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Exhibit 1.01
4,500,000 Shares of Common Stock
(675,000 Additional Shares)
APPLIEDTHEORY CORPORATION
UNDERWRITING AGREEMENT
April 29, 1999
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
▇▇▇▇▇▇ BROTHERS INC.
WIT CAPITAL CORPORATION
As Representatives (the "Representatives") of the
several Underwriters named in
Schedule I attached hereto
c/o BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Ladies and Gentlemen:
AppliedTheory Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Company"), proposes, subject to the terms
and conditions stated herein, to issue and sell to the several underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of 4,500,000 shares
(the "Firm Shares") of its common stock, par value $0.01 per share (the "Common
Stock") and, for the sole purpose of covering over-allotments in connection with
the sale of the Firm Shares, at the option of the Underwriters, up to an
additional 675,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares." The Shares are more fully described in the Registration
Statement referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the Underwriters that:
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(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-72133), for the
registration of the Shares under the Securities Act of 1933, as amended (the
"Act"). Such registration statement, including the prospectus, financial
statements and schedules, exhibits and all other documents filed as a part
thereof, or incorporated therein by reference, as amended, at the time of
effectiveness of the registration statement, including any information deemed to
be a part thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A of the Rules and Regulations of the Commission under the Act (the
"Regulations"), is herein called the "Registration Statement" and the
prospectus, in the form first filed with the Commission pursuant to Rule 424(b)
of the Regulations or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, is herein called the
"Prospectus." The term "preliminary prospectus" as used herein means a
preliminary prospectus as described in Rule 430 of the Regulations.
(b) At the time the Registration Statement is first filed with the
Commission, at the time any amendment to the Registration Statement is filed
with the Commission, at the time of the effectiveness of the Registration
Statement or the effectiveness of any post-effective amendment to the
Registration Statement, at the time the Prospectus is first filed with the
Commission pursuant to Rule 424(b) of the Regulations, at the time any
supplement to or amendment of the Prospectus is filed with the Commission and at
the Closing Date and the Additional Closing Date, if any (as hereinafter
defined), the Registration Statement and the Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects
with the applicable provisions of the Act and the Regulations and did not, do
not and will not contain an untrue statement of a material fact and did not, do
not and will not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of the Prospectus,
in light of the circumstances under which they were made, not misleading. When
any related preliminary prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied when so filed in all material respects with the applicable provisions
of the Act and the Regulations and did not contain an 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, in light of the
circumstances under which they were made, not misleading. No representation and
warranty is made in this subsection (b), however, with respect to any
information contained in or omitted from the Registration Statement or the
Prospectus or any related preliminary prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information furnished
in
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writing to the Company by or on behalf of any Underwriter through the
Representatives expressly for use in connection with the preparation thereof.
(c) Neither the Commission nor the "Blue Sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order") suspending
the effectiveness of the Registration Statement, preventing or suspending the
use of any preliminary prospectus, the Prospectus, the Registration Statement or
any amendment or supplement thereto, refusing to permit the effectiveness of the
Registration Statement, or suspending the registration or qualification of the
Firm Shares or the Additional Shares, nor, to the knowledge of the Company, has
any of such authorities instituted or threatened to institute any proceedings
with respect to a Stop Order.
(d) To the knowledge of the Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have
certified the financial statements and supporting schedules included in the
Registration Statement and whose reports are filed with the Commission as part
of the Registration Statement, are independent public accountants with regard to
the Company as required by the Act and the Regulations.
(e) Subsequent to the respective dates as of which information is
given in the Registration Statement and in the Prospectus, except as set forth
in the Registration Statement and in the Prospectus, there has been no material
adverse change in the business, prospects, properties (whether or not insured),
operations, condition (financial or other) or results of operations of the
Company, whether or not arising in the ordinary course of business (a "Material
Adverse Change") nor, except as set forth in the Registration Statement and as
shall be set forth in the Prospectus, does the Company have knowledge of the
existence of any fact, development or event that could reasonably be expected to
result in a Material Adverse Change or in a material adverse effect on the
ability of the Company to consummate the transactions contemplated hereby (any
such result, a "Material Adverse Effect"). Since the date of the latest balance
sheet presented in the Registration Statement and the Prospectus, except as
expressly disclosed in the Registration Statement and the Prospectus, the
Company has not (i) incurred or undertaken any liabilities or obligations,
direct or contingent, not in the ordinary course of business that are material
to the Company, (ii) entered into any material transaction not in the ordinary
course of business and consistent with past practice, (iii) entered into any
agreement or made any commitment binding on the Company to acquire any company,
business or assets that is material to the Company taken as a whole or (iv)
declared or paid any dividend or made any distribution on any shares of its
capital stock or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its capital stock (it being
understood that the Company intends to repurchase its outstanding preferred
stock as disclosed in the Registration Statement and the Prospectus).
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(f) The Company has the requisite corporate power and the authority
to enter into this Agreement, perform each of its obligations hereunder and
issue, sell and deliver the Shares to be sold by it hereunder. This Agreement
and the transactions contemplated herein have been duly and validly authorized
by the Company, and this Agreement has been duly and validly executed and
delivered by the Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) as the
enforceability hereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors rights generally and by general equitable principles
and (ii) to the extent that rights to indemnity and contribution hereunder may
be limited by federal or state securities laws or the public policy underlying
such laws.
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby (including the issuance, sale and delivery of the Shares by the Company)
do not and will not (i) conflict with or result in a breach of any of the terms
and provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, give rise to any
right to accelerate the maturity or require the prepayment of any obligation of
the Company or require any consent (other than any consent that has been
obtained), or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, pursuant to the terms of
any agreement, instrument, franchise, license or permit to which the Company is
a party or by which its properties or assets may be bound, or (ii) violate or
conflict with any provision of the certificate of incorporation or by-laws of
the Company or any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its properties or assets.
(h) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its properties or assets is required for the valid execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Shares to
be issued, sold and delivered by the Company hereunder, except (i) the
registration under the Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of the Shares, (ii) such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits as may be required under state securities or "Blue Sky" laws in
connection with the purchase and distribution of the Shares by the Underwriters,
(iii) the approval of the Shares for quotation on the Nasdaq National Market,
and (iv) the approval of the Corporate Financing Department of NASD Regulation,
Inc.
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(i) All of the outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and non-assessable, were issued
in compliance with all applicable United States federal and state securities
laws and were not issued in violation of, and upon completion of the offering
contemplated hereby such shares will not be subject to, any preemptive or
similar rights. The Shares have been duly authorized and, when issued, delivered
and sold in accordance with this Agreement, will be validly issued and
outstanding, fully paid and non-assessable, and will not have been issued in
violation of or be subject to any preemptive or similar rights, and will be free
and clear of any pledges, liens, security interests, charges, claims or
encumbrances of any kind (other than those created by the Underwriters). The
Company has a duly authorized and outstanding capitalization as of December 31,
1998 as set forth under the caption "Capitalization" in the Registration
Statement and as shall be set forth in the Prospectus. The Common Stock, the
Firm Shares and the Additional Shares conform in all material respects to the
descriptions thereof contained in the Registration Statement and shall be as set
forth in the Prospectus. There is no commitment, plan or arrangement to issue,
and no outstanding option, warrant, security or other right or instrument issued
by the Company or to which the Company is a party which requires, permits or
provides for the issuance, subscription or purchase of, any share of capital
stock of the Company or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for capital stock of the
Company, except as described in the Registration Statement. Except as described
in the Registration Statement, none of the Company's certificate of
incorporation, by-laws or any agreement to which the Company is a party imposes
any restrictions on the voting or transfer of any shares of capital stock of the
Company.
(j) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company has no subsidiaries. The Company is duly qualified
and in good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which could not,
individually or in the aggregate, have a Material Adverse Effect, and the
Company has not received any claim or notice from any official in any
jurisdiction that it is required to be qualified or licensed to do business in
any jurisdiction in which it is not so qualified or licensed. Except as would
not, individually or in the aggregate, have a Material Adverse Effect, the
Company has all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses and
permits of and from all public, regulatory or governmental agencies and bodies,
to own, lease and operate its properties and conduct its business as now being
conducted and as described in the Registration Statement and as shall be
described in the Prospectus, and the Company has not received any notice of any
proceedings relating to the revocation or modification of any thereof, nor is
the Company aware of any basis therefor, and no such consent, approval,
authorization, order, registration, qualification,
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franchise license or permit contains a materially burdensome restriction that is
not accurately disclosed in the Registration Statement and the Prospectus.
(k) Except as described in the Registration Statement and as shall
be described in the Prospectus, there is no action, suit, investigation or
proceeding, governmental or otherwise, to which the Company is a party or to
which any property of the Company is subject or which is pending or, to the best
knowledge of the Company, threatened against the Company which (i) if adversely
decided or concluded, could reasonably be expected to have a Material Adverse
Effect, (ii) is required to be disclosed in the Registration Statement or (iii)
seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge
the issuance of, the Shares or the execution and delivery of this Agreement or
any of the other transactions contemplated hereby, or questions the legality or
validity of any such transactions or that seeks to recover damages or obtain
other relief in connection with any of such transactions.
(l) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares or otherwise.
(m) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and as will be set
forth in the Prospectus present fairly the financial condition, results of
operations, stockholders' equity and cash flows and other information purported
to be shown therein of the Company at the dates and for the periods indicated
and present fairly the information required to be stated therein. Such financial
statements and supporting schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, and are in accordance with the books and records of the
Company, respectively, in all material respects. No other financial statements
or supporting schedules are required by Form S-1 to be included in the
Registration Statement or the Prospectus. The financial data set forth in the
Registration Statement and as will be set forth in the Prospectus under the
captions "Prospectus Summary -- Summary Financial Information",
"Capitalization", "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" fairly present, on
the basis stated in the Registration Statement and as will be stated in the
Prospectus, the information set forth therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and as will be set forth in the Prospectus. The "as
adjusted" financial information included in the Registration Statement and as
will be included in the Prospectus that gives effect to the issuance of the
Shares, the application of the net proceeds therefrom and the other transactions
and events specified therein presents fairly the information contained therein,
has been properly compiled on the basis of the assumptions set forth with
respect thereto, and the assumptions used in the preparation
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thereof are reasonable and the adjustments to the historical figures have been
properly applied to such figures. All other financial information and
statistical data set forth in the Registration Statement and as will be set
forth in the Prospectus are, in all material respects, accurately presented and,
in the case of such financial information, has been prepared on an accounting
basis consistent with the financial statements included in the Registration
Statement and as will be included in the Prospectus.
(n) The Company has good and marketable title to all the properties
and assets reflected as owned in the financial statements (or elsewhere) in the
Registration Statement and as will be set forth in the Prospectus, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in the financial statements or elsewhere in the Registration
Statement or the Prospectus, or (ii) those which are not material in amount and
do not adversely affect the use made and proposed to be made of such property by
the Company. The Company holds its leased properties under valid, subsisting and
enforceable leases, with such exceptions as are not, individually or in the
aggregate, material and do not, individually or in the aggregate, interfere with
the use made or proposed to be made of such properties by the Company. Except as
disclosed in the Registration Statement and as will be disclosed in the
Prospectus, the Company owns or leases all such properties as are necessary to
conduct its operations as now conducted.
(o) The Company has (i) filed all federal, state and local and
foreign tax returns which are required to be filed through the date hereof, and
all such tax returns are true, complete and accurate in all material respects,
or (ii) received valid extensions thereof and have paid all taxes shown on such
returns and all assessments received by it, except (a) for such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided, or (b) in the case of state and local and foreign tax returns, the
failure to file, extend the due date of or pay the same, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect; the Company has no
knowledge of any tax deficiency which has been or might be asserted against the
Company which could materially and adversely affect the business or properties
of the Company; to the Company's best knowledge, all tax liabilities are
adequately provided for on the books of the Company.
(p) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" or an entity "controlled by" an "investment company" within the meaning
of Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
(q) The Company owns or possesses adequate licenses or other rights
to use all patents, trademarks, service marks, trade names, copyrights,
technology and know-how necessary to conduct its business as now conducted by
the Company as
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described in the Registration Statement and as will be described in the
Prospectus, except for those patents, trademarks, service marks, trade names,
copyrights, technology and know-how the failure to own or have the right to use
which would not have a Material Adverse Effect, and, except as disclosed in the
Registration Statement and as will be disclosed in the Prospectus, the Company
has not received any notice of infringement of or conflict with (or knows of
such infringement of or conflict with) rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-how; and to
the best knowledge of the Company, the Company does not, in the conduct of its
business as now conducted, infringe or conflict with any such rights of any
third party, except as described in the Registration Statement and will be
disclosed in the Prospectus.
(r) There are no contracts, indentures, mortgages, loan agreements,
notes, leases or other agreements or instruments or other documents
(collectively, the "Documents") required to be described or referred to in, or
filed with, the Registration Statement and the Prospectus, other than those
described or referred to therein or filed as exhibits thereto; all such
descriptions are accurate in all material respects and present fairly the
information required to be described therein.
(s) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business), or guarantees of
indebtedness by the Company to or for the benefit of any of the executive
officers or directors of the Company or any of the members of the families of
any of them, and there are no business relationships or related-party
transactions involving the Company or any other person required to be described
in the Registration Statement and the Prospectus, except in all cases as
disclosed in the Registration Statement and as will be disclosed in the
Prospectus; all such descriptions are accurate in all material respects and
present fairly the information required to be described in the Registration
Statement and as will be described in the Prospectus.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) The Company is not in violation or breach of, or in default (nor
has any event occurred which with notice, or lapse of time, or both, would
constitute a default) under, any contract, agreement, indenture, loan or other
agreement, instrument, mortgage, note, permit, lease, license, arrangement or
understanding to which the
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Company is a party or by which the Company or any of its properties may be bound
where such default, either individually or together with all such other
defaults, could reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the ability of the Company to perform its obligations
hereunder. Each such contract, agreement, indenture, loan or other agreement,
instrument, mortgage, note, permit, lease, license, arrangement and
understanding to which the Company is a party or by which the Company or any of
its properties may be bound is in full force and effect and is the legal, valid,
and binding obligation of the Company, and, to the knowledge of the Company, the
other parties thereto and is enforceable against the Company, as the case may
be, and, to the knowledge of the Company, against the other parties thereto in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors rights generally and
by general equity principles. The Company enjoys peaceful and undisturbed
possession under all material leases and material licenses under which the
Company is operating. The Company is not in violation or breach of, or in
default with respect to, any term of its certificate of incorporation or bylaws.
The Company is not in violation of, or in default with respect to, any law,
rule, regulation, order, judgment or decree, except such as are described in the
Registration Statement and as will be described in the Prospectus or such as,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(v) The Company has obtained from each of the Company's executive
officers, directors and security holders set forth on Schedule II hereto a
written agreement, in a form or forms approved by the Representatives and their
counsel (a "Lock-Up Agreement"), that for a period of 180 days from the date of
the Prospectus each such holder will not, without the prior written consent of
Bear, ▇▇▇▇▇▇▇ & Co. Inc. directly or indirectly, (i) offer, pledge, sell, agree
to sell, sell any option or contract to purchase, grant any option, right or
warrant for the sale of, lend or otherwise dispose of or establish a "put
equivalent position" (within the meaning of Rule 16a-1(h) under the Exchange
Act), with respect to any shares of capital stock, or any security convertible
into, exercisable for or exchangeable for capital stock of the Company, now or
hereafter acquired by such holder, or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of capital stock of the Company or any such other
security, whether any such transaction is to be settled by delivery of capital
stock of the Company or such other securities, in cash or otherwise, except
pursuant to the option agreements as described in the Prospectus under the
caption "Certain Transactions--Option Agreements" and, in the case of
▇▇▇▇▇▇▇▇.▇▇▇, Inc., the sale of preferred stock to the Company as contemplated
in the Prospectus under the caption "Certain Transactions--Borrowings with
▇▇▇▇▇▇▇▇.▇▇▇ and Redeemable Preferred Stock." Notwithstanding anything to the
contrary in the foregoing, no consent shall be required for any transfer of
Common Stock by such holder (x) in the case of individuals, to a member of said
holders' immediate family and (y) in the case of other holders, to any person at
the time directly or indirectly controlling,
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controlled by or under direct or indirect common control with such holder,
provided, however, that, in the case of each of (x) and (y), such transferee
shall agree in a letter agreement addressed to Bear, ▇▇▇▇▇▇▇ & Co. Inc., prior
to or contemporaneously with such transfer, to be bound by the provisions of the
lock-up agreement to the same extent as such holder and shall promptly deliver
to Bear, ▇▇▇▇▇▇▇ & Co. Inc. a copy of such lockup agreement.
(w) The Common Stock has been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance.
(x) Except as described in the Registration Statement and as will be
described in the Prospectus, (i) no labor dispute with the employees of the
Company exists or, to the best knowledge of the Company, is threatened and (ii)
the Company is not aware of any labor disturbance by the employees of any of its
significant manufacturers, suppliers, customers or contractors, that could
reasonably be expected in the case of both (i) and (ii) to have a Material
Adverse Effect.
(y) Except as described in the Registration Statement and as will be
described in the Prospectus, (i) the Company is not a party to or bound by any
stockholders' agreements or voting trusts with respect to any securities of the
Company and (ii) there are no contracts, agreements or understandings between
the Company and any person or entity granting such person or entity the right to
require the Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such person or entity
or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement.
(z) Except as disclosed in the Registration Statement and as will be
disclosed in the Prospectus or as would not otherwise, individually or in the
aggregate, have a Material Adverse Effect (i) the Company is not in violation of
any federal, state or local law or regulation relating to occupational safety
and health or to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including without limitation, laws,
codes and regulations relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous materials or substances, solid or hazardous wastes, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of Materials of
Environment Concern, underground or above ground storage tanks and related
piping, and emissions, discharges, releases or threatened releases therefrom and
damages to natural resources (collectively, "Environmental Laws"), which
violation includes, but is not limited to, noncompliance with any permits or
other governmental authorizations required for the operation of the business of
the Company under applicable Environmental Laws, or noncompliance with the terms
and
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conditions thereof, nor has the Company received any written communication,
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that the Company is in violation of any Environmental Law; (ii)
there is no claim, action or cause of action filed with a court or governmental
authority, no governmental investigation with respect to which the Company has
received written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, clean-up costs, governmental
responses costs, natural resources damages, property damages, personal injuries,
attorneys' fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Material of Environmental
Concern at any location owned, leased, controlled or operated by the Company,
now or in the past (collectively, "Environmental Claims"), pending or, to the
best knowledge of the Company, threatened against the Company or any person or
entity whose liability for any Environmental Claim the Company has retained or
assumed either contractually or by operation of law; (iii) to the knowledge of
the Company, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that reasonably could result in a violation of any Environmental Law or
form the basis of a potential Environmental Claim against the Company or against
any person or entity whose liability for any Environmental Claim the Company has
retained or assumed either contractually or by operation of law; (iv) the
Company has received all permits, licenses or other approvals required under
applicable federal, state and local occupational safety and health and
Environmental Laws and regulations to conduct their respective businesses; and
(v) the Company is in compliance with all terms and conditions of any such
permits, licenses or approvals, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
which could not, individually or together with all such other violations or
failures, have a Material Adverse Effect.
(aa) Except as described in the Registration Statement and as will
be described in the Prospectus, the Company has not incurred any liability for
the finder's fees or similar payments in connection with the transactions
contemplated hereby.
(bb) The Company and any "employee benefit plan" (as defined under
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, "ERISA"))
established or maintained by the Company or its "ERISA Affiliates" (as defined
below) are in compliance with ERISA to the extent it could not be expected to
have a Material Adverse Effect. "ERISA Affiliate" means, with respect to the
Company, any member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (the "Code") of which the
Company is a member. No "reportable event" (as defined under ERISA) has occurred
or is reasonably expected to occur with respect to any
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"employee benefit plan" established or maintained by the Company or any of its
ERISA Affiliates. No "employee benefit plan" established or maintained by the
Company or any of its ERISA Affiliates, if such "employee benefit plan" were
terminated, would have any "amount of unfunded benefit liabilities" (as defined
under ERISA). Neither the Company nor any of its ERISA Affiliates has incurred
or reasonably expects to incur any material liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee benefit
plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee
benefit plan" established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(cc) The Company has in effect, with insurers of recognized
financial responsibility, insurance with respect to its business and properties
against loss or damage of the kind customarily insured against by corporations
engaged in the same or similar businesses and similarly situated, of such type
and in such amounts as are customarily carried under similar circumstances by
such other corporations.
(dd) The disclosures in the Registration Statement and the
Prospectus related to Year 2000 compliance comply in all material respects with
the requirements of SEC Release 33-7558.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) The Company agrees to sell to the respective Underwriters and,
on the basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, each of the
Underwriters agrees, severally and not jointly, to purchase from the Company the
number of Firm Shares set forth opposite its name in Schedule I hereto at a
price per share of [________] with respect to an aggregate of 4,500,000 shares,
plus any additional number of Shares which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 9 hereof at a price per share
of [_________].
(b) Delivery of certificates for the Firm Shares and payment of the
purchase price shall be made at the office of Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place or places as shall be
agreed upon by the Representatives and the Company, at 10:00 A.M. New York City
time, on the third or fourth business day (as permitted under Rule 15c6-1 under
the Exchange Act) (unless postponed in accordance with the provisions of Section
9 hereof) following the date of the effectiveness of the Registration Statement
(or, if the Company elects to rely on Rule 430A of the Regulations, the third or
fourth day (as permitted under Rule 15c6-1 under the Exchange Act) after the
determination of the initial public offering price of the Shares), or such other
time not later than ten business days after such date as shall be
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agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called the "Closing Date"). Payment shall be
made to the Company by wire transfer, against delivery to the Representatives
for the respective accounts of the Underwriters of certificates for the Firm
Shares to be purchased by them. Certificates for the Firm Shares shall be
registered in such name or names and in such authorized denominations as the
Representatives may request in writing at least two full business days prior to
the Closing Date; provided that, if so specified by the Representatives, the
Firm Shares may be represented by a global certificate registered in the name of
Cede & Co., as nominee of The Depositary Trust Company ("Cede"). The Company
will permit the Representatives to examine and package such certificates for
delivery at least one full business day prior to the Closing Date at the office
of Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(c) In addition, the Company hereby grants to the several
Underwriters the option (the "Option") to purchase all or any portion of the
Additional Shares at the same purchase price per share to be paid by the several
Underwriters to the Company for the Firm Shares as set forth in Section 2(a),
for the sole purpose of covering over-allotments in the sale of Firm Shares by
the several Underwriters. The number of Additional Shares to be purchased from
the Company by each Underwriter (as adjusted by the Representatives to eliminate
fractions) shall be determined by multiplying the number of Additional Shares to
be sold by the Company by a fraction, the numerator of which is the number of
Firm Shares purchased by such Underwriter and the denominator of which is the
aggregate number of Firm Shares purchased by all the Underwriters from the
Company hereunder, plus any additional number of Shares which the Underwriters
may become obligated to purchase pursuant to the provisions of Section 9 hereof.
The Option may be exercised at any time, in whole or in part, on or before the
thirtieth (30) day following the date of this Agreement, by written notice by
the Representatives to the Company in the manner specified in Section 12 hereof.
Such notice shall set forth the aggregate number of Additional Shares as to
which the Option is being exercised and the date and time, as reasonably
determined by the Representatives, when the Additional Shares are to be
delivered (such date and time being herein sometimes referred to as the
"Additional Closing Date"); provided, however, that the Additional Closing Date
shall not be earlier than the Closing Date or earlier than the second full
business day after the date on which the Option shall have been exercised nor
later than the tenth (10) full business day after the date on which the Option
shall have been exercised (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Certificates for the Additional Shares
shall be registered in such name or names and in such authorized denominations
as the Representatives may request in writing at least two full business days
prior to the Additional Closing Date; provided, that, if so specified by the
Representatives, the Additional Shares may be represented by a global
certificate registered in the name of Cede. The Company will permit the
Representatives to examine and package such certificates for delivery at least
one full business day prior to the
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Additional Closing Date at the office of Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Delivery of the certificates for the Additional Shares shall be made
to the Representatives, for the respective accounts of the Underwriters, against
payment by the Representatives, on behalf of the respective Underwriters, for
the Additional Shares by wire transfer at the office of Bear, ▇▇▇▇▇▇▇ & Co.
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other location as may
be mutually acceptable.
(d) The Underwriters shall not be obligated to purchase any Firm
Shares from the Company except upon tender to the Underwriters by the Company of
all of the Firm Shares. The Company shall not be obligated to sell or deliver
Firm Shares except upon tender of payment by the Underwriters for all the Firm
Shares agreed to be purchased by them hereunder.
3. OFFERING. As soon after the Registration Statement becomes effective as
the Representatives deem it advisable to do so, the Underwriters propose to
offer the Shares for sale to the public upon the terms set forth in the
Prospectus.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriters that:
(a) If the Registration Statement or any post-effective amendment
thereto, has not yet been declared effective, the Company will use its best
efforts to cause the Registration Statement and any amendments thereto to become
effective as promptly as possible. If the Registration Statement has become or
becomes effective pursuant to Rule 430A or the filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file with the Commission
the Prospectus (properly completed) pursuant to Rule 424(b) within the
prescribed time period and will provide evidence satisfactory to the
Representatives of such timely filing.
The Company will notify the Representatives immediately (and, if
requested by you, will confirm such notice in writing), (i) when the
Registration Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
mailing or the delivery to the Commission for filing of any amendment of or
supplement to the Registration Statement or the Prospectus, (iv) of the issuance
by the Commission of any Stop Order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, (v) of the receipt
of any comments or other communication from the Commission and (vi) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for
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that purpose. If the Commission shall propose or enter a Stop Order at any time,
the Company will make every reasonable effort to prevent the issuance of any
such Stop Order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b)) that differs from the prospectus
on file at the time of the effectiveness of the Registration Statement before or
after the effective date of the Registration Statement to which the
Representatives shall reasonably object in writing after being timely furnished
in advance a copy thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would, in the
judgment of the Representatives or the Company, include an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at any
time to amend the Registration Statement or supplement the Prospectus to comply
with the Act or the Regulations, the Company will notify the Representatives
promptly and prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to the Representatives) that will
correct such statement or omission and which will effect such compliance and
will use its best efforts to have any such amendment to the Registration
Statement declared effective as soon as possible.
(c) The Company will promptly deliver to the Representatives two
conformed copies of the Registration Statement, including exhibits and all
documents incorporated by reference therein and all amendments thereto, and the
Company will promptly deliver to the Underwriters such number of copies of any
preliminary prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, as the Representatives
may reasonably request. The Company consents to the respective use of any
preliminary prospectus or the Prospectus or any amendment or supplement thereto
by the Representatives, the Underwriters and by all dealers to whom the Shares
may be sold, in connection with the offering or sale of the Shares, as
appropriate, and as to the Prospectus or any amendment or supplement thereto
during such period of time thereafter as the Prospectus is required by law to be
delivered in connection therewith.
(d) The Company will take such action as the Representatives may
reasonably request at or prior to the time of effectiveness of the Registration
Statement, in connection with the qualification or registration of the Shares
for offering and sale under the securities or "Blue Sky" laws relating to the
offering or sale of the Shares of such jurisdictions as the Representatives may
designate and to maintain such qualifications and registrations in effect for so
long as required for the distribution thereof; except that in no
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event shall the Company be obligated in connection therewith to qualify as a
foreign corporation in any jurisdiction where it is not now qualified or to
execute a general consent to service of process in any action other than one
arising out of the offering or sale of the Shares in such jurisdiction.
(e) The Company will make generally available (within the meaning of
Section 11 (a) of the Act) to its security holders and to the Representatives
(in such numbers as the Representatives may reasonably request for distribution
to the Underwriters) as soon as practicable, but not later than 45 days after
the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings statement of
the Company (in form complying with the provisions of Rule 158 of the
Regulations and in such numbers as the Representatives shall reasonably request)
covering a period of at least twelve consecutive months beginning after the
effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus,
the Company will not, without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co.
Inc., issue, sell, offer or agree to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any Common Stock (or any
securities convertible into, exercisable for or exchangeable for Common Stock)
except (i) pursuant to this Agreement, (ii) grants of options pursuant to the
Company's existing stock option plans, (iii) issuances and/or sales of Common
Stock pursuant to the Company's existing stock option plans, employee stock
purchase plan and other options granted by the Company and outstanding on the
date of this Agreement and (iv) issuances of Common Stock in connection with
acquisitions by the Company, provided in the case of this clause (iv), the
recipients of such Common Stock execute a lock-up agreement in the form
contemplated by Section 1(v) of this Agreement, and the Company will obtain and
deliver to the Representatives concurrently with the execution of this Agreement
the lock-up agreements specified in Section 1(v). The foregoing notwithstanding,
prior to the expiration of such 180-day period, the Company may file one or more
registration statements with the Commission on Form S-8 relating to the
Company's existing stock option plans and stock purchase plan as disclosed in
the Registration Statement and as will be disclosed in the Prospectus.
(g) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to the Representatives copies
of all reports or other communications (financial or other) furnished to
stockholders, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any class
of securities of the Company is listed; provided, however, that the Company
shall not be obligated to deliver any report or communication available through
▇▇▇▇▇.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
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(i) The Company will use its best efforts to obtain the quotation of
the Shares on the Nasdaq Stock Market and will take all necessary steps to cause
the Shares to be included on the Nasdaq National Market.
(j) The Company will file with the Commission such information as
may be required pursuant to Rule 463 of the Regulations.
(k) The Company will comply with all provisions of all undertakings
pursuant to Item 512 of Regulation S-K under the Act contained in the
Registration Statement.
(l) After the date of this Agreement and prior to the date on which
the Offering will be completed, the Company will not issue any press release or
other communication directly or indirectly and will not hold any press
conference with respect to the Company, or its business, prospects, properties,
assets, earnings, condition (financial or other), results of operations or this
offering without the prior written consent of the Representatives, which consent
will not be unreasonably withheld or delayed.
5. PAYMENT OF EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
thereof or supplements thereto (including, without limitation, fees,
disbursements and expenses of the Company's accountants and counsel), the
underwriting documents (including this Agreement, the Agreement Among
Underwriters and the Selling Agreement) and all other documents related to the
public offering of the Shares (including those supplied to the Underwriters in
quantities as hereinabove stated), (ii) the issuance, transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon, (iii) the qualification of the Shares under state or foreign securities
or Blue Sky laws, including the costs of printing and mailing a preliminary and
final "Blue Sky Survey" and the reasonable fees and disbursements of counsel to
the Underwriters in relation thereto, (iv) the quotation of the Shares on the
Nasdaq National Market, (v) filing fees of the Commission and the National
Association of Securities Dealers, Inc. ("NASD"), (vi) all costs and expenses
incident to any review by the NASD of the terms of the sale of the Shares
(including, without limitation, reasonable fees and expenses of Underwriters'
counsel in relation thereto), (vii) printing certificates representing the
Shares and (viii) the cost and charges of any transfer agent or registrar.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as
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provided herein, shall be subject, in the Representatives' discretion, to the
condition that all the representations and warranties of the Company herein
contained are true and correct, as of the date hereof and as of the Closing Date
(for purposes of this Section 6 "Closing Date" shall refer to the Closing Date
for the Firm Shares and any Additional Closing Date, if any, for the Additional
Shares), to the absence from any certificates, opinions, written statements or
letters furnished to the Representatives or to Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP ("Underwriters' Counsel") pursuant to this Section 6 of any qualification or
limitation not previously approved by the Representatives, to the performance by
the Company in all material respects of its obligations hereunder, and to the
following additional conditions:
(a) (i) The Registration Statement shall have become effective not
later than 5:30 p.m., New York City time on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by the
Representatives; if the Company shall have elected to rely upon Rule 430A of the
Regulations, the Prospectus shall have been filed with the Commission in a
timely fashion pursuant to Rule 424(b) under the Act within the applicable time
period prescribed in the Regulations for such filing in accordance with Section
4(a) hereof, and, at or prior to the Closing Date no Stop Order shall have been
issued and no proceedings therefor shall, to the knowledge of the Company, have
been initiated or threatened by the Commission or the authorities of any such
jurisdiction; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the Commission's reasonable
satisfaction, and (iii) after the date hereof, no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Underwriters and the Underwriters did not
reasonably object thereto.
(b) At the Closing Date, the Representatives shall have received the
opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company, dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary,
except for those failures to be so qualified or in good standing which
would not, individually or in the aggregate, have a Material Adverse
Effect. The Company has all requisite corporate power and authority to
own, lease and operate its properties and conduct its business as now
being conducted and as described in the Registration Statement and the
Prospectus. To such counsel's knowledge there are no subsidiaries of the
Company.
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(ii) The Company has authorized capital stock as set forth in
the Registration Statement and the Prospectus under the caption
"Capitalization." To the knowledge of such counsel, all of the outstanding
shares of capital stock of the Company are duly authorized and validly
issued, are fully paid and non-assessable, were issued in accordance with
all applicable United States federal and state securities laws and, except
as disclosed in the Prospectus, were not issued and are not now in
violation of, and upon completion of the offering contemplated by this
Agreement will not be subject to, any preemptive or other similar rights.
The Shares have been duly authorized and when issued, delivered and sold
by the Company against payment therefor in accordance with this Agreement
will be duly authorized, validly issued and outstanding, fully paid and
non-assessable and will not be subject to any preemptive rights, or to the
knowledge of such counsel, or any similar rights. Upon delivery of
certificates evidencing the Shares and payment therefor as contemplated
hereby, the Underwriters will acquire good, valid and marketable title to
the Firm Shares (and the Additional Shares, if any) free of any adverse
claim, assuming the Underwriters are acting in good faith and without
notice of any adverse claim. The Common Stock, the Firm Shares and the
Additional Shares conform in all material respects as to legal matters to
the descriptions thereof contained in the Registration Statement and the
Prospectus under the caption "Description of Capital Stock," and such
descriptions fairly present in all material respects the information
required to be presented therein pursuant to Item 202 of Regulation S-K
under the Act with respect to such legal matters. The form of certificate
evidencing the Shares to be delivered hereunder complies in all material
respects with the requirements of the Delaware General Corporation Law.
(iii) Except as disclosed in or described in the Registration
Statement and the Prospectus, to such counsel's knowledge there is no
commitment, plan, or arrangement for the Company to issue and no
outstanding options, warrants, securities, instruments or other rights
requiring, permitting or providing for the issuance of, and no written
commitments entered into by the Company to issue, subscribe or purchase
any shares of capital stock of the Company or any security or other
instrument convertible into exercisable for or exchangeable for capital
stock of the Company. Except as described in the Prospectus and the
Registration Statement and as may be required by applicable securities
laws, to such counsel's knowledge, none of the Company's certificate of
incorporation, by-laws or, any other agreement to which the Company is a
party imposes restrictions on the voting or transfer of shares of capital
stock of the Company.
(iv) Except as described in the Registration Statement, to
such counsel's knowledge (a) the Company is not a party to or bound by any
stockholders' agreements or voting trusts with respect to any securities
of the
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Company and (b) there are no contracts, written agreements or written
understandings between the Company and any person or entity granting such
person or entity the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person or entity or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement in the Registration Statement.
(v) The Company has the requisite corporate power and
authority to enter into this Agreement, perform its obligations hereunder,
and to issue, sell and deliver the Shares to the Underwriters. This
Agreement and the transactions contemplated herein have been duly and
validly authorized, executed and delivered by the Company.
(vi) To such counsel's knowledge, there is no action, suit,
investigation or proceeding, governmental or otherwise, before any court
or before or by any public, regulatory or governmental agency or body
pending or threatened against or involving any of the properties or
business of, the Company which is of a character required to be disclosed
in the Registration Statement and the Prospectus which has not been
disclosed therein as required.
(vii) The execution, delivery, and performance by the Company
of this Agreement and the consummation of the transactions contemplated
hereby (including the issuance, sale and delivery of the Shares by the
Company) and the reorganization of the Company as a Delaware corporation
do not and will not (a) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a
default) under, give rise to any right to accelerate the maturity, or
require the prepayment of any obligation of the Company or require any
consent (other than any consents that have been obtained), or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to any indenture, mortgage,
deed of trust, loan agreement or other agreement filed as an exhibit to
the Registration Statement, (b) violate or conflict with any provision of
the certificate of incorporation or by-laws of the Company, (c) violate or
conflict with any judgment, decree or order of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets, and which is specifically
applicable to the Company and is known to such counsel or (d) violate
applicable provisions of any statute or regulation of the State of New
York or of the United States or the General Corporation Law of the State
of Delaware, and which, in such counsel's experience, are ordinarily
applicable to transactions of the type contemplated hereby.
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(viii) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any public, governmental, or regulatory agency or body having
jurisdiction over the Company or any of its properties or assets is
required for the valid execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby,
except for (a) such as may be required under state securities or Blue Sky
laws or from the Corporate Financing Department of NASD Regulation, Inc.
in connection with the purchase and distribution of the Shares by the
Underwriters (as to all of which such counsel need express no opinion),
(b) such as have been made or obtained under the Act and the Exchange Act,
and (c) the approval of the Shares for quotation on the Nasdaq National
Market, subject to official notice of issuance.
(ix) The Registration Statement and the Prospectus (other than
the financial statements and schedules and other financial or statistical
data included therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Act and the Regulations.
(x) Such counsel has been advised by the Commission that the
Registration Statement has been declared effective under the Act, and, to
the knowledge of such counsel, no Stop Order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof has
been issued, no proceedings therefor have been initiated or threatened by
the Commission or any state securities or "Blue Sky" authority and all
filings required by Rule 424(b) under the Act have been made.
(xi) To such counsel's knowledge, the Company is not in
violation or breach of, or in default (nor, to such counsel's knowledge,
has any event occurred which with notice, or lapse of time, or both, would
constitute a default) under any term of its certificate of incorporation
or bylaws or under any contract or agreement filed as an exhibit to the
Registration Statement, except for any such violations, breaches or
defaults as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(xii) To such counsel's knowledge, the Company has such
consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits as may be required of it under any
statute or regulation of the State of New York or of the United States or
under the General Corporation Law of the State of Delaware to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, except for any such consents,
approvals, authorizations, orders, registrations, qualifications, licenses
and permits the failure of which to have could not reasonably be expected
to have a Material Adverse Effect. To such counsel's knowledge, the
Company is
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in compliance with all terms and conditions of any such consent, approval,
authorization, order, registration, qualification, license or permit,
except for such non-compliance as would not, individually or in the
aggregate, have a Material Adverse Effect.
(xiii) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as
an "investment company" or an entity "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended, and
the rules and regulations promulgated thereunder.
(xiv) Such counsel does not know of any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus that are not filed or described as required.
(xv) The reorganization of the Company as a Delaware
corporation has been validly consummated in accordance with the General
Corporation Law of the State of Delaware and each outstanding share of
common stock and preferred stock of the Company has been converted as
provided in the Agreement of Merger between the constituent parties.
In addition, such opinion shall also contain a statement that such
counsel has participated in conferences with officers and representatives of the
Company, representatives of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and representatives of the
Underwriters and their counsel at which the contents of the Registration
Statement, the Prospectus, any amendment thereof or supplement thereto and
related matters were discussed. On the basis of the foregoing, and without
assuming any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, no facts
have come to the attention of such counsel which lead such counsel to believe
that either the Registration Statement at the time it became effective, or any
amendment thereof subsequent to the date hereof made prior to the Closing Date
as of the date of such amendment, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
as of its date and as of the date of such opinion contained or contains an
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief, view or opinion with
respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or the Prospectus).
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In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of governmental officials, provided
that copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, the Representatives and they are justified in
relying thereon.
(c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and to Underwriters'
Counsel, and the Underwriters shall have received from said Underwriters'
Counsel a favorable opinion, dated as of the Closing Date with respect to the
issuance and sale of the Shares, the Registration Statement and the Prospectus
and such other related matters as the Representatives may reasonably require,
and the Company shall have furnished to Underwriters' Counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(d) At the Closing Date, the Representatives shall have received a
certificate of the Company, executed on behalf of the Company by the Chief
Executive Officer or President and the Chief Financial Officer of the Company,
dated the Closing Date to the effect that (i) the conditions set forth in
subsection (a) of this Section 6 have been satisfied, (ii) as of the date hereof
and as of the Closing Date, the representations and warranties of the Company
set forth in Section 1 hereof are true and accurate, (iii) at the time of the
Closing on the Closing Date, the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed and (iv) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any Material Adverse Effect, or
any development involving a prospective Material Adverse Change, on the Company,
except in each case as described in the Prospectus.
(e) At the time this Agreement is executed and at the Closing Date,
the Representatives shall have received a letter from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent public accountants for the Company, dated as of the date of this
Agreement and as of the Closing Date, as appropriate, addressed to the
Underwriters and in form and substance satisfactory to the Representatives, to
the effect that: (i) they are independent certified public accountants with
respect to the Company within the meaning of the Act and the Regulations; (ii)
in their opinion, the financial statements and schedule of the Company
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included in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the minutes of meetings and consents of the
stockholders and boards of directors of the Company through the date of such
letter, inquiries of officers and other employees of the Company who have
responsibility for financial and accounting matters of the Company with respect
to transactions and events through a date not more than three days prior to the
date of such letter and other specified procedures and inquiries to a date not
more than three days prior to the date of such letter, nothing has come to their
attention (except as noted therein) that would cause them to believe that: (A)
as of the date not more than three days prior to the date of such letter, there
was any change in the capital stock or paid-in capital, increase in long-term
debt, or decrease in net current assets or net assets and changes in
stockholders' equity (deficit) of the Company as compared with amounts shown in
the December 31, 1998 audited balance sheet included in the Registration
Statement, (B) for the period from January 1, 1999 to a date not more than three
days prior to the date of such letter, there were any decreases as compared to
the corresponding period in the preceding year, in revenues or increases in the
total or per share amount of net loss, and (C) stating that they have compared
specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the Registration Statement and the Prospectus, which have been specified by the
Representatives prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages, and information may be derived from the general
accounting and financial records of the Company or from schedules furnished by
the Company, with the results obtained from the application of specified
readings, inquiries, and other appropriate procedures specified by the
Representatives set forth in such letter, and found them to be in agreement.
(f) Prior to the Closing Date the Company shall have furnished to
the Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(g) The Representatives shall have received from each person who is
a director or officer of the Company or such security holder as has been
heretofore designated by you and listed on Schedule II hereto the agreements
required by Section 1(v).
(h) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market under the symbol disclosed in the
Prospectus.
(i) The Company shall not have sustained, (i) since the date of the
latest financial statements included in the Prospectus, any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by
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insurance, or from any labor dispute or court or governmental action, order or
decree otherwise than as set forth or expressly contemplated in the Prospectus
which loss or interference is not immaterial to the Company, and (ii) since the
respective dates as of which information is given in the Prospectus, there shall
not have been any Material Adverse Change, or any development involving a
prospective Material Adverse Change, otherwise than as set forth or expressly
contemplated in the Prospectus, the effect of which, in any such case described
in clause (i) or (ii) of this Section 6(i), in the Representatives' reasonable
judgment, makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered on the Closing Date on
the terms and in the manner contemplated in the Prospectus.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Representatives or to Underwriters' Counsel pursuant to this Section 6 shall not
be in all material respects reasonably satisfactory in form and substance to the
Representatives and to Underwriters' Counsel, all obligations of the
Underwriters hereunder may be cancelled by the Representatives at, or at any
time prior to, the Closing Date and the obligations of the Underwriters to
purchase the Additional Shares may be cancelled by the Representatives at, or at
any time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its officers, directors, partners, employees, agents and counsel
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act,
any state securities or Blue Sky law or otherwise, insofar as such losses,
liabilities, claims, damages, obligations, penalties, judgments, awards, costs,
disbursements or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement for the registration of the Shares, as
originally filed or any amendment thereof, or any related preliminary prospectus
or the Prospectus, or in any supplement thereto or amendment thereof, or arise
out of or are based upon the omission or alleged omission to state in any
preliminary prospectus, the Registration Statement for the registration of the
Shares or the Prospectus, or in any amendment thereof or supplement thereto, any
material fact required to be stated therein or necessary to make the statements
therein not misleading;
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provided, however, that (A) the Company will not be liable in any such case to
the extent but only to the extent that any such loss, liability, claim, damage,
obligation, penalty, judgment, award, cost, disbursement or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives expressly for use therein and (B) the
indemnity agreement contained in this Section 7(a) with respect to any
preliminary prospectus (or the Prospectus) shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) from
whom the person asserting any such losses, liabilities, claims, damages or
expenses purchased the Shares 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 Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
preliminary prospectus (or the Prospectus) was corrected in the Prospectus (or
the Prospectus as amended or supplemented) and delivery of such Prospectus (or
the Prospectus as amended or supplemented) would have eliminated any such loss,
liability, claim, damage or expense unless the failure is the result of
non-compliance by the Company with Section 4(c) hereof.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the Shares,
as originally filed or any amendment thereof, or any related preliminary
prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives expressly for use therein, provided, however, that in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting
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discount applicable to the Shares purchased by such Underwriter hereunder. This
indemnity will be in addition to any liability which any Underwriter may
otherwise have including under this Agreement. The Company acknowledges that the
statements set forth in the table listing Underwriters under the caption
"Underwriting" in the Prospectus and in the third, eighth, ninth and tenth
paragraphs under the caption "Underwriting" in the Prospectus constitute the
only information furnished in writing by or on behalf of any Underwriter
expressly for use in any registration statement relating to the Shares as
originally filed, in the Registration Statement or in any amendment thereof, any
related preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 unless and to the extent the
indemnifying party did not otherwise learn of such action and such failure to
notify results in the forfeiture by the indemnifying party of substantial rights
and defenses). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
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8. CONTRIBUTION. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, then each indemnifying party shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including without
limitation any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Underwriters, on the other
hand, from the offering of the Shares or, if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company,
on the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company, and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company, on the one hand, and of the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter be liable or responsible
for any portion of the contribution obligation imposed on all Underwriters in
excess of its pro rata share of the total underwriting discount set forth in the
table on the cover page of the Prospectus based on the number of shares
underwritten by it as compared to the number of shares underwritten by all
Underwriters who do not default on their obligations under this Section 8 less
all amounts paid or payable by such Underwriter pursuant to Section 7; and (ii)
no person
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guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 8 and the preceding sentence, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of the immediately preceding sentence. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties, notify each party
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise unless and to the extent the party from whom contribution
is sought did not otherwise learn of such action and such failure to notify
results in the forfeiture by the party from whom contribution is sought of
substantial rights and defenses. No party shall be liable for contribution with
respect to any action or claim settled without its consent; provided, however,
that such consent was not unreasonably withheld.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by the Representatives
pursuant to subsection (b) below) exceed in the aggregate 10% of the number of
Firm Shares or Additional Shares, as the case may be, which all Underwriters
have agreed to purchase hereunder, then such Firm Shares or Additional Shares to
which the default relates shall be purchased by the non-defaulting Underwriters
in proportion to the respective proportions which the numbers of Firm Shares set
forth opposite their respective names in Schedule I hereto bear to the aggregate
number of Firm Shares set forth opposite the names of the non-defaulting
Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, the Representatives may in
their discretion arrange for themselves or for another party or parties
(including any
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non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. If within five calendar days after such a default
the Representatives do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares, shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Sections 5, 7 and 8 hereof) or the several non-defaulting
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters (except as provided in Sections 5, 7 and 8 hereof)
of its or their liability, if any, to the other Underwriters and the Company for
damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, the
Representatives or the Company shall have the right to postpone the Closing Date
or Additional Closing Date, as the case may be, for a period, not exceeding five
business days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion
of Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
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(a) This Agreement shall become effective (i) if Rule 430A under the
Act is not used, when the Representatives shall have received notification of
the effectiveness of the Registration Statement or (ii) if Rule 430A under the
Act is used, when the parties hereto have executed and delivered this Agreement.
If either the initial public offering price or the purchase price per Share has
not been agreed upon prior to 5:00 P.M., New York City time, on the fourteenth
(14) full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying the Representatives or by the Representatives notifying the Company.
Notwithstanding the foregoing, the provisions of this Section 11 and of Sections
1, 5, 7 and 8 hereof shall at all times be in full force and effect.
(b) The Representatives shall have the right to terminate this
Agreement at any time prior to the Closing Date (and, with respect to the
Additional Shares, the Additional Closing Date) by notice to the Company from
the Representatives, without liability (other than with respect to Sections 7
and 8 hereof) on the part of any Underwriter to the Company, if, on or prior to
such date, (i) the Company shall have failed, refused or been unable to perform
in any material respect any agreement on its, his or her part to be performed
hereunder, (ii) any other condition to the Underwriters' obligations hereunder
set forth in Section 6 is not fulfilled when and as required in any material
respect, (iii) trading in securities on the New York or American Stock
Exchanges, or Nasdaq National Market shall have been suspended or materially
limited, or minimum or maximum prices shall have been established or maximum
price ranges for prices for securities shall have been required, on the New York
or American Stock Exchanges or Nasdaq National Market by the Commission or by
such exchange or other regulatory body or governmental authority having
jurisdiction, (iv) a general banking moratorium shall have been declared by a
federal or state authority or any new restriction materially and adversely
affecting the distribution of the Firm Shares or the Additional Shares, as the
case may be, (v) there shall have occurred an outbreak or escalation of armed
hostilities involving the United States on or after the date hereof, or if there
has been a declaration by the United States of a national emergency or war, the
effect of which shall be, in the Representatives' judgment, to make it
inadvisable or impracticable to proceed with the sale and delivery of the Shares
on the terms and in the manner contemplated in the Prospectus, (vi) since the
respective dates as of which information is given in the Prospectus, there shall
have occurred a Material Adverse Change, or any development involving a
prospective Material Adverse Change, otherwise than as set forth and expressly
contemplated by the Prospectus, the effect of which in the Representatives'
reasonable judgment, makes it impracticable or inadvisable to proceed with the
public offering and delivery of the Firm Shares or the Additional Shares, as the
case may be, on the terms and in the manner contemplated hereby and by the
Prospectus, or (vii) there shall have occurred such a material adverse change in
general economic, political or financial conditions or if the effect of
international conditions on the financial
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markets in the United States shall be such as, in the judgment of the
Representatives, makes it inadvisable or impracticable to proceed with the sale
and delivery of the Firm Shares or the Additional Shares, as the case may be, on
the terms contemplated hereby and by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by the
Representatives as provided in Section 11(a) hereof or (ii) Section 9(b) or
11(b) hereof (except clauses (i) and (ii) thereof)), or if the sale of the
Shares provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth herein required to be satisfied by the
Company is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any provision
hereof, the Company will, subject to demand by the Representatives, reimburse
the Underwriters for all out-of-pocket expenses (including the reasonable fees
and expenses of their counsel), incurred by the Underwriters in connection
herewith.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Department; if sent to
the Company, shall be mailed, delivered, or telegraphed and confirmed in writing
to Applied Theory Corporation, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman and Chief Executive Officer.
In all dealings hereunder, the Representatives shall act on behalf
of each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representatives jointly or by Bear, ▇▇▇▇▇▇▇ &
Co. Inc. on behalf of the Representatives.
13. PARTIES. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. The term "successors and assigns" shall not include a purchaser, in
its capacity as such, of Shares from any of the Underwriters.
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14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
15. COUNTERPARTS. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same agreement.
16. PARTIAL INVALIDITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, and upon acceptance
hereof by the Representatives, on behalf of each of the Underwriters, this
letter and such acceptance hereof shall constitute a binding agreement among
each of the Underwriters and the Company. It is understood that the acceptance
by the Representatives of this letter on behalf of each of the Underwriters is
pursuant to the authority set forth in a form of Agreement Among Underwriters,
the form of which shall be submitted to the Company for examination, upon
request.
Very truly yours,
APPLIEDTHEORY CORPORATION
By:______________________________________
Name:
Title:
Accepted as of the date first above written at New York, New York, on behalf of
themselves severally and the other several Underwriters named in Schedule I
hereto.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
▇▇▇▇▇▇ BROTHERS INC.
WIT CAPITAL CORPORATION
By: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: ______________________________
Name:
Title:
