Stock bears to the maximum number of shares of
Additional Selling Stockholder Option Stock.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover page
and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Stock filed by the Company
(insofar as such information relates to the Underwriters) constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration Statement, any Preliminary Prospectus, and the Prospectus, and you
on behalf of the respective Underwriters represent and warrant to the Company
that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock and
the Option Stock (if the option granted by Section 3(c) hereof shall have been
exercised not later than 7:00 A.M., San Francisco time, on the date two business
days preceding the Closing Date), and payment therefor, shall be made at the
office of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, at 7:00
a.m., San Francisco time, on the fourth business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such fourth business day, as shall be agreed upon in writing by the
Company and you. The date and hour of such delivery and payment (which may be
postponed as provided in Section 3(b) hereof) are herein called the Closing
Date.
(b) If the option granted by Section 3(c) hereof shall be exercised after
7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, at 7:00 a.m., San Francisco time, on the
third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to the
Company or its order and payment for the Stock purchased from the Selling
Stockholders shall be made to the Custodian for the account of the Selling
Stockholders, in each case by one or more certified or official bank check or
checks in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco Securities Corporation, 0 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 on the business day prior to the Closing Date or, in the
case of the Option Stock, by 3:00 p.m., New York time, on the business day
preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Stockholders for shares to be purchased by any Underwriter whose
check shall not have been received by you on the Closing Date or any later date
on which Option Stock is purchased for the account of such Underwriter. Any such
payment by you shall not relieve such Underwriter from any of its obligations
hereunder.
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6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. The
Company, and to the extent specified below the Selling Stockholders,
respectively severally covenant and agree as follows:
(a) The Company will (i) prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A and (ii)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act or the rules and regulations of the
Commission.
(b) The Company will promptly notify each Underwriter in the event of (i)
the request by the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time such Prospectus
is delivered to such purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in
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connection with the sale of the Stock in accordance with the applicable
provisions of the Securities Act and the applicable rules and regulations
thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission (including the Report on Form SR required by Rule 463 of the
Commission under the Securities Act).
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company and the Selling Stockholders jointly and severally agree to
pay all costs and expenses incident to the performance of their obligations
under this Agreement, including all costs and expenses incident to (i) the
preparation, printing and filing with the Commission and the National
Association of Securities Dealers, Inc. of the Registration Statement, any
Preliminary Prospectus and the Prospectus, (ii) the furnishing to the
Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished, (iii)
the printing of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this Section 6, (v)
the furnishing to you and the Underwriters of the reports and information
referred to in paragraph (g) of this Section 6 and (vi) the printing and
issuance of stock certificates, including the transfer agent's fees. The Selling
Stockholders will pay any transfer taxes incident to the transfer to the
Underwriters of the shares of Stock being sold by the Selling Stockholders.
(j) The Company and the Selling Stockholders jointly and severally agree to
reimburse you, for the account of the several Underwriters, for blue sky fees
and related disbursements (including counsel fees and disbursements and cost of
printing memoranda for the Underwriters) paid by or for the account of the
Underwriters or their counsel in qualifying the Stock under state securities or
blue sky laws and in the review of the offering by the NASD.
(k) Without the prior written consent of Xxxxxxxxx & Xxxxx LLC on behalf of
the Underwriters, the Company will not, for a period of 180 days following the
commencement of the public offering of the Stock by the Underwriters, directly
or indirectly, (i) sell, offer, contract to sell, make any short sale, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences or ownership of Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Stock to be sold to the
Underwriters
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pursuant to this Agreement, (B) shares of Common Stock issued by the Company
upon the exercise of options granted under the stock option plans of the Company
(the "Option Plans") or upon the exercise of warrants outstanding as of the date
hereof, all as described in footnote (*) to the table under the caption
"Capitalization" in the Preliminary Prospectus, and (C) the grant of options to
purchase Common Stock under the Option Plans.
(l) The Company has obtained from each director and officer of the Company,
whether or not the individual owns securities of the Company, from each
stockholder (other than as consented to by the Representatives) and from each
holder of an option or other right to acquire the Company's securities, an
agreement with you that, without the prior written consent of Xxxxxxxxx & Xxxxx
LLC on behalf of the Underwriters, such person or entity will not, for a period
of 180 days following the commencement of the public offering of the Stock by
the Underwriters, directly or indirectly, (i) sell, offer, contract to sell,
make any short sale, pledge, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any rights to purchase or
acquire Common Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or ownership of
Common Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise.
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(n) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7, the
Company and the Selling Stockholders, joint and severally (as described in
paragraph (f) of this Section 7), agree to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Securities Exchange Act of 1934, as amended
(herein called the Exchange Act), or the common law or otherwise, and the
Company and the Selling Stockholders jointly and severally agree to reimburse
each such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary
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Prospectus or the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that (1) the indemnity
agreements of the Company and the Selling Stockholders contained in this
paragraph (a) shall not apply to any such losses, claims, damages, liabilities
or expenses if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished in
writing to the Company by or on behalf of any Underwriter for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto and (2) the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Stock which
is the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Stock a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person (excluding the documents incorporated
therein by reference) and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
noncompliance by the Company or the Selling Stockholders with paragraph (c) of
Section 7 hereof. Each Selling Stockholder shall only be liable under this
paragraph with respect to (A) information pertaining to such Selling Stockholder
furnished by or on behalf of such Selling Stockholder expressly for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto or (B) facts that would constitute
a breach of any representation, warranty or covenant of such Selling Stockholder
set forth in Sections 2(b) or 6(l) hereof. The indemnity agreements of the
Company and the Selling Stockholders contained in this paragraph (a) and the
representations and warranties of the Company and the Selling Stockholders
contained in Section 2 and Section 3, respectively, hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company and the Selling Stockholders, each of the Company's officers who signs
the Registration Statement on his own behalf or pursuant to a power of attorney,
each of the Company's directors, each other Underwriter and each person
(including each partner or officer thereof) who controls the Company or any such
other Underwriter within the meaning of Section 15 of the Securities Act, and
the Selling Stockholders from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of such indemnifying Underwriter for use in the Registration
Statement or the Prospectus or any such amendment thereof or
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supplement thereto. The indemnity agreement of each Underwriter contained in
this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and (b) of
this Section 7 agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against, it in respect of which indemnity may be sought on account
of any indemnity agreement contained in such paragraphs, it will promptly give
written notice (herein called the Notice) of such service or notification to the
party or parties from whom indemnification may be sought hereunder. No
indemnification provided for in such paragraphs shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceeding to
which the Notice would have related and was prejudiced by the failure to give
the Notice, but the omission so to notify such indemnifying party or parties of
any such service or notification shall not relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party shall be entitled at its own expense to participate in the
defense of any action, suit or proceeding against, or investigation or inquiry
of, an indemnified party. Any indemnifying party shall be entitled, if it so
elects within a reasonable time after receipt of the Notice by giving written
notice (herein called the Notice of Defense) to the indemnified party, to assume
(alone or in conjunction with any other indemnifying party or parties) the
entire defense of such action, suit, investigation, inquiry or proceeding, in
which event such defense shall be conducted, at the expense of the indemnifying
party or parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense. If,
within a reasonable time after receipt of the Notice, an indemnifying party
gives a Notice of Defense and the counsel chosen by the indemnifying party or
parties is reasonably satisfactory to the indemnified party or parties, the
indemnifying party or parties will not be liable under paragraphs (a) through
(c) of this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under paragraph (a) or (b) of
this Section 7, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 7 (i) in such proportion as
is appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each
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indemnifying party in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, or actions in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on one hand, and the
Underwriters on the other, shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Stock received by
the Company and the Selling Stockholders and the total underwriting discount
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the Stock. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be 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 into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparing to defend or defending against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. 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. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Stockholders will, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
(f) The term "jointly and severally" in the second and eighth lines of
paragraph (a) of this Section 7 means that the Company's obligation is joint and
several with the obligation of each of the Selling Stockholders, but that the
obligation of a Selling Stockholder is several and not joint with the obligation
of the Company or any other Selling Stockholder. The liability of each Selling
Stockholder under the indemnity, contribution and reimbursement agreements
contained in the provisions of this Section 7 and Section 11 hereof shall be
limited to an amount equal to the price to the underwriters of the stock sold by
such Selling Stockholder to the Underwriters. The Company and the Selling
Stockholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible.
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8. TERMINATION. This Agreement may be terminated by you at any time prior
to the Closing Date by giving written notice to the Company and the Selling
Stockholders if after the date of this Agreement trading in the Common Stock
shall have been suspended, or if there shall have occurred (i) the engagement in
hostilities or an escalation of major hostilities by the United States or the
declaration of war or a national emergency by the United States on or after the
date hereof, (ii) any outbreak of hostilities or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, calamity, crisis or change in economic or political conditions
in the financial markets of the United States would, in the Underwriters'
reasonable judgment, make the offering or delivery of the Stock impracticable,
(iii) suspension of trading in securities generally or a material adverse
decline in value of securities generally on the New York Stock Exchange, the
American Stock Exchange, The Nasdaq Stock Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company or the Selling
Stockholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Stockholders; provided, however, that in the event of any
such termination the Company and the Selling Stockholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Stockholders under
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and the Selling Stockholders of all of their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and
no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except as
to the financial statements contained therein), shall have been approved at
or prior to the Closing Date by Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.,
counsel for the Underwriters.
(c) You shall have received from Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP, counsel for the Company and the Selling
Stockholders, an opinion, addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex A hereto, and if
Option Stock is purchased at any date after the Closing Date, an additional
opinion from such counsel, addressed to the Underwriters and dated such
later date, confirming that the statements expressed as of the Closing Date
in such opinion remain valid as of such later date.
(d) You shall have received from Seed, Xxxxxxx & Xxxx, counsel for the
Company, a letter addressed to the Underwriters and dated the Closing Date,
stating that such counsel is not aware of any pending or threatened
litigation involving the Company or any of its subsidiaries, and if Option
Stock is purchased at any date after the Closing Date, an additional letter
from such
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counsel, addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing Date in such
letter remain valid as of such later date.
(e) You shall have received from Swidler, Berlin, regulatory counsel
for the Company, an opinion, addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex B hereto, and if
Option Stock is purchased at any date after the Closing Date, an additional
opinion from such counsel, addressed to the Underwriters and dated such
later date, confirming that the statements expressed as of the Closing Date
in such opinion remain valid as of such later date.
(f) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not
misleading, (ii) since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the Prospectus
which has not been set forth in such a supplement or amendment, (iii) since
the respective dates as of which information is given in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change
in or affecting the business, properties, financial condition or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, the Company has not entered into any material
transaction not referred to in the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein,
(iv) the Company does not have any material contingent obligations which
are not disclosed in the Registration Statement and the Prospectus, (v)
there are not any pending or known threatened legal proceedings to which
the Company is a party or of which property of the Company or any of its
subsidiaries is the subject which are material and which are not disclosed
in the Registration Statement and the Prospectus, (vi) there are not any
franchises, contracts, leases or other documents which are required to be
filed as exhibits to the Registration Statement which have not been filed
as required, (vii) the representations and warranties of the Company herein
are true and correct in all material respects as of the Closing Date or any
later date on which Option Stock is to be purchased, as the case may be,
and (viii) there has not been any material change in the market for
securities in general or in political, financial or economic conditions
from those reasonably foreseeable as to render it impracticable in your
reasonable judgment to make a public offering of the Stock, or a material
adverse change in market levels for securities in general (or those of
companies in particular) or financial or economic conditions which render
it inadvisable to proceed.
(g) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the Attorney-in-Fact for
the Selling Stockholders, stating that the representations and warranties
of the Selling Stockholders herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Stock is
to be purchased, as the case may be.
(h) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in
the form in which it originally became effective and the Prospectus
contained therein and any supplements or amendments thereto, and that the
statements included in clauses (i) through (vii) of paragraph (d) of this
Section 9 are true and correct.
(i) You shall have received from Xxxxxx Xxxxxxxx LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the
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meaning of the Securities Act and the applicable published rules and
regulations thereunder and based upon the procedures described in their
letter delivered to you concurrently with the execution of this Agreement
(herein called the Original Letter), but carried out to a date not more
than three business days prior to the Closing Date or such later date on
which Option Stock is purchased (i) confirming, to the extent true, that
the statements and conclusions set forth in the Original Letter are
accurate as of the Closing Date or such later date, as the case may be, and
(ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect
any changes in the facts described in the Original Letter since the date of
the Original Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any change,
or any development involving a prospective change, in or affecting the
business or properties of the Company which, in your sole judgment, makes
it impractical or inadvisable to proceed with the public offering of the
Stock or the purchase of the Option Stock as contemplated by the
Prospectus.
(j) You shall have received from Xxxxxx Xxxxxxxx LLP a letter stating
that their review of the Company's system of internal accounting controls,
to the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as at December 31, 1996,
did not disclose any weakness in internal controls that they considered to
be material weaknesses.
(k) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
(l) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq National
Market.
(m) On or prior to the Closing Date, you shall have received from all
directors, officers, stockholders and holders of options or rights to
acquire securities of the Company agreements, in form reasonably
satisfactory to Xxxxxxxxx & Xxxxx LLC, stating that without the prior
written consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters,
such person or entity will not, for a period of 180 days following the
commencement of the public offering of the Stock by the Underwriters,
directly or indirectly, (i) sell, offer, contract to sell, make any short
sale, pledge, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any
rights to purchase or acquire Common Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for
the Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and the Selling Stockholders. Any such termination shall be without
liability of the Company or the Selling Stockholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Stockholders; provided, however, that (i) in the event of such termination, the
Company and the Selling Stockholders agree to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company and the Selling Stockholders under this Agreement,
including all costs and expenses referred to in paragraphs (i) and (j) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein, to fulfill any of the conditions
herein, or to
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comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The obligation of the Company and the Selling Stockholders to
deliver the Stock shall be subject to the conditions that (a) the Registration
Statement shall have become effective and (b) no stop order suspending the
effectiveness thereof shall be in effect and no proceedings therefor shall be
pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by the Company and the Selling
Stockholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Stockholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Stockholders; provided, however, that in the event of any such termination the
Company and the Selling Stockholders jointly and severally agree to indemnify
and hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Stockholders under
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement, the Company and the Selling
Stockholders hereby jointly and severally agree to reimburse on a quarterly
basis the Underwriters for all reasonable legal and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in paragraph (a) of
Section 7 of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of the Company and the Selling Stockholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Stockholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Xxxxxxxxx & Xxxxx LLC, Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, 000 Xxxx Xx Xx Xxxxxx Xxxxxx,
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxxxxx Xxxxxxxx; and if to the
Selling Stockholders, shall be mailed, telegraphed or delivered to the Selling
Stockholders in care of at . All notices
given by telegraph shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or their respective directors or officers, and (c) delivery and
payment for the Stock
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under this Agreement; provided, however, that if this Agreement is terminated
prior to the Closing Date, the provisions of paragraphs (k) and (l) of Section 6
hereof shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
STAR TELECOMMUNICATIONS, INC.
By:
------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
Chief Executive Officer
SELLING STOCKHOLDERS
------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxx
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXXXX & XXXXX LLC
XXXX. XXXXX & SONS INCORPORATED
By Xxxxxxxxx & Xxxxx LLC
By:
--------------------------------------------------------
Managing Director
Acting on behalf of the several Underwriters, including themselves, named in
Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------------------------------------------- ---------
Xxxxxxxxx & Xxxxx LLC............................
Alex. Xxxxx & Sons Incorporated..................
-------
Total.................................. 6,500,000
=======
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SCHEDULE II
SELLING STOCKHOLDERS
PART A
NUMBER OF
UNDERWRITTEN SHARES
NAME OF UNDERWRITTEN SELLING STOCKHOLDER TO BE SOLD
------------------------------------------------- -------------------
Xxxxxxxxxxx X. Xxxxxxxx.......................... 868,000
Xxxx X. Xxxxx.................................... 132,000
---------
1,000,000
=========
PART B
NUMBER OF
SHARES
NAME OF ADDITIONAL SELLING STOCKHOLDER TO BE SOLD
------------------------------------------------- -------------------
Xxxx X. Xxxxx.................................... 185,340
===============
24
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF XXXXXXXXX XXXXXXX XXXXXX XXXXXXXXXX
XXXXXXXX & XXXXXXXXX, LLP
COUNSEL FOR THE COMPANY AND THE SELLING STOCKHOLDERS
(i) Each of the Company and its subsidiaries have been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in each state of the United States of America and in each
foreign country in which its ownership or leasing of property requires such
qualification (except where the failure to be so qualified would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and its subsidiaries, and has full
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; all the issued and
outstanding capital stock of the Company and each of the subsidiaries of the
Company has been duly authorized and validly issued and is fully paid and
nonassessable, and is owned by the Company free and clear of all liens,
encumbrances and security interests, and to the best of such counsel's
knowledge, no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in such subsidiaries are outstanding; no
preemptive right, or right of refusal in favor, exists with respect to the
Stock, or the issue and sale thereof, or with respect to the exercise of options
or other rights to purchase securities of the Company after the sale of the
Stock, pursuant to the Certificate of Incorporation or Bylaws of the Company and
there is no contractual preemptive right that has not been waived, right of
first refusal or right of co-sale which exists with respect to the Stock being
sold by the Selling Stockholders or the issue and sale of the Stock; there are
no subsidiaries of the Company;
(ii) the authorized capital stock of the Company consists of
shares of Stock, of which there are outstanding shares, and
shares of Common Stock, $ par value, of which there are
outstanding shares (including the Underwritten Stock plus the number
of shares of Option Stock issued on the date hereof); proper corporate
proceedings have been taken validly to authorize such authorized capital stock;
all of the outstanding shares of such capital stock (including the Underwritten
Stock and the shares of Option Stock issued, if any) have been duly and validly
issued and are fully paid and nonassessable; any Option Stock purchased after
the Closing Date, when issued and delivered to and paid for by the Underwriters
as provided in the Underwriting Agreement, will have been duly and validly
issued and be fully paid and nonassessable; and no preemptive rights of, or
rights of refusal in favor of, stockholders exist with respect to the Stock, or
the issue and sale thereof, pursuant to the Certificate of Incorporation or
Bylaws of the Company and, to the knowledge of such counsel, there are no
contractual preemptive rights that have not been waived, rights of first refusal
or rights of co-sale which exist with respect to the issue and sale of the Stock
or with respect to the exercise of options or other rights to purchase
securities of the Company after the sale of the Stock;
(iii) the Registration Statement has become effective under the Securities
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with the rules
and regulations of the Commission thereunder;
(v) such counsel have no reason to believe that the Registration Statement
(except as to the financial statements and schedules and other financial and
statistical data contained or incorporated by reference therein, as to which
such counsel need not express any opinion or belief) at the Effective Date
contained any untrue statement of a material fact or omitted to state a material
fact required to
25
be stated therein or necessary to make the statements therein not misleading, or
that the Prospectus (except as to the financial statements and schedules and
other financial and statistical data contained or incorporated by reference
therein, as to which such counsel need not express any opinion or belief) as of
its date or at the Closing Date (or any later date on which Option Stock is
purchased), contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(vi) the information required to be set forth in the Registration Statement
in answer to Items 9, 10 (insofar as it relates to such counsel) and 11(c) of
Form S-1 is to the best of such counsel's knowledge accurately and adequately
set forth therein in all material respects or no response is required with
respect to such Items, the description of the Company's stock option plans and
the options granted and which may be granted thereunder in the Prospectus
accurately and fairly presents the information required to be shown with respect
to said plans and options to the extent required by the Securities Act and the
rules and regulations of the Commission thereunder;
(vii) such counsel has reviewed all contracts, leases or other documents
referred to in the Registration Statement and the Prospectus and such contracts,
leases or other documents are fairly summarized or disclosed therein, and filed
as exhibits thereto as required, and all such contracts to which the Company is
a party have been duly authorized, executed and delivered by the Company,
constitute valid and binding agreements of the Company and, subject to
applicable bankruptcy laws, are enforceable against the Company in accordance
with the terms thereof;
(viii) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(ix) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(x) the issue and sale by the Company of the shares of Stock sold by the
Company and the Selling Stockholders as contemplated by the Underwriting
Agreement will not conflict with, or result in a breach of, the Certificate of
Incorporation or Bylaws of the Company or any of its subsidiaries or any
agreement or instrument known to such counsel to which the Company or any of its
subsidiaries is a party or any applicable law or regulation, or so far as is
known to such counsel, any order, writ, injunction or decree, of any
jurisdiction, court or governmental instrumentality;
(xi) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have 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;
(xii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, 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 Stock by
the Underwriters;
(xiii) the Stock issued and sold by the Company and the Selling
Stockholders will been duly authorized for listing by the Nasdaq National Stock
Market;
(xiv) the Company is not, and upon receipt and pending application of the
net proceeds from the sale of the Stock to be sold by the Company in the manner
described in the Prospectus will not be, an "investment company" or an
"affiliated person" of or "promoter" or "principal underwriter" for an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended;
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(xv) The Company and its subsidiaries have complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida), relating to
issuers doing business with the Government of Cuba or with any person or
affiliate located in Cuba;
(xvi) Neither the Company nor any other person associated with or acting on
behalf of the Company including, without limitation, any director, officer,
agent, or employee of the Company has, directly or indirectly, while acting on
behalf of the Company, (i) used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political activity;
(ii) made any unlawful contribution to any candidate for foreign or domestic
office, or to any foreign or domestic government officials or employees or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof or to foreign or domestic political parties or campaigns from corporate
funds, or failed to disclose fully any contribution in violation of law; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or (iv) made any other unlawful payment;
(xvii) Each Selling Stockholder has full power and authority to enter into
this Agreement and the Agreement and Power of Attorney. All authorizations and
consents necessary for the execution and delivery by such Selling Stockholder of
the Agreement and Power of Attorney, and for the execution of this Agreement on
behalf of such Selling Stockholder, have been given. Each of the Agreement and
Power of Attorney and this Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder and constitutes a valid
and binding agreement of such Selling Stockholder and is enforceable against
such Selling Stockholder in accordance with the terms thereof and hereof;
(xviii) Each Selling Stockholder now has, and at the time of delivery
thereof hereunder will have; (1) good and marketable title to the Shares to be
sold by such Selling Stockholder hereunder, free and clear of all liens,
encumbrances and claims whatsoever (other than pursuant to the Agreement and
Power of Attorney); and (2) full legal right and power to sell, transfer and
deliver such Shares to the Underwriters hereunder and to make the
representations, warranties and agreements made by such Selling Stockholder
herein;
(xix) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by such Selling Stockholder of the transactions on its part
contemplated herein and in the Agreement and Power of Attorney, except such as
have been obtained under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the by-laws and rules of the
NASD in connection with the purchase and distribution by the Underwriters of the
Shares to be sold by such Selling Stockholder; and
(xx) To the best of our knowledge, none of the Selling Stockholders,
directly or indirectly through one or more intermediaries, controls, is
controlled by, is under common control with, or has any other association
(within the meaning of Article I, Section 1(m) of the bylaws of the NASD) or
affiliation with, any member firm of the NASD.
Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States or of the State of Delaware, upon
opinions of local counsel satisfactory in form and scope to counsel for the
Underwriters. Copies of any opinions so relied upon shall be delivered to the
Representatives and to counsel for the Underwriters and the foregoing opinion
shall also state that counsel knows of no reason the Underwriters are not
entitled to rely upon the opinions of such local counsel.
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ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF XXXXXXX, BERLIN
REGULATORY COUNSEL FOR THE COMPANY
Such counsel are familiar with the business of the Company and have read
the Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to
regulatory issues and:
(i) with respect to matters relating to the regulation of long distance
telecommunications carriers administered by United States federal or state
authorities, including the FCC and State Public Utilities Commissions
(collectively "Regulatory Matters"), such counsel (A) has no reason to believe
that (except for financial statements and supporting notes and schedules and
other financial and statistical data contained therein, as to which such counsel
need not comment) the Registration Statement and the prospectus included therein
at the time the Registration Statement became effective 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 (in
the case of the prospectus, in light of the circumstances under which they were
made) and (B) has no reason to believe that (except for financial statements and
supporting notes and schedules and other financial statistical data contained
therein, as to which such counsel need not comment) the Prospectus contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(ii) the statements relating to Regulatory Matters in the Prospectus under
the captions "Risk Factors -- Potential Adverse Affects of Government Regulation
and -- Significant Competition," "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Summary" and
"Business -- Industry Background -- Network, and -- Government Regulation",
insofar as such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly summarize the matters referred to
therein;
(iii) Schedule 1 hereto accurately and completely lists all of the
licenses, permits, and authorizations issued by the FCC (collectively, the
"Licenses") necessary for the Company to carry on its business as described in
the Registration Statement and Prospectus. Schedule 2 hereto accurately and
completely lists all pending applications filed by the Company with the FCC;
(iv) to the best of our knowledge, the Licenses are validly issued.
"Validly issued" as used herein means that the Licenses have been issued through
the means of regular FCC procedures applied in conformity with the
Communications Act and prior FCC practice and there is no legal basis under the
Communications Act to conclude that the Company cannot hold one or more of the
Licenses as a matter of law. To the best of our knowledge, (i) the Licenses are
in full force and effect without conditions that would have a material adverse
effect on the Company's operations except for such conditions that would have a
material adverse effect on the Company's operations except for such conditions
imposed generally by the FCC upon such licenses or conditions stated on the face
of the Licenses, (ii) all express conditions in the Licenses have been satisfied
where the failure to satisfy such conditions would have a material adverse
effect on the Company's operations as described in the Registration Statement
and the Prospectus, and (iii) the Company has not received any notification that
any revocation or limitation of the Licenses is threatened or pending that would
have a material adverse effect on the Company's operations as described in the
Registration Statement and Prospectus;
(v) except as specified in Schedule 3 hereto, the Company has filed with
the FCC all applications, statements, reports, information, forms, or any other
document required under the Communications Act, except where the failure to so
file would not have a material adverse effect on the Company's ability to
provide its services as described in the Registration Statement and the
Prospectus and, to the best of our knowledge, such filings or submissions were
in compliance with applicable laws or regulations when filed or submitted and no
deficiencies have been asserted by the FCC with respect to such filings or
submissions except where the deficiency is of such a nature that failure to cure
any such
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deficiency would not have a material adverse effect on the Company's ability to
provide its services as described in the Registration Statement and Prospectus,
and, the information contained in such filings or submissions was, in all
material respects, accurate, complete and up-to-date at the time the filings or
submissions were made;
(vi) the Company has filed with the applicable foreign and domestic
regulatory authorities each and every statement, report, information or form
required by any applicable law, regulation or order, except where the failure to
so file would not have a material adverse effect on the Company or its business,
properties, business prospects, condition (financial or otherwise) or results of
operations, and all such filings or submissions were in compliance with
applicable laws when filed, and no deficiencies have been asserted by any
regulatory commission, agency or authority with respect to such filings or
submissions, except where the failure to so file or cure any such deficiency
would not have a material adverse effect on the Company or its business,
properties, business prospects, condition (financial or otherwise) or results of
operations. The Company has maintained in full force and effect all licenses and
permits necessary or proper for the conduct of its business, except where the
failure to do so would not have a material adverse effect on the Company or its
business, properties, business prospects, condition (financial or otherwise) or
results of operations, and the Company has not received any notification that
any revocation or limitation thereof is threatened or pending that would have
such an effect. Except as disclosed in the Registration Statement and the
Prospectus, there is not pending any change under any law, regulation, license
or permit that would have a material adverse effect on the Company or its
business, properties, business prospects, condition (financial or otherwise) or
results of operations. The Company has not received any notice of, or, to our
knowledge, been threatened with or is under investigation with respect to, a
violation or a possible violation of any provision of any law, regulation or
order, except such violation or violations as would not have a material adverse
effect on the Company or its business, properties, business prospects, condition
(financial or otherwise) or results of operations;
(viii) with respect to state certificates of public convenience and
necessity of other operating authorizations issued by state and public utility
commissions or similar state governmental agencies (collectively "PUCs" and
individually a "PUC") (such PUC certificates and authorizations are hereinafter
referred to collectively as the "State Authorizations") held by the Company,
such State Authorizations are in full force and effect and are unimpaired by any
act or omission of the Company or any of its employees or agents, in each case
except where such authorization is not required or where the failure to so hold
any such State Authorization would not have a material adverse effect on the
Company or its business, properties, business prospects, condition (financial or
otherwise) or results of operations. The State Authorizations are all of the
licenses, authorizations, consents and approvals necessary from the PUCs in
order to allow the Company to own its assets and carry on its business as
currently being conducted, except where the failure to so hold any State
Authorizations would not have a material adverse effect on the Company or its
business, properties, business prospects, condition (financial or otherwise) or
results of operations. To the best of our knowledge, there are no proceedings of
any kind, including but not limited to rulemaking proceedings of general
applicability in the industry or industries in which the Company operates, by or
before any PUC, now pending or threatened, which, if adversely determined, would
have a material adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of operations.
Neither the execution and delivery of this Agreement and the Pricing Agreement
or the consummation of the transactions contemplated herein and therein and in
the Registration Statement will conflict with or result in a breach of, or
require any authorization, approval or consent under the Communications Act of
1934, as amended, or the rules of the Federal Communications Commission (the
"FCC") or the communications statutes of any state or the policies or rules of
any PUC;
(ix) to the best of our knowledge, there is no proceeding, formal or
informal complaint or investigation before the FCC against the Company or any of
the Licenses identified in Schedule 1 or based on any violation or alleged
violation by the Company of the Communications Act except for proceedings
affecting the industry generally to which the Company is not a specific party;
and
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With respect to subparagraph (i) above, Xxxxxxx, Berlin may state that its
opinion and belief is based upon its participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified. In rendering its opinion, Xxxxxxx,
Berlin may rely, to the extent it deems proper, and without limitation, on
public files, documents, certificates on file with or issued by public
officials, and certificates of responsible officers of the Company.
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