7,000,000 Shares
STAR TELECOMMUNICATIONS, INC.
Common Stock
($.001 Par Value)
EQUITY UNDERWRITING AGREEMENT
April 28, 1998
BT Alex. Xxxxx Incorporated
Xxxxxxx Xxxxx & Co.
Xxxxxxxxx & Xxxxx LLC
Xxxxxx Brothers
Xxxxxx Xxxx LLC
As Representatives of the
Several Underwriters
c/o BT Alex. Xxxxx Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Star Telecommunications, Inc., a Delaware corporation (the "Company")
and a certain shareholder of the Company named in Part A of Schedule II
hereto (the "Selling Shareholder") propose to sell to the several
underwriters (the "Underwriters") named in Schedule I hereto for whom you are
acting as representatives (the "Representatives") an aggregate of 7,000,000
shares of the Company's Common Stock, $.001 par value (the "Firm Shares").
The respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto. The
Company and certain shareholders of the Company named in Part B of Schedule
II hereto (the "Additional Selling Sharehodlers"), also propose to sell at
the Underwriters' option (the "Underwriters' Option") an aggregate of up to
1,050,000 additional shares of the Company's Common Stock (the "Option
Shares") as set forth below. The Selling Shareholder and the Additional
Selling Shareholders are hereinafter referred to as "Selling Shareholders."
The Company, the Selling Shareholders and the Additional Selling Shareholders
are sometimes referred to herein collectively as the "Sellers."
As the Representatives, you have advised the Company and the Selling
Shareholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the
Option Shares if you elect to exercise the over-allotment option in whole or in
part for the accounts of the several Underwriters. The Firm Shares and the
Option Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) The Company represents and warrants to each of the
Underwriters as follows:
(i) A registration statement on Form S-1 (File No.
333-48559) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together with any
registration statement filed by the Company pursuant to Rule 462 (b) of the Act,
herein referred to as the "Registration Statement," which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "Prospectus" means the form of prospectus
first filed with the Commission pursuant to Rule 424(b). Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each of the
subsidiaries of the Company as listed in Exhibit A hereto (collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. The Subsidiaries are the
only material subsidiaries, direct or indirect, of the Company. The Company and
each of the Subsidiaries are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such qualification
except where the failure to so qualify in any such jurisdiction would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Effect"). The outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and are owned by the Company or
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another Subsidiary free and clear of all liens, encumbrances and equities and
claims; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Selling Shareholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the portion
of the Shares to be issued and sold by the Company have been duly authorized and
when issued and paid for as contemplated herein will be validly issued, fully
paid and non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue and sale thereof. Neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Shares
conform to the description thereof contained in the Registration Statement. The
form of certificates for the Shares conforms to the corporate laws of the State
of Delaware.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor to the best knowledge of the Company, instituted proceedings for that
purpose. The Registration Statement contains, and the Prospectus and any
amendments or supplements thereto will contain, all statements which are
required to be stated therein by, and will conform, in all material respects, to
the requirements of the Act and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not 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;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof.
(vi) The consolidated financial statements of the Company
and the Subsidiaries, together with related notes and schedules as set forth in
the Registration Statement, present fairly the financial position and the
results of operations and cash flows of the Company and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods. Such
financial statements, and related schedules have been prepared in accordance
with generally accepted principles of accounting, consistently applied
throughout the periods involved, except as disclosed
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therein, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary financial, pro forma and statistical
data included in the Registration Statement presents fairly the information
shown therein and such data has been compiled on a basis consistent with the
financial statements presented therein and/or the books and records of the
Company as the case may be.
(vii) To the best of the Company's knowledge, Xxxxxx
Xxxxxxxx LLP, who have certified certain of the financial statements filed with
the Commission as part of the Registration Statement, are independent public
accountants as required by the Act and the Rules and Regulations.
(viii) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
the Subsidiaries before any court or administrative agency or otherwise which if
determined adversely to the Company or any of its Subsidiaries could be
reasonably expected to result in any material adverse change in the earnings,
business, management, properties, assets, operations, condition (financial or
otherwise) or prospects of the Company and of the Subsidiaries taken as a whole
or to prevent the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement.
(ix) The Company and the Subsidiaries have good and
marketable title to all of the properties and assets (other than leased
properties and assets) reflected in the financial statements (or as described in
the Registration Statement) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements or the related notes and schedules thereto (or as described
in the Registration Statement) or which are not material in amount. The Company
and the Subsidiaries occupy their leased properties under valid and binding
leases.
(x) The Company and the Subsidiaries have filed all
Federal, State, local and foreign tax returns which have been required to be
filed and have paid all taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes have become due
and are not being contested in good faith. All tax liabilities have been
adequately provided for in the financial statements of the Company, and the
Company does not know of any actual or proposed additional material tax
assessments.
(xi) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, operations, condition (financial or otherwise),
or prospects of the Company and its Subsidiaries taken as a whole, whether or
not occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is expected
to be entered into by the Company or the Subsidiaries, other than transactions
in the ordinary course of business and changes and transactions described in the
Registration Statement, as it may be amended or supplemented and other than
changes in the general
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economic condition of the United States of America. The Company and the
Subsidiaries have no material contingent obligations which are not disclosed in
the Company's financial statements which are included in the Registration
Statement.
(xii) Neither the Company nor any of the Subsidiaries is or with
the giving of notice or lapse of time or both, will be, in violation of or in
default under its Amended and Restated Certificate of Incorporation or By-Laws
or under any agreement, lease, contract, indenture or other material instrument
or obligation to which it is a party or by which it, or material portions of its
properties, is bound except for such violation or default that would not result
in a Material Adverse Effect. The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated and the fulfillment of
the terms hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust or other material agreement or instrument to which the Company or
any Subsidiary is a party, or of the Amended and Restated Certificate of
Incorporation or By-Laws of the Company or any order, rule or regulation
applicable to the Company or any Subsidiary of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction
except for such conflicts, breaches or default that, individually or in the
aggregate would not result in a Material Adverse Effect.
(xiii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect except where the failure to obtain such
approval, consent, order, authorization, designation, declaration or filing
would not result in a Material Adverse Effect.
(xiv) The Company owns or possesses adequate licenses or
other rights to use all patents, copyrights, trademarks and trade secrets (the
"Intellectual Property") described or referred to in the Prospectus as owned and
used by it. Except as disclosed in the Prospectus, the Company has not received
any notice of infringement or conflict with (and knows of no infringement or
conflict with) asserted rights of others with respect to any Intellectual
Property which infringement or conflict is of a material significance in respect
of the condition, financial or otherwise of the Company and its Subsidiaries
taken as a whole or the business, management, properties, assets, operations,
condition (financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole. The Company knows of no material infringement by
others of any Intellectual Property owned by or licensed to, and used by, the
Company.
(xv) Neither the Company, nor to the Company's knowledge,
any of its affiliates or Subsidiaries, has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the
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stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares. The Company acknowledges that the
Underwriters may engage in passive market making transactions in the Shares on
the Nasdaq National Market in accordance with Rule 103 of Regulation M under
the Exchange Act.
(xvi) Neither the Company nor any Subsidiary is an
"investment company" or an "affiliated person" of or "promoter" or "principal
underwriter" for an "investment company", as such terms are defined in the
Investment Company Act of 1940 (as amended, the "1940 Act") and the rules and
regulations of the Commission thereunder.
(xvii) 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 authorization;
(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.
(xviii) The Company and each of its Subsidiaries carry,
or are covered by, insurance in such amounts and covering such risks as is
commercially reasonable for the conduct of their respective businesses and the
value of their respective properties and as is customary for companies engaged
in similar industries.
(xix) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(xx) To the Company's knowledge, there are no affiliations
or associations between any member of the NASD and any of the Company's
officers, directors or 5% or greater security holders, except as set forth in
the Registration Statement.
(xxi) All holders of a material portion of the securities
of the Company and its Subsidiaries having rights to the registration of shares
of Common Stock, or other securities, because of the filing of the Registration
Statement by the Company have waived such rights or such
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rights have expired by reason of lapse of time following notification of the
Company's intent to file the Registration Statement.
(xxii) This Agreement has been duly authorized, executed and
delivered by the Company and has been duly executed and delivered by the Selling
Shareholders and constitutes a valid and binding obligation of each of them
enforceable in accordance with its terms except as rights to indemnity and
contribution hereunder may be limited by applicable laws and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by general equitable principles.
(xxiii) The Company and its subsidiaries have all
necessary consents, authorizations, approvals, orders, certificates and
permits (collectively, the "Licenses") of and from, and have made all
declarations and filings with, all U.S. and foreign, local and other
governmental authorities, including the Federal Communications Commission
(the "FCC"), all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except to the
extent that the failure to obtain such Licenses or make such declarations or
filings would not have Material Adverse Effect and except as otherwise
described in the Prospectus. Except as described in the Prospectus, neither
the Company nor any of its Subsidiaries have received any notice of
proceedings relating to, the limitation, suspension, modification or
revocation of the Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
(xxiv) To the Company's knowledge after inquiry, except as
described in the Prospectus, the Licenses are in full force and effect without
conditions that would have a Material Adverse Effect except for such conditions
imposed generally by the FCC upon such Licenses or conditions stated on the face
of such Licenses, (i) except as disclosed in the Prospectus including, without
limitation, conditions relating to the regulation regarding services over
private lines interconnected to the public switched network, all express
conditions in the Licenses have been satisfied where the failure to satisfy such
conditions would have a Material Adverse Effect, and (ii) except as disclosed in
the Prospectus, neither the Company nor any of its Subsidiaries have received
any notification that any revocation or limitation of the Licenses is threatened
or pending that would have a Material Adverse Effect.
(xxv) To the Company's knowledge after inquiry, and
except as disclosed in the Prospectus the Licenses are validly issued.
Except as disclosed in the Registration Statement or in the Prospectus, the
Company and its Subsidiaries have filed with the FCC all tariffs,
applications, informational reports, contracts, fee filings, and other
document, that, to the Company's knowledge, are required under the
Communications Act, except where the failure to so file would not have a
Material Adverse Effect and such filings or submissions were in compliance in
all material respects with applicable laws or regulations when filed or
submitted and no deficiencies have been asserted by the FCC with respect to
such filings or submissions except where the deficiency is of such a nature
that failure to cure any such deficiency would not have a Material Adverse
Effect.
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(xxvi) To the Company's knowledge and except as
disclosed in the Prospectus, there is no proceeding, formal or informal
complaint or investigation before the FCC against the Company or any of its
Subsidiaries or any of the Licenses or based on any violation or alleged
violation by the Company or any of its Subsidiaries of the Communications Act
of 1934 (the "Communications Act") except for proceedings affecting the
industry generally to which neither the Company nor any of its Subsidiaries
is a specific party.
(xxvii) To the Company's knowledge, neither the
execution, delivery and performance of the Underwriting Agreement by the
Company and the Selling Stockholders nor the stock issuance and sale
described in the Registration Statement and Prospectus, will conflict with,
violate or require any authorization, approval, or consent under the
Communications Act not already obtained, or result in a breach or violation
of any terms or provisions of, or constitute a default under, or cause any
forfeiture or impairment of, any of the Licenses except with respect to any
conflicts, violations, required authorization, approval and consents, or
defaults that would not result in a Material Adverse Effect.
(xxviii) Neither the Company nor, to the Company's
knowledge, any other person associated with or acting on behalf of the
Company including, without limitation, any director, officer, agent, or
employee of the Company has, directly or indirectly, while acting on behalf
of the Company, violated any material provision of the Foreign Corrupt
Practices Act of 1977, as amended.
(xxix) Except as disclosed in the Prospectus, there is
no (i) legal or governmental proceeding pending or, to the Company's
knowledge, threatened to which the Company or any of its Subsidiaries is a
party or to which any of the properties of the Company or its Subsidiaries is
subject; or (ii) administrative or judicial proceeding pending or, to the
Company's knowledge, threatened to which the Company or any of its
Subsidiaries is a party or to which any of the properties of the Company or
its subsidiaries is subject arising under any Federal, State or local
provisions that have been enacted or adopted regulating the discharge of
materials into the environment or primarily for the purpose of protecting the
environment; or (iii) material effect upon the Company or any of its
Subsidiaries arising from compliance with Federal, State and local provisions
which have been enacted or adopted regulating the discharge of materials into
the environment or otherwise relating to the protection of the environment,
that is required to be described in the Registration Statement or the
Prospectus and is not so described.
(xxx) To the best knowledge of the Company, no action
has been taken by the Company or any of its Subsidiaries or any of the
Selling Stockholders which would constitute a material violation of any
noncompetition (or similar) agreement between Xxxxxxxxxxx X. Xxxxxxxx and any
other person or entity.
(xxxi) The Shares are listed on the Nasdaq National Market
subject to notice of listing.
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(b) The Selling Shareholders severally but not jointly represents
and warrants as follows:
(i) Such Selling Shareholder now has and at the Option
Closing Date (as such date is hereinafter defined) will have good and
marketable title to the Option Shares to be sold by such Selling Shareholder,
free and clear of any liens, encumbrances, equities and claims, and full right,
power and authority to effect the sale and delivery of such Option Shares; and
upon the delivery of, against payment for, such Option Shares pursuant to this
Agreement, the Underwriters will acquire good and marketable title thereto, free
and clear of any liens, encumbrances, equities and claims.
(ii) Such Selling Shareholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney, and the
Custodian Agreement referred to below and to perform its obligations under such
agreements. The execution and delivery of this Agreement and the consummation
by such Selling Shareholder of the transactions herein contemplated and the
fulfillment by such Selling Shareholder of the terms hereof will not require any
consent, approval, authorization, or other order of any court, regulatory body,
administrative agency or other governmental body (except as may be required
under the Act, National Association of Securities Dealers, Inc. (the "NASD")
rules or state securities laws or Blue Sky laws) and will not result in a breach
of any indenture, mortgage, deed of trust or other material agreement or
instrument to which such Selling Shareholder is a party, or of any order, rule
or regulation applicable to such Selling Shareholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(iii) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to, or which has constituted,
or which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company and, other than as
permitted by the Act, the Selling Shareholder will not distribute any prospectus
or other offering material in connection with the offering of the Shares.
(iv) Without having undertaken to determine independently
the accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement, such Selling Shareholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1 are
not true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Registration Statement which has adversely affected or may adversely affect the
business of the Company or any of the Subsidiaries; and the sale of the Option
Shares by such Selling Shareholder pursuant hereto is not prompted by any
material information concerning the Company or any of the Subsidiaries which is
not set forth in the Registration Statement. The information pertaining to such
Selling Shareholder under the caption "Principal and Selling Stockholders" in
the Prospectus is complete and accurate in all material respects.
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(v) Neither such Selling Shareholder nor any of such
Selling Shareholder's affiliated directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
or has any other association (within the meaning of Article I, Section l(m) of
the by-laws of the NASD) or affiliation with, any member firm of the NASD.
(vi) Certificates in negotiable form for the total number
of the Option Shares to be sold hereunder by the Selling Shareholders have been
placed in custody with ___________________ as custodian (the "Custodian")
pursuant to the Custodian Agreement executed by each Selling Shareholder for
delivery of any Option Shares to be sold hereunder by the Selling Shareholders.
Each of the Selling Shareholders specifically agrees that any Option Shares
represented by the certificates held in custody for the Selling Shareholders
under the Custodian Agreement are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Shareholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Shareholders hereunder shall not be terminable by any act or deed of the Selling
Shareholders (or by any other person, firm or corporation including the Company,
the Custodian or the Underwriters) or by operation of law (including the death
of an individual Selling Shareholder or the dissolution of a corporate Selling
Shareholder) or by the occurrence of any other event or events, except as set
forth in the Custodian Agreement. If any such event should occur prior to the
delivery to the Underwriters of the Option Shares hereunder, certificates for
the Options Shares shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such event has not occurred. The
Custodian is authorized to receive and acknowledge receipt of the proceeds of
sale of the Option Shares held by it against delivery of such Option Shares.
(vii) This Agreement has been duly executed and delivered by
the Selling Shareholders and constitutes a valid and binding obligation of each
of them enforceable in accordance with its terms except as rights to indemnity
and contribution hereunder may be limited by applicable laws and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by general equitable principals.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES AND THE OPTION
SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
and the Selling Shareholder agree to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a price of $_____
per share, the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be
made in New York Clearing House funds by Federal (same day) funds against
delivery of certificates therefor to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be made through
the facilities of the Depository Trust Company, New York, New York at 10:00
a.m., New York time, on the third business day after the date of this Agreement
or at such other time and
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date not later than five business days thereafter as you and the Company shall
agree upon, such time and date being herein referred to as the "Closing Date."
(As used herein, "business day" means a day on which the New York Stock Exchange
is open for trading and on which banks in New York are open for business and are
not permitted by law or executive order to be closed.)
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and the Selling Shareholders hereby grant an option to the
several Underwriters to purchase the Option Shares at the price per share as set
forth in the first paragraph of this Section 2. The option granted hereby may
be exercised in whole or in part by giving written notice (i) at any time before
the Closing Date and (ii) only once thereafter within 30 days after the date of
this Agreement, by you, as Representatives of the several Underwriters, to the
Company and the Selling Shareholders setting forth the number of Option Shares
as to which the several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such certificates are to be delivered. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The number of Option Shares to be purchased by each Underwriter
shall be in the same proportion to the total number of Option Shares being
purchased as the number of Firm Shares being purchased by such Underwriter bears
to the number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the Selling
Shareholders. To the extent, if any, that the option is exercised, payment for
the Option Shares shall be made on the Option Closing Date in Federal (same day)
funds drawn to the order of the Company for the Option Shares to be sold by it
and to the order of the Custodian for the Option Shares to be sold by the
Selling Shareholders against delivery of certificates therefor through the
facilities of the Depository Trust Company in New York, New York.
(d) If on the Option Closing Date, any Selling Shareholder fails
to sell the Option Shares which such Selling Shareholder has agreed to sell on
such date as set forth in Schedule II hereto, the Company agrees that it will
sell or arrange for the sale of that number of shares of Common Stock to the
Underwriters which represent the Option Shares which such Selling Shareholder
has failed to so sell, as set forth in Schedule II thereto, or such lesser
number as may be requested by the Representatives.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deems it advisable to
do so. The Firm Shares are to be
- 11 -
initially offered to the public at the public offering price set forth in the
Prospectus. The Representatives may from time to time thereafter change the
public offering price and other selling terms. To the extent, if at all, that
any Option Shares are purchased pursuant to Section 2 hereof, the Underwriters
will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters, a copy of which shall be furnished to the Company prior to the
Closing Date.
4. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved (which approval shall not be unreasonably withheld or delayed) by the
Representatives containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations.
(ii) The Company will advise the Representatives promptly
(A) when the Registration Statement or any post-effective amendment thereto
shall have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, and
(D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The Company will use its
best efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as
- 12 -
are or may be required to continue such qualifications in effect for so long a
period as the Representatives may reasonably request for distribution of the
Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or
before the Closing Date, four signed copies of the Registration Statement and
all amendments thereto including all exhibits filed therewith, and will deliver
to the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, so as to
permit the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so made
available.
(vii) Prior to the Closing Date, the Company will furnish to
the Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
- 13 -
(viii) No offering, sale, short sale or other disposition of
any shares of Common Stock or other securities convertible into or exchangeable
or exercisable for shares of Common Stock or derivative of Common Stock (or
agreement for such) will be made for a period of 90 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than hereunder or
with the prior written consent of BT Alex. Xxxxx Incorporated. The foregoing
sentence shall not apply to (A) the Shares to be sold to the Underwriters
pursuant to this Agreement, (B) shares of Common Stock issued by the Company
upon the exercise of options granted under the stock options plans of the
Company (the "Options Plans") all as described in footnote (___) to the table
under the caption "Capitalization" in the Prospectus, (C) the grant of options
to purchase Common Stock under the Option Plans, and (D) shares of Common Stock
or securities convertible into, or exercisable for, shares of Common Stock
pursuant to an acquisition transaction.
(ix) The Company has caused each officer and director of
the Company and certain stockholders (Xxx Xxxxxxx, the entities affiliated
with the Xxxx Family Trusts and Gotel Investment, Ltd.) to furnish to you, on
or prior to the date of this Agreement, a letter or letters, in form and
substance satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose of any
shares of Common Stock of the Company or other capital stock of the Company,
or any other securities convertible, exchangeable or exercisable for Common
Shares or derivative of Common Shares owned by such person or request the
registration for the offer or sale of any of the foregoing (or as to which
such person has the right to direct the disposition of) for a period of 90
days, and in certain cases, for a period of 45 days, after the date of this
Agreement, directly or indirectly, except with the prior written consent of
BT Alex. Xxxxx Incorporated ("Lockup Agreements").
(x) The Company shall apply the net proceeds of its sale
of the Shares as set forth in the Prospectus.
(xi) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the 0000 Xxx.
(xii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xiii) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company, provided that the actions of any of the
Underwriters in that regard shall not be deemed actions of the Company.
(b) The Selling Sharehodler and subject to the exercise of the
Underwriters' Option, each of the Additional Selling Shareholders covenants
and agrees with the several Underwriters that:
- 14 -
(i) No offering, sale, short sale or other disposition
of any shares of Common Stock or other capital stock of the Company or other
securities convertible, exchangeable or exercisable for Common Stock or
derivative of Common Stock owned by such Selling Shareholder or request the
registration for the offer or sale of any of the foregoing (or as to which
such Selling Shareholder has the right to direct the disposition of) will be
made for a period of 90 days after the date of this Agreement, directly or
indirectly, by such Selling Shareholder otherwise than hereunder or with the
prior written consent of BT Alex. Xxxxx Incorporated.
(ii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the Option Closing Date a
properly completed and executed United States Treasury Department Form W-8 or
W-9 (or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(iii) Such Selling Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of Common Stock, provided that the actions of any of the
Underwriters in that regard shall not be deemed actions of such Selling
Shareholder.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting
fees of the Company; the fees and disbursements of counsel for the Company and
the Selling Shareholders; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration Statement, Preliminary
Prospectuses, the Prospectus, this Agreement, the Underwriters' Selling
Memorandum, the Underwriters' Invitation Letter, the Blue Sky Survey and any
supplements or amendments thereto; the filing fees of the Commission; the filing
fees and expenses (including legal fees and disbursements) incident to securing
any required review by the NASD of the terms of the sale of the Shares; the
Listing Fee of the Nasdaq National Market; and the expenses, including the fees
and disbursements of counsel for the Underwriters, incurred in connection with
the qualification of the Shares under State securities or Blue Sky laws which
fees and expenses of such counsel shall not exceed $20,000. [THE SELLING
SHAREHOLDERS HAVE AGREED WITH THE COMPANY TO REIMBURSE THE COMPANY FOR A PORTION
OF SUCH EXPENSES.] To the extent, if at all, that any of the Selling
Shareholders engage special legal counsel to represent them in connection with
this offering, the fees and expenses of such counsel shall be borne by such
Selling Shareholder. Any transfer taxes imposed on the sale of the Shares to
the several Underwriters will be paid by the Sellers pro rata. The Company
agrees to pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed shares of the Common Stock by the Underwriters to employees and persons
having business relationships with the Company and its Subsidiaries. The
Sellers shall not, however, be required to pay for any of the Underwriters
expenses (other than those related to
- 15 -
qualification under NASD regulation and State securities or Blue Sky laws and
subject to the limit described above) except that, if this Agreement shall not
be consummated because the conditions in Section 6 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to
Section 11 hereof, or by reason of any failure, refusal or inability on the part
of the Company or the Selling Shareholders to perform any undertaking or satisfy
any condition of this Agreement or to comply with any of the terms hereof on
their part to be performed, unless such failure to satisfy said condition or to
comply with said terms be due to the default or omission of any Underwriter,
then the Company shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including fees and disbursements of counsel, reasonably
incurred in connection with investigating, marketing and proposing to market the
Shares or in contemplation of performing their obligations hereunder; but the
Company and the Selling Shareholders shall not in any event be liable to any of
the several Underwriters for damages on account of loss of anticipated profits
from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Selling Shareholders contained herein, and to the performance by the
Company and the Selling Shareholders of their covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or the Selling Shareholders, shall be
contemplated by the Commission and no injunction, restraining order, or order of
any nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Xxxxxxx &
XxXxxxxx, counsel for the Company, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Underwriters (and stating that it may
be relied upon by counsel to the Underwriters) to the 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, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration
- 16 -
Statement; each of the Company's United States Subsidiaries has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement; the Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the conduct of
their business requires such qualification, or in which the failure to qualify
would have a materially adverse effect upon the business of the Company and the
Subsidiaries taken as a whole; and the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Company or a Subsidiary; and,
to the best of such counsel's knowledge, the outstanding shares of capital stock
of each of the Subsidiaries is owned free and clear of all liens, encumbrances
and equities and claims, and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into any shares of capital stock or of ownership interests in the
Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus; the
outstanding shares of the Company's Common Stock, including the Shares to be
sold by the Selling Shareholders, have been duly authorized and validly issued
and are fully paid and non-assessable; all of the Shares conform to the
description thereof contained in the Prospectus; the certificates for the
Shares, assuming they are in the form filed with the Commission, are in due and
proper form under the Delaware General Corporation Law; the shares of Common
Stock, including the Option Shares, if any, to be sold by the Company pursuant
to this Agreement have been duly authorized and will be validly issued, fully
paid and non-assessable when issued and paid for as contemplated by this
Agreement; and no preemptive rights of stockholders exist under the Amended and
Restated Articles of Incorporation with respect to any of the Shares or the
issue or sale thereof.
(iii) Except as described in or contemplated by the
Prospectus or as provided on a schedule attached to the opinion, to the
knowledge of such counsel, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company nor any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Shares or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under
the Act and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the Act.
- 17 -
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules, footnotes and other financial and statistical information
contained therein).
(vi) The statements under the captions "Management---1997
Omnibus Stock Incentive Plan;" "Management---1996 Outside Director Nonstatutory
Stock Option Plan;" "Management---Employment Contracts and Change of Control
Arrangements;" "Description of Capital Stock;" and "Shares Eligible for Future
Sale" in the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, fairly summarize in all
material respects the information called for with respect to such documents and
matters.
(vii) Such counsel does not know of any material contracts
or documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are no so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(viii) Based solely on our review of the letter of Seed
Xxxxxxx & Xxxx LLP regarding litigation matters relating to the Company or
any of its Subsidiaries, such counsel knows of no material legal or domestic
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Certificate of Incorporation or By-Laws of
the Company, or any material agreement or instrument known to such counsel
and filed as an Exhibit to the Registration Statement to which the Company or
any of the Subsidiaries is a party or any applicable United States federal,
California or Delaware law or regulation, or so far as is known to such
counsel, any order, writ or injunction that is material to the Company or its
United States Subsidiaries, taken as a whole, of any United States federal or
California or Delaware state jurisdication, court or governmental
instrumentality.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by state
securities laws as to which such counsel need express no opinion) except such as
have been obtained or made, specifying the same.
- 18 -
(xii) The Company is not, and will not become, as a result
of the consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiii) This Agreement has been executed and delivered on
behalf of the Selling Shareholders.
(xiv) Each Selling Shareholder has full legal right, power
and authority, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the portion of the Shares to be sold by
such Selling Shareholder.
(xv) The Custodian Agreement and the Power of Attorney
executed and delivered by each Selling Shareholder is valid and binding.
(xvi) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the Uniform Commercial Code) have acquired good
and marketable title to the Shares being sold by each Selling Shareholder on the
Closing Date, and the Option Closing Date, as the case may be, free and clear of
all liens, encumbrances, equities and claims.
(xvii) The Shares have been listed by the Nasdaq National
Market.
In rendering such opinion Xxxxxxx & XxXxxxxx may rely as to matters
governed by the laws of states other than California or Delaware or Federal laws
on local counsel in such jurisdictions, provided that in each case such counsel
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In rendering such opinion with respect to the
Selling Shareholders, Xxxxxxx & XxXxxxxx may rely on Seed Xxxxxxx & Xxxx,
counsel for the Selling Shareholders, provided that Xxxxxxx & XxXxxxxx shall
state that they believe that they and the Underwriters are justified in relying
on Seed Xxxxxxx & Xxxx, counsel for the Selling Shareholders. In addition to
the matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the Option
Closing Date, as the case may be, contained an 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, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express an opinion as to the financial statements and related
schedules, footnotes and other financial and statistical information contained
- 19 -
therein). With respect to such statement, Xxxxxxx & XxXxxxxx may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(c) The Representatives shall have received from Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, P.C. ("WSGR"), counsel for the Underwriters, an opinion dated
the Closing Date or the Option Closing Date, as the case may be, to the effect
that:
(i) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and non-assessable.
(ii) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement of
the Company, except as rights to indemnity or contribution pursuant to Section 8
thereunder may be limited under applicable law and except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws generally
affecting creditors' rights.
In rendering such opinion WSGR may rely as to all matters governed
other than by the laws of the State of California or Federal laws on the opinion
of counsel referred to in Paragraph (b) of this Section 6. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, or any amendment thereto, as of
the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) as of
the Closing Date or the Option Closing Date, as the case may be, contained an
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,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact, necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to
such statement, WSGR may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(d) The Representatives shall have received at or prior to the
Closing Date from WSGR a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
laws of such jurisdictions as the Representatives may reasonably have designated
to the Company.
(e) You shall have received, on each of the dates hereof, the
Closing Date and the Option Closing, as the case may be, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to you, of Xxxxxx Xxxxxxxx LLP
- 20 -
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations; and containing such other statements and
information as is ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received from Xxxxxx Xxxxxxxx
LLP a letter stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as of December
31, 1997, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(g) The Representatives shall have received from counsel for
the Selling Shareholders an opinion, addressed to Xxxxxxx & XxXxxxxx and dated
the Closing Date, in form reasonably acceptable to counsel for the
Underwriters, and if Option Shares are purchased at any date after the
Closing Date, an additional opinion from such counsel, addressed to Xxxxxxx &
XxXxxxxx and dated the Option Closing Date, confirming that the statements
expressed as of the Closing Date in such opinion remain valid as of such
later date.
(h) The Representatives shall have received from Xxxxx &
XxXxxxxx, United Kingdom Regulatory counsel for the Company, an opinion,
addressed to the Underwriters and dated the Closing Date, in form reasonably
acceptable to counsel for the Underwriters, and if Option Shares are purchased
at any date after the Closing Date, an additional opinion from such counsel,
addressed to the Underwriters and dated the Option Closing Date, confirming that
the statements expressed as of the Closing Date in such opinion remain valid as
of such later date.
(i) The Representatives shall have received from Doser Amereller
Xxxxx/Xxxxx & XxXxxxxx, Federal Republic of Germany Regulatory counsel for the
Company, an opinion, addressed to the Underwriters and dated the Closing Date,
in form reasonably acceptable to counsel for the Underwriters, and if Option
Shares are purchased at any date after the Closing Date, an additional opinion
from such counsel, addressed to the Underwriters and dated the Option Closing
Date, confirming that the statements expressed as of the Closing Date in such
opinion remain valid as of such later date.
(j) The Representatives shall have received from Xxxxxx &
Naftalin, United States Regulatory counsel for the Company, an opinion,
addressed to the Underwriters and dated the Closing Date, covering the matters
set forth in Exhibit B hereto, and if Option Shares are purchased at any date
after the Closing Date, an additional opinion from such counsel, addressed to
the Underwriters and dated the Option Closing Date, confirming that the
statements expressed as of the Closing Date in such opinion remain valid as of
such later date.
(k) The Representatives shall have received from The
Xxxxxxxxxx Group, United States state regulatory counsel for the Company, an
opinion, addressed to the Underwriters and dated the
- 21 -
Closing Date, in form reasonably acceptable to counsel for the Underwriters, and
if Option Shares are purchased at any date after the Closing Date, an additional
opinion from such counsel, addressed to the Underwriters and dated the Option
Closing Date, confirming that the statements expressed as of the Closing Date in
such opinion remain valid as of such later date.
(l) The Representatives shall have received from Seed, Xxxxxxx
& Xxxx LLP, counsel for the Company, a letter addressed to the Underwriters
and dated the Closing Date, stating that except as set forth in such letter,
such counsel is not aware of any pending or threatened litigation involving
the Company or any of its Subsidiaries, and if Option Shares are purchased at
any date after the Closing Date, an additional letter from such counsel,
addressed to the Underwriters and dated the Option Closing Date, confirming
that the statements expressed as of the Closing Date in such letter remain
valid as of such later date.
(m) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer or President and the Chief Financial Officer of the
Company to the effect that, as of the Closing Date or the Option Closing Date,
as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under
the Act and no stop order suspending the effectiveness of the Registrations
Statement has been issued, and no proceedings for such purpose have been taken
or are, to his or her knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or
- 22 -
an amendment of the Prospectus which has not been so set forth in such
supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, operations, condition (financial or otherwise)
or prospects of the Company and the Subsidiaries taken as a whole, whether or
not arising in the ordinary course of business.
(n) The Company and the Selling Shareholders shall have furnished
to the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(o) The Lockup Agreements described in Section 4(ix) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Representatives and to WSGR,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Selling Shareholders of
such termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.
In such event, the Selling Shareholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of
the Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
- 23 -
(i) to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) 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 any act or failure to act, or (iii) any
alleged act or failure to act by any Underwriter in connection with, or relating
in any manner to, the Shares or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(PROVIDED, that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct);
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof.
(ii) to reimburse each Underwriter and each such
controlling person upon demand for any legal or other out-of-pocket expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Shares, whether or not such Underwriter or
controlling person is a party to any action or proceeding. In the event that it
is finally judicially determined that the Underwriters were not entitled to
receive payments for legal and other expenses pursuant to this subparagraph, the
Underwriters will promptly return all sums that had been advanced pursuant
hereto.
(b) The Selling Shareholders severally and not jointly agree to
indemnify the Underwriters and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or controlling person may become subject
under the Act or otherwise to the same extent as indemnity is provided by the
Company pursuant to Section 8(a) above. In no event, however, shall the
liability of any Selling Shareholder for indemnification and contribution under
this Section 8 exceed the proceeds received by such Selling Shareholder from the
Underwriters in the offering. This indemnity obligation will be in addition to
any liability which the Company may otherwise have.
(c) The obligation of the Company pursuant to Section 8 herein
shall be joint and several with the obligation of each of the Selling
Shareholders, provided, however, that the
- 24 -
obligation of a Selling Shareholder pursuant to Section 8 herein shall be
several and not joint with the obligation of the Company or any other Selling
Shareholder. The Company and the Selling Shareholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they shall
be responsible.
(d) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Shareholders, and each person, if
any, who controls the Company or the Selling Shareholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling Shareholder or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, Selling Shareholder or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(e) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a), (b) or (d) shall be available to
any party who shall fail to give notice as provided in this Section 8(e) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a), (b) or (d). In case any such 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 therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying
- 25 -
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) or (b) and by the Company and the Selling Shareholders
in the case of parties indemnified pursuant to Section 8(d). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding of which indemnification may be sought hereunder (whether or not
any indemnified party is an actual or potential party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(f) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), (b) or (d) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged
- 26 -
omission to state a material fact relates to information supplied by the Company
or the Selling Shareholders on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(f) 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 in this Section 8(f). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Section 8(f) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (e), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation, and (iii) no Selling Shareholder shall be required to
contribute any amount in excess of the proceeds received by such Selling
Shareholder from the Underwriters in the offering. The Underwriters'
obligations in this Section 8(f) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(g) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(h) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
- 27 -
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Selling
Shareholder), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Selling
Shareholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Shareholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Shareholders
except to the extent provided in Section 8 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 9, the Closing
Date or Option Closing Date, as the case may be, may be postponed for such
period, not exceeding seven days, as you, as Representatives, may determine in
order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to BT Alex.
Xxxxx Incorporated, Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
General Counsel; with a copy to BT Alex. Xxxxx Incorporated, One Bankers
Trust Plaza, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General
Counsel; if to the Company, to
- 28 -
Xxxxx X. Xxxx
STAR Telecommunications
000 Xxxx Xx Xx Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxxxxxxx
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
if to the Selling Shareholders, to
The Selling Shareholders
c/o Xxxxxxxxxxx X. Xxxxxxxx, attorney-in-fact
STAR Telecommunications
000 Xxxx Xx Xx Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
with a copy to:
Xxx Xxxx
Seed, Xxxxxxx & Xxxx LLP
0000 Xxxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to the
Company at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
- 29 -
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) suspension of trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange, (iv) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or New York
State authorities, (vi) any downgrading, or placement on any watch list for
possible downgrading, in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Exchange Act); (vii) the suspension of trading of the
Company's common stock by the Nasdaq National Market, the Commission, or any
other governmental authority or, (viii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Shareholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished by
any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the Company
or its directors or officers and (c) delivery of and payment for the Shares
under this Agreement.
- 30 -
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Shareholders, the
Company and the several Underwriters in accordance with its terms.
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
- 31 -
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Shareholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
STAR TELECOMMUNICATIONS, INC.
By
--------------------------------------------
Xxxxx X. Xxxx, Chief Financial Officer
Selling Shareholders listed on Schedule II
By
--------------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx, Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. XXXXX INCORPORATED
----------------------------------------
----------------------------------------
As Representatives of the several
Underwriters listed on Schedule I
By: BT Alex. Xxxxx Incorporated
By:
------------------------------------
Authorized Officer
- 32 -
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
--------------------------------- -------------------------------------
BT Alex. Xxxxx Incorporated
-------------
Total
-------------
SCHEDULE II
PART A
Number of Firm
Name of Underwritten Selling Shareholder Shares to be Sold
---------------------------------------- -------------------
Xxxxxxxxxxx X. Xxxxxxxx 330,000
-------
Total 330,000
-------
-------
PART B
Number of Option
Name of Additional Selling Shareholders Shares to be Sold
--------------------------------------- -------------------
Xxxxxxxxxxx X. Xxxxxxxx
Xxxxx Xxxx Xxxxxx
Xxxx X. Xxxxx 85,000
-------
Total
-------
-------
