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4,000,000 Shares
ABOVENET COMMUNICATIONS INC.
Common Stock
UNDERWRITING AGREEMENT
December __, 1998
CIBC Oppenheimer Corp.
Xxxxx Xxxxx Xxxxxx and Company, LLC
c/o CIBC Oppenheimer Corp.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several Underwriters named on Schedule I attached hereto.
Ladies and Gentlemen:
AboveNet Communications Inc., a Delaware corporation (the
"Company"), proposes to sell to you and the other underwriters named on Schedule
I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 4,000,000 shares (the "Firm Shares") of the
Company's Common Stock, $0.001 par value (the "Common Stock"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 600,000 shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
1. Sale and Purchase of the Shares. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at $_____ per share (the "Initial Price"), the number of
Firm Shares set forth opposite the name of such Underwriter on Schedule I
to this Agreement.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same
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percentage (adjusted by the Representatives to eliminate fractions) of the
total number of Option Shares to be purchased by the Underwriters as such
Underwriter is purchasing of the Firm Shares. Such option may be exercised
only to cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or
before 9:00 a.m., San Francisco time, on the business day before the Firm
Shares Closing Date (as defined below), and only once thereafter within 30
days after the date of this Agreement, in each case upon written or
facsimile notice, or verbal or telephonic notice confirmed by written or
facsimile notice, by the Representatives to the Company no later than 9:00
a.m., San Francisco time, on the business day before the Firm Shares
Closing Date or at least two business days before the Option Shares
Closing Date (as defined below), as the case may be, setting forth the
number of Option Shares to be purchased and the time and date (if other
than the Firm Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price by certified or official bank check or checks
payable in New York Clearing House (next day) funds or by wire transfer to the
Company, shall take place at the offices of CIBC Xxxxxxxxxxx Corp., at
Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
a.m., New York City time (a) on the third (3rd) full business day following the
first day that Shares are traded, (b) if this Agreement is executed and
delivered after 4:30 P.M., New York City time, the fourth (4th) full business
day following the day that this Agreement is executed and delivered or (c) at
such other time and date not later than 10 business days after the date of this
Agreement, as shall be agreed upon by the Company and the Representatives (such
time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by certified or official bank check or checks payable in New York Clearing
House (next day) funds or by wire transfer to the Company shall take place at
the offices of CIBC Xxxxxxxxxxx Corp. specified above at the time and on the
date (which may be the same date as, but in no event shall be earlier than, the
Firm Shares Closing Date) specified in the notice referred to in Section 1(b)
(such time and date of delivery and payment are called the "Option Shares
Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by
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the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-1 (No. 333-63141), including a preliminary prospectus
relating to the Shares, and has filed with the Commission the Registration
Statement (as hereinafter defined) and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration Statement
(including all amendments thereof) and of the related preliminary prospectus
have heretofore been delivered by the Company to you. The term "preliminary
prospectus" means any preliminary prospectus (as described in Rule 430 of the
Rules) included at any time as a part of the Registration Statement. The
Registration Statement as amended at the time and on the date it becomes
effective (the "Effective Date"), including all exhibits and information, if
any, deemed to be part of the Registration Statement pursuant to Rule 424(b) and
Rule 430A of the Rules, is called the "Registration Statement." The term
"Prospectus" means the prospectus in the form first used to confirm sales of the
Shares (whether such prospectus was included in the Registration Statement at
the time of effectiveness or was subsequently filed with the Commission pursuant
to Rule 424(b) of the Rules).
The Company understands that the Underwriters propose to make a
public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, on the date any post-effective
amendment to the Registration Statement shall become effective, on the
date any supplement or amendment to the Prospectus is filed with the
Commission and on each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will comply,
in all material respects, with the applicable provisions of the Securities
Act and the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder; the Registration Statement did not, as of the Effective Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and on the other dates referred to
above neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue statement
of a material fact or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. When any related preliminary prospectus was first filed with
the Commission (whether filed as part of the Registration Statement or any
amendment thereto or pursuant to Rule 424(a) of the Rules) and when any
amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus as amended or supplemented
complied in all material respects with the applicable provisions of the
Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary
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in order to make the statements therein not misleading. Notwithstanding
the foregoing, the Company makes no representation or warranty as to the
paragraph with respect to stabilization on the inside front cover page of
the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus. The Company acknowledges that the
statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of the
several Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus.
(b) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the Commission
as exhibits to the Registration Statement.
(c) The financial statements of the Company (including all notes
and schedules thereto) included in the Registration Statement and
Prospectus present fairly the financial position, the results of
operations and cash flows and the stockholders' equity and the other
information purported to be shown therein of the Company at the respective
dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the
periods involved, and all adjustments necessary for a fair presentation of
the results for such periods have been made.
(d) Deloitte & Touche LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act and the Rules.
(e) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
The Company has no subsidiary or subsidiaries and does not control,
directly or indirectly, any corporation, partnership, joint venture,
association or other business organization. The Company is duly qualified
and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties (owned, leased
or licensed) or the nature of its business makes such qualification
necessary except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the Company.
Except as disclosed in the Registration Statement and the Prospectus, the
Company does not own, lease or license any asset or property or conduct
any business outside the United States of America. The Company has all
requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and
from all governmental or regulatory bodies or any other person or entity,
to own, lease and license its assets and properties and conduct its
business as now being conducted and as described in the Registration
Statement and the Prospectus except for such authorizations, approvals,
consents, orders, material licenses, certificates and permits the failure
to so obtain would not have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company; no such authorization, approval,
consent, order, license, certificate or permit contains a materially
burdensome restriction other than as disclosed in the Registration
Statement and the Prospectus; and the Company has all such corporate
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power and authority, and such authorizations, approvals, consents, orders,
licenses, certificates and permits to enter into, deliver and perform this
Agreement and to issue and sell the Shares (except as may be required
under the Securities Act and state and foreign Blue Sky laws).
(f) Except as disclosed in the Prospectus, the Company owns or is
licensed, or otherwise possesses adequate and enforceable rights to use
copyrights, copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, "Intangibles") and, to
it's knowledge, all trademarks, trademark applications, trade names and
service marks (the "Trademarks") necessary for the conduct of its business
as currently conducted and as described in the Registration Statement and
the Prospectus. The Company has not received any notice of, and to its
knowledge is not aware of, any infringement of or conflict with asserted
rights of others with respect to any Intangibles or Trademarks which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(g) The Company has good title to each of the items of personal
property which are reflected in the financial statements referred to in
Section 4(c) or are referred to in the Registration Statement and the
Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property which are
referred to in the Registration Statement and the Prospectus as being
leased by it, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those described in the
Registration Statement and the Prospectus and those which do not and will
not have a material adverse effect upon the assets or properties,
business, results of operations or financial condition of the Company,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles. Nothing in this
Section 4(g) shall be interpreted as limiting the Company's representation
in Section 4(f) above.
(h) Other than as described in the Registration Statement and the
Prospetus, there is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or, to the Company's knowledge, threatened (and the Company does
not know of any basis therefor) against, or involving the assets,
properties or business of, the Company which would materially adversely
affect the value or the operation of any such assets or properties or the
business, results of operations, prospects or condition (financial or
otherwise) of the Company.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
described therein, (i) there has not been any material adverse change in
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise), of the Company, whether or not arising
from transactions in the ordinary course of business; (ii) the Company has
not sustained any material loss or interference with its assets, business
or properties (whether owned or leased) from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other
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governmental action, order or decree; and (iii) since the date of the
latest balance sheet included in the Registration Statement and the
Prospectus, except as reflected therein, the Company has not (a) issued
any securities or incurred any material liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations
incurred in the ordinary course of business and securities issued or
issuable to employees, directors, consultants and other service providers
in the ordinary course of business, (b) entered into any transaction not
in the ordinary course of business or (c) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any
shares of its stock, other than the repurchase of shares of Common Stock
from employees, consultants or other service providers whose services have
been terminated with the Company.
(j) There is no document or contract of a character required to be
described in the Registration Statement or Prospectus which is not
described as required. Each agreement listed in the exhibits to the
Registration Statement is in full force and effect and, to its knowledge,
is valid and enforceable by and against the Company in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles. Neither the Company, nor, to the Company's knowledge, any
other party is in default in the observance or performance of any term or
obligation to be performed by it under any such agreement, and no event
has occurred which with notice or lapse of time or both would constitute
such a default, in any such case which default or event would have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(k) The Company is not in violation of any term or provision of
its charter or by-laws or of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of such
violation would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(l) Other than as described in the Registration Statement and
Prospectus, neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is a party or by which it or any of its properties or
business is bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation applicable to the Company or violate
any provision of the charter or by-laws of the Company, except
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for such consents or waivers which have already been obtained and are in
full force and effect.
(m) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of Common Stock have been duly and validly issued and
are fully paid and nonassessable and none were issued in violation of any
preemptive or other similar right. The Shares, when issued and sold
pursuant to this Agreement, will be duly and validly issued, fully paid
and nonassessable and none of them will be issued in violation of any
preemptive or other similar right. The Common Stock and the Shares conform
in all material respects to all statements in relation thereto contained
in the Registration Statement and the Prospectus.
(n) Each officer and director of the Company and each beneficial
owner of __________ or more shares of Common Stock has agreed in writing
that such person will not, for a period of 180 days from the date that the
Registration Statement is declared effective by the Commission (the
"Lock-up Period"), offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock or any securities
convertible into or exchangeable for shares of Common Stock (collectively,
"Securities") now owned or hereafter acquired directly by such person or
with respect to which such person has or hereafter acquires the power of
disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction,
(ii) as a distribution to partners or stockholders of such person,
provided that the distributees thereof agree in writing to be bound by the
terms of this restriction, (iii) to any trust for the benefit of such
person or such person's immediate family, provided that the trustee of the
trust agrees in writing, on behalf of the trust, to be bound by the terms
of this restriction, (iv) shares of Common Stock purchased on the Nasdaq
National Market, provided that such person is not an officer or director
of the Company and that following the date that the Registration Statement
is declared effective by the Commission, such person will hold less than
five percent (5%) of the capital stock of the Company, on an as-converted
basis, or (v) with the prior written consent of CIBC Xxxxxxxxxxx Corp. The
foregoing restriction has been expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition
of Securities during the Lock-up Period, even if such Securities would be
disposed of by someone other than such holder. Such prohibited hedging or
other transactions would include, without limitation, any short sale
(whether or not against the box) or any purchase, sale or grant of any
right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives
any significant part of its value from Securities. Furthermore, such
person has also agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Securities held by such person except in compliance with this restriction.
(o) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of
this Agreement and the
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issuance and sale of the Shares by the Company. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (A)
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles and (B)
to the extent that rights to indemnity or contribution under this
Agreement may be limited by Federal and state securities laws or the
public policy underlying such laws.
(p) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company.
(q) No transaction has occurred between or among the Company and
any of its officers or directors or any affiliate or affiliates of any
such officer or director that is required to be described in and is not
described in the Registration Statement and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of the Common Stock to facilitate the sale or resale of any of the Shares.
(s) The Company has filed all Federal, state, local and foreign
tax returns which are required to be filed through the date hereof, or has
received extensions thereof, and has paid or is contesting in good faith
all taxes shown on such returns and all assessments received by it to the
extent that the same are material and have become due.
(t) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market.
(u) The Company has complied with all of the requirements and
filed the required forms as specified in Florida Statutes Section 517.075.
5. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares are subject to
each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(A)(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration
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Statement or the Prospectus or otherwise) shall have been complied with to
the satisfaction of the Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date and the Company shall have performed all covenants
and agreements and satisfied all the conditions contained in this
Agreement required to be performed or satisfied by it at or before such
Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that the
signatories of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations
and warranties of the Company in this Agreement are true and correct on
and as of such Closing Date with the same effect as if made on such
Closing Date and the Company has performed all covenants and agreements
and satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date.
(e) The Representatives shall have received on the Effective Date,
at the time this Agreement is executed and on each Closing Date, a signed
letter from Deloitte & Touche LLP addressed to the Representatives and
dated, respectively, the Effective Date, the date of this Agreement and
each such Closing Date, in form and substance reasonably satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the response
to Item 10 of the Registration Statement is correct insofar as it relates
to them and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings
"Summary Financial and Operating Data" and "Selected and Operating
Data," carrying out certain procedures (but not an examination in
accordance with generally accepted auditing standards) which would
not necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of the
meetings of the stockholders and directors of the Company, and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
as to transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to their
attention which caused them to believe that:
(A) the amounts in "Summary Financial and Operating
Data," and "Selected Financial and Operating Data" included in
the Registration
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Statement and the Prospectus do not agree with the
corresponding amounts in the audited financial statements from
which such amounts were derived; or
(B) with respect to the Company, there were, at a
specified date not more than five business days prior to the
date of the letter, any increases in the current liabilities
and long-term liabilities of the Company or any decreases in
net income or in working capital or the stockholders' equity
in the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended June
30, 1998 included in the Registration Statement; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at
the date of the letter.
(f) The Representatives shall have received on each Closing Date
from Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP,
counsel for the Company, an opinion, addressed to the Representatives and
dated such Closing Date, and stating in effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware. To such counsel's knowledge, the Company has no
subsidiaries and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other
business organization. The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased or
licensed) or the nature of its business makes such qualification
necessary, except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and
conduct its business as described in the Registration Statement and
the Prospectus; and the Company has all requisite corporate power
and authority and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits to enter into, deliver
and perform this Agreement and to issue and sell the Shares other
than those required under the Securities Act and state and foreign
Blue Sky laws.
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(iii) The Company has authorized and issued capital stock as
set forth in the Registration Statement and the Prospectus; the
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company; all of
the outstanding shares of Common Stock of the Company have been duly
and validly authorized and have been duly and validly issued and, to
such counsel's knowledge, are fully paid and nonassessable and none
of them was issued in violation of any preemptive or other similar
right set forth in the Company's Certificate of Incorporation or
Bylaws. The Shares when issued and sold pursuant to this Agreement
will be duly and validly issued, outstanding, fully paid and
nonassessable and none of them will have been issued in violation of
any preemptive or other similar right set forth in the Company's
Certificate of Incorporation or Bylaws. To such counsel's knowledge,
except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement
to issue, any share of stock of the Company or any security
convertible into, exercisable for, or exchangeable for, stock of the
Company. The Common Stock and the Shares conform in all material
respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(iv) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(v) Other than as stated in the Prospectus, neither the
execution, delivery and performance of this Agreement by the Company
nor the consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or
any event which with notice or lapse of time, or both, would
constitute a default) under, or require consent or waiver under, or
result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company pursuant to
the terms of any indenture, mortgage, deed trust, note or other
agreement or instrument which has been filed as an exhibit to the
Registration Statement and to which the Company is a party or by
which it or any of its properties or businesses is bound, or to such
counsel's knowledge any franchise, license, permit, judgment,
decree, order, statute, rule or regulation under Delaware corporate
law or California law or violate any provision of the charter or
by-laws of the Company.
(vi) To the best of such counsel's knowledge, no default
exists, and no event has occurred which with notice or lapse of
time, or both, would constitute a default, in the due performance
and observance of any term, covenant or condition by the Company of
any indenture, mortgage, deed of trust, note or any other agreement
or instrument to which is filed or required to be filed as an
exhibit to the Registration Statement and to which the Company is a
party or by
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which it or any of its assets or properties or business may be bound
or affected, where the consequences of such default would have a
material and adverse effect on the assets, properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company.
(vii) To the best of such counsel's knowledge, the Company is
not in violation of any term or provision of its charter or by-laws
or any judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a material and adverse
effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(viii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the performance
of this Agreement by the Company or the consummation of the
transactions contemplated hereby, except such as have been obtained
under the Securities Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the several Underwriters.
(ix) Other than as stated in the Prospectus, to such
counsel's knowledge, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by any
public body or board pending or threatened against, or involving the
assets, properties or business of, the Company which would have a
material adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company
(x) The statements in the Prospectus under the captions
"Description of Capital Stock--Effect of Delaware Antitakeover
Statute," "Shares Eligible for Future Sale," "Management-Employment
Agreements," "Management-Stock Incentive Plan," and "Certain
Transactions," insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair summaries
in all material respects and accurately present the information
called for with respect to such documents and all contracts and
other documents required to be filed as exhibits to, or described
in, the Registration Statement have been so filed with the
Commission or are fairly described in the Registration Statement, as
the case may be.
(xi) The Registration Statement has become effective under
the Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are threatened, pending or contemplated.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of California, the General Corporation Law of the State of Delaware
and the Federal securities laws of the United States; provided that such counsel
shall state that in their opinion the Underwriters and they are justified in
relying on such other
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opinions. Copies of such other opinions shall be furnished to the
Representatives and counsel for the Underwriters.
In addition, such counsel shall state that although such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, (i) no facts have come to the attention of such
counsel which lead such counsel to believe that the Registration Statement at
the time it became effective (except with respect to the financial statements
and notes and schedules thereto and other financial data, as to which such
counsel need express no belief) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus
as amended or supplemented (except with respect to the financial statements and
notes schedules thereto and other financial data, as to which such counsel need
make no statement) on the date thereof contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (ii) the Registration Statement and the Prospectus
comply as to form in all material respects with the requirements of the
Securities Act and the applicable Rules (except as to financial statements and
schedules and other financial and statistical data included therein).
(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their
counsel and the Underwriters shall have received from Pillsbury Madison &
Sutro LLP a favorable opinion, addressed to the Representatives and dated
such Closing Date, with respect to the Shares, the Registration Statement
and the Prospectus, and such other related matters, as the Representatives
may reasonably request, and the Company shall have furnished to Pillsbury
Madison & Sutro LLP such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(h) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representative, and dated such Closing Date,
of an executive officer of the Company to the effect that the signatory of
such certificate has reviewed and understands the provisions of Section
517.075 of the Florida Statutes, and represents that the Company has
complied, and at all times will comply, with all provisions of Section
517.075 and further, that as of such Closing Date, neither the Company nor
any of its affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba.
6. Covenants of the Company.
(A) The Company covenants and agrees as follows:
(a) The Company shall prepare the Prospectus in a form approved by
the Representatives and file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act, and shall promptly advise the
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Representatives (i) when any amendment to the Registration Statement shall
have become effective, (ii) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any
additional information, (iii) of the prevention or suspension of the use
of any preliminary prospectus or the Prospectus or of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company shall not file any amendment
of the Registration Statement or supplement to the Prospectus unless the
Company has furnished the Representatives a copy for its review prior to
filing and shall not file any such proposed amendment or supplement to
which the Representatives reasonably object. The Company shall use its
reasonable efforts to prevent the issuance of any such stop order and, if
issued, to use its reasonable efforts to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare and file
with the Commission, subject to the second sentence of paragraph (a) of
this Section 6(A), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such compliance.
(c) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs
(or 90 days if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions of
Section 11(a) of the Securities Act or Rule 158 of the Rules.
(d) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) and to
each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Securities
Act or the Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as the
Representatives may reasonably request.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale under the
laws of such jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company
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shall not be required in connection therewith, as a condition thereof, to
qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject itself to taxation as
doing business in any jurisdiction.
(f) For a period of five years after the date of this Agreement,
the Company shall supply to the Representatives, and to each other
Underwriter who may so request in writing, copies of such financial
statements and other periodic and special reports as the Company may from
time to time distribute generally to the holders of any class of its
capital stock and to furnish to the Representatives a copy of each annual
or other report it shall be required to file with the Commission.
(g) Without the prior written consent of CIBC Xxxxxxxxxxx, for a
period of 180 days after the date of this Agreement, the Company shall not
issue, sell or register with the Commission (other than on Form S-8 or on
any successor form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities convertible into or
exercisable or exchangeable for equity securities of the Company), except
for the issuance of the Shares pursuant to the Registration Statement and
the issuance of shares pursuant to the Company's existing stock option and
purchase plans. In the event that during this period, (i) any shares are
issued pursuant to the Company's existing stock and option purchase plans
or (ii) any registration is effected on Form S-8 or on any successor form,
the Company shall obtain the written agreement of such grantee or
purchaser or holder of such registered securities that, for a period of
180 days after the date of this Agreement, such person will not, without
the prior written consent of the Representatives, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect
to, any shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common Stock) owned by
such person.
(h) Notwithstanding any agreement between any holder of the
Company's securities and the Company, the Company agrees that it will not
allow any holder of the Company's securities to transfer such securities
during the Lock Up Period without CIBC Xxxxxxxxxxx'x prior written
consent. For the purposes of this Agreement, the "Lock Up Period" shall be
as defined in the Lock Up Agreement between CIBC Xxxxxxxxxxx and certain
holders of the Company's securities dated October 4, 1998.
(i) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the
Nasdaq National Market (including any required registration under the
Exchange Act).
(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the performance of the obligations of the Company under this Agreement and all
costs and expenses relating to: (i) the preparation, printing, filing and
distribution of the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation
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and delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
6(A)(e), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments or supplements
to the Prospectus, and of the several documents required by this Section to be
so furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom Shares
may be sold; (v) the filing fees of the National Association of Securities
Dealers, Inc. in connection with its review of the terms of the public offering;
(vi) the furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and information
required by Section 6(A)(f); (vii) inclusion of the Shares for quotation on the
Nasdaq National Market; and (viii) all transfer taxes, if any, with respect to
the sale and delivery of the Shares by the Company to the Underwriters. Subject
to the provisions of Section 9, the Underwriters agree to pay, whether or not
the transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the Company
pursuant to the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they,
or any of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that such indemnity shall not inure to the benefit of
any Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages or liabilities arising from the sale of the
Shares to any person by such Underwriter if (i) such untrue statement or
omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus, or
such amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives on
behalf of any Underwriter specifically for use therein or (ii) 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 as proven by the Company and the untrue statement
or omission of a material fact contained in such preliminary Prospectus
was corrected in the Prospectus (or the Prospectus as amended or
supplemented) unless the failure is
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the result of non-compliance by the Company with paragraph (d) of Section
6 hereof. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each director of the Company, and each
officer of the Company who signs the Registration Statement, to the same
extent as the foregoing indemnity from the Company to each Underwriter,
but only insofar as such losses, claims, damages or liabilities arise out
of or are based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, contained in the last paragraph of the cover page, in
the paragraph relating to stabilization on the inside front cover page of
the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus; provided, however, that the obligation
of each Underwriter to indemnify the Company (including any controlling
person, director or officer thereof) shall be limited to the net proceeds
received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be available to
any party who shall fail to give notice as provided in this Section 7(c)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution or
otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof and the approval by the indemnified party of such
counsel, the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses, except as provided below and except
for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified
party shall have the right to employ its counsel in any such action, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified
party in the conduct of the defense of such action (in which case the
indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party) or (iii) the indemnifying
parties shall not have employed counsel to assume the defense of such
action within a reasonable time after notice of the commencement thereof,
in each of which case the fees and expenses of counsel shall be at the
expense of the indemnifying
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parties. An indemnifying party shall not be liable for any settlement of
any action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) is due in accordance with its terms but for any reason is held to
be unavailable from the Company, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who may also
be liable for contribution) to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter (except as
may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) the Company shall be liable
and responsible for any amount in excess of such underwriting discount;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately
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preceding sentence of this Section 8. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section, notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriter's obligations to
contribute pursuant to this Section 8 are several in proportion to their
respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company at any time
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with
the offering; (iii) if there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (iv) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock
Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq Stock
Market has been suspended or limited, or minimum or maximum ranges for
prices for securities shall have been fixed, or maximum ranges for prices
for securities have been required, by said exchanges or system or by order
of the Commission, the National Association of Securities Dealers, Inc.,
or any other governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
the Company shall not be under any liability to any Underwriter, and no
Underwriter shall be under any liability to the Company, except that (y) if this
Agreement is terminated by the Representatives or the Underwriters because of
any failure, refusal or inability on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in contemplation
of performing their obligations hereunder and (z) no Underwriter who shall have
failed or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Company or to the other Underwriters for damages occasioned by
its failure or refusal.
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10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section
1 be increased pursuant to this Section 10 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares
upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery
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of and payment for the Shares. The provisions of Sections 6(B), 7, 8 and 9 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CBIC Xxxxxxxxxxx Corp., Xxxxxxxxxxx
Tower, World Financial Center, New York, New York 10281 Attention: __________,
and (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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22
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
ABOVENET COMMUNICATIONS INC.
By ______________________________________
Title:
Confirmed:
CIBC XXXXXXXXXXX CORP.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC XXXXXXXXXXX CORP.
By ____________________________________
Title:
23
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- --------------
CIBC Xxxxxxxxxxx Corp.
Xxxxx Xxxxx Xxxxxx and Company, LLC
------------
Total 4,000,000
============
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