Underwriting Agreement
______________, 0000
XxxxxXxxxxx Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities, Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxx Xxxxxxxx Incorporated
As Representatives of the several Underwriters
c/o FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
INTRODUCTORY. iBasis, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several underwriters named in SCHEDULE A (the
"Underwriters") $150,000,000 aggregate principal amount of its ___% Convertible
Subordinated Notes due 2005 (the "Firm Notes"). In addition, the Company has
granted to the Underwriters an option to purchase up to an additional
$22,500,000 aggregate principal amount of its ___% Convertible Subordinated
Notes due 2005 (the "Option Notes"), as provided in Section 2. The Firm Notes
and, if and to the extent such option is exercised, the Option Notes, are
collectively called the "Notes." The Notes are to be issued under an Indenture
dated as of March ___, 2000 (the "Indenture"), by and between the Company and
The Bank of New York, as trustee (the "Trustee"), pursuant to which the Notes
will be issued. The Notes will be convertible at the option of the holders into
the Company's Common Stock, par value $0.01 per share (the "Common Stock"). The
Notes and the shares of Common Stock into which the Notes are convertible are
referred to herein as the "Securities." FleetBoston Xxxxxxxxx Xxxxxxxx Inc.,
Xxxxx Securities, Inc., U.S. Bancorp Xxxxx Xxxxxxx Inc. and Xxxx Xxxxxxxx
Incorporated have agreed to act as representatives of the several Underwriters
(in such capacity, the "Representatives,") in connection with the offering and
sale of the Notes.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-96533), which contains a form of prospectus to be used in connection with
the public offering and sale of the Notes. Such registration statement, as
amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act"), including any information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
or Rule 434 under the Securities Act, is called the "Registration Statement."
Any registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement," and from
and after the date and time of filing of the Rule 462(b) Registration Statement
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form
first used by the Underwriter after effectiveness of the Registration
Statement to confirm sales of the Notes, is called the "Prospectus," PROVIDED,
HOWEVER, if the Company has, with the consent of FleetBoston Xxxxxxxxx Xxxxxxxx
Inc., elected to rely upon Rule 434 under the Securities Act, the term
"Prospectus" shall mean the Company's prospectus subject to completion (each, a
"preliminary prospectus") dated February ___, 2000 (such preliminary prospectus
is called the "Rule 434 preliminary prospectus"), together with the applicable
term sheet (the "Term Sheet") prepared and filed by the Company with, the
Commission under Rules 434 and 424(b) under the Securities Act and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus or the Term Sheet, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("XXXXX").
The Company hereby confirms its agreement with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents, warrants and covenants to each Underwriter
as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
with all requests of the Commission for additional or supplemental information.
No, stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceeding for such
purpose have been instituted or are pending or, to the knowledge of the Company,
are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Notes. Each of
the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied in all material respects with the Securities Act and
did not at the time the Registration Statement was declared effective, and will
not contain on the Closing Date and on any Second Closing date, any untrue
statement of a material fact or omit to state a 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. The Prospectus, as
amended or supplemented, as of its date and at all subsequent times prior to and
including the Closing Date and any Second Closing Date, did not and will not on
the Closing Date or any Second Closing Date contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions from
the Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or
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any amendments or supplements thereto, made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing
by the Representative expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has
delivered to the Representatives three complete conformed copies of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company has
not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below), if any, and the completion of the Underwriters'
distribution of the Notes, any offering material in connection with the offering
and sale of the Notes other than a preliminary prospectus, the Prospectus or the
Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnification and contribution hereunder may be limited by
applicable law and public policy and except as the enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(e) THE INDENTURE. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Indenture.
The Indenture has been duly and validly authorized by the Company and, when duly
executed and delivered by the Company, and assuming the due authorization,
execution and delivery by the Trustee, will be the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except as the enforceability thereof may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles. The Indenture meets the requirements for qualification
under the Trust Indenture Act of 1939, as amended (the "TIA") and at the First
Closing Date, the Indenture will have been qualified under the TIA. The
Indenture conforms in all material respects to the description thereof contained
in the Prospectus.
(f) AUTHORIZATION OF THE NOTES. The Company has all requisite corporate
power and authority to execute, deliver and perform its obligations under the
Notes. The Notes, when issued, will be in the form contemplated by the
Indenture. The Notes to be purchased by the Underwriters from the Company have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Underwriters in accordance with the terms of
this Agreement, will be the legal, valid and binding obligations of the Company,
enforceable against the
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Company in accordance with their terms and entitled to the benefits of the
Indenture except as the enforceability thereof may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles. The stockholders of the Company have no preemptive or
similar rights with respect to the Notes or the Common Stock issuable upon
conversion of the Notes.
(g) AUTHORIZATION OF THE SHARES OF COMMON STOCK TO BE ISSUED UPON
CONVERSION OF THE NOTES. The Notes are convertible into shares of Common Stock
in accordance with the terms of the Indenture; the shares of Common Stock
initially issuable upon conversion of the Notes have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the Prospectus.
(h) No APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived or have lapsed in accordance with their terms.
(i) NO MATERIAL ADVERSE CHANGE. Subsequent to the respective dates as
of which information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change" or a "Material
Adverse Effect"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(j) INDEPENDENT ACCOUNTANTS. Xxxxxx Xxxxxxxx LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.
(k) PREPARATION OF THE FINANCIAL STATEMENTS. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles as applied in the United
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States, ("U.S. GAAP") applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes thereto. No
other financial statements or supporting schedules are required to be included
in the Registration Statement. The financial data set forth in the Prospectus
under the captions "Summary-Summary Consolidated Financial Data," "Selected
Consolidated Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement other than the absence of
footnotes. The pro forma and pro forma as adjusted consolidated balance sheet
data of the Company and its subsidiaries and the related notes thereto included
under the caption "Summary--Summary Consolidated Financial Data," "Selected
Consolidated Financial Data" and elsewhere in the Prospectus and in the
Registration Statement present fairly the information contained therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly presented on
the bases described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. No other pro forma
financial information is required to be included in the Registration Statement
pursuant to Regulation S-X.
(l) COMPANY'S ACCOUNTING SYSTEM. The Company and each of its
subsidiaries maintains a system of accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions recorded as
necessary to permit preparation of financial statements in conformity with U.S.
GAAP 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.
(m) SUBSIDIARIES OF THE COMPANY. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
as listed in Exhibit 21.1 to the Registration Statement. The subsidiaries
considered in the aggregate as a single subsidiary, would not constitute a
"significant subsidiary," as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act.
(n) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation or limited liability company, as the
case may be, in good standing under the laws of the jurisdiction in which it is
organized with full corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure to be
so qualified will not have a Material Adverse Change.
(o) CAPITALIZATION AND OTHER CAPITAL STOCK. The authorized, issued and
outstanding capital stock of the Company, upon consummation of the Closing, will
be as set forth in the Prospectus under the caption "Capitalization" (other than
for subsequent issuances, if any, pursuant to employee benefit plans described
in the Prospectus or upon exercise of outstanding options or warrants described
in the Prospectus), assuming no issuance of shares of Common
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Stock in a concurrent public offering by the Company. The Notes and the Common
Stock conform in all material respects to the description thereof contained in
the Prospectus. All of the issued and outstanding Common Stock has been duly
authorized and validly issued, fully paid and nonassessable and will have been
issued in compliance with federal and state securities laws. None of the
outstanding Common Stock has been issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase
securities of the Company. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to purchase
or equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries other than
those accurately and completely described in the Prospectus. The description of
the Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the Prospectus
accurately and completely presents the information required to be shown with
respect to such plans, arrangements, options and rights.
(p) CAPITALIZATION OF THE SUBSIDIARIES. All of the outstanding shares
of capital stock of each subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise disclosed
in the Prospectus, all outstanding shares of capital stock of the subsidiaries
are owned by the Company, either directly or through its wholly-owned
subsidiaries, free and clear of any security interests, claims, liens or
encumbrances.
(q) NO PROHIBITION ON SUBSIDIARIES FROM PAYING DIVIDENDS OR MAKING
OTHER DISTRIBUTIONS. No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or any
other subsidiary of the Company, except as described in or contemplated by the
Prospectus, restrictions under securities laws, and except as such restrictions
would not have a Material Adverse Effect.
(r) STOCK EXCHANGE LISTING. The shares of common stock issuable upon
conversion of the Notes have been registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and are
approved for quotation on the Nasdaq National Market, subject only to official
notice of issuance. The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Nasdaq National Market, nor
has the Company received any notification from the Commission or the National
Association of Securities Dealers, LLC (the "NASD") is contemplating terminating
such registration or listing.
(s) NO CONSENTS, APPROVALS OR AUTHORIZATIONS REQUIRED. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein, except such as have been obtained or made under the
Securities Act and such as may be required (i) under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Notes by
the Underwriters in the manner contemplated here and in the Prospectus, (ii) by
the NASD and (iii) by the federal and provincial law of Canada.
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(t) NON-CONTRAVENTION OF EXISTING INSTRUMENTS AGREEMENTS. Neither the
issuance and sale of the Notes, the issuance of the Common Stock upon conversion
of the Notes, nor the consummation any other of the transactions contemplated
herein or in the Indenture, nor the fulfillment of the terms hereof or thereof
will conflict with, result in a breach or Violation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of
its subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
respective properties.
(u) NO DEFAULTS OR VIOLATIONS. Neither the Company nor any subsidiary
is in violation or default of (i) any provision of its charter or by-laws, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is subject
or (iii) any statute, law, rule, regulation, judgment, order or decree of any
court; regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or such subsidiary or any
of their respective properties, as applicable, except any such violation or
default which would not, singly or in the aggregate, result in a Material
Adverse Change or except as otherwise disclosed in the Prospectus.
(v) NO ACTIONS, SUITS OR PROCEEDINGS. No action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries or its or their respective
properties is pending or, to the knowledge of the Company, threatened that (i)
could reasonably be expected to have a Material Adverse Effect on the
performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to result in a Material
Adverse Effect.
(w) ALL NECESSARY PERMITS, ETC. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the Company nor
any subsidiary has received any notice of proceedings relating to the revocation
or modification of, or non-compliance with, any such certificate, authorization
or permit which singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could reasonably be expected to result in a
Material Adverse Change.
(x) TITLE TO PROPERTIES. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(i) above (or elsewhere in the
Prospectus), in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary. The real property, improvements, equipment and
personal property held under lease
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by the Company or any subsidiary are held under leases, with such exceptions, if
any, as are not material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.
(y) TAX LAW COMPLIANCE. The Company and its consolidated subsidiaries
have filed all necessary federal, state, local and foreign income and franchise
tax returns or have properly requested extensions thereto and have paid all
taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them except as may be
being contested in good faith and by appropriate proceedings. The Company has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(i) above in respect of all federal, state,
local and foreign income and franchise taxes for all periods as to which the tax
liability of the Company of its consolidated subsidiaries has not been finally
determined. The Company is not aware of any tax deficiency that has been or
might be asserted or threatened against the Company that could result in a
Material Adverse Change.
(z) INTELLECTUAL PROPERTY RIGHTS. Each of the Company and its
subsidiaries owns or possesses legally enforceable rights to use all patents,
patent rights or licenses, inventions, collaborative research agreements, trade
secrets, know-how, trademarks, service marks, trade names and copyrights which
are necessary to conduct its businesses as described in the Registration
Statement and Prospectus; the expiration of any patents, patent rights, trade
secrets trademarks, service marks, trade names or copyrights would not result in
a Material Adverse Change that is not otherwise accurately and completely
described in the Prospectus; the Company has not received any notice of, and has
no knowledge of any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could reasonably be
expected to result in a Material Adverse Change. There is no claim being made
against the Company regarding patents, patent trademarks, service marks, trade
names or copyright that could reasonably be expected to result in a Material
Adverse Effect. The Company and its subsidiaries do not in the conduct of their
business as now conducted and as proposed to be conducted as described in the
Prospectus infringe or conflict with any right or patent of any third party, or
any discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company or any of its
subsidiaries, which such infringement or conflict could reasonably be expected
to result in a Material Adverse Change.
(aa) YEAR 2000 PREPAREDNESS. There are no issues related to the
Company's, or any of its subsidiaries', preparedness for the Year 2000 that
(i) are of a character required to be described or referred to in the
Registration Statement or Prospectus by the Securities Act which have not
been accurately and completely described in the Registration Statement or
Prospectus or (ii) could reasonably be expected to result in any Material
Adverse Change or that might materially affect the properties, assets or
rights of the Company or any of its Subsidiaries. All internal computer
systems and each Constituent Component (as defined below) of those systems
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and all computer-related products and each Constituent Component of those
products of the Company and each of its subsidiaries fully comply with Year 2000
Qualification Requirements. For purposes of this Agreement, "Year 2000
Qualifications Requirements" means that the internal computer systems and each
Constituent Component (as defined below) of those systems and all
computer-related products and each Constituent Component (as defined below) of
those products of the Company and each of its Subsidiaries (i) have been
reviewed to confirm that they store, process (including sorting and performing
mathematical operations, calculations and computations), input and output data
containing date and information correctly regardless of whether the date
contains dates and times before, on or after January 1, 2000, (ii) have been
designated to ensure date and time entry recognition and calculations, and date
data interface values that reflect the century, (iii) accurately manage and
manipulate data involving dates and times, including single century formulas and
multi-century formulas, and will not cause an abnormal ending scenario within
the application or generate incorrect values or invalid results involving such
dates, (iv) accurately process any date rollover, and (v) accept and respond to
two-digit year date input in a manner that resolves any ambiguities as to the
century. For purposes of this Agreement, "Constituent Component" means all
software (including operating systems, programs, packages and utilities),
firmware, hardware, networking components, and peripherals provided as part of
the configuration. The Company has inquired of material vendors as to their
preparedness for the Year 2000 and has disclosed in the Registration Statement
or Prospectus any issues relating to such material vendors and known to the
Company that could reasonably be expected to result in any Material Adverse
Change.
(bb) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or
other similar fees or charges under federal, state, local or foreign laws
required to be paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the Notes.
(cc) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt of
payment for the Notes will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(dd) INSURANCE. Except as otherwise accurately and completely described
in the Prospectus, each of the Company and its subsidiaries is insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes, general liability and Directors and Officers liability. The Company
has no reason to believe that it or any subsidiary will not be able (i) to renew
its existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. Neither of the Company nor any
subsidiary has been denied any insurance coverage which it has sought or for
which it has applied.
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(ee) LABOR MATTERS. To the Company's knowledge, no labor disturbance by
the employees of the Company or any of its subsidiaries exists or is imminent;
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers that could reasonably be
expected to result in a Material Adverse Change.
(ff) NO PRICE STABILIZATION OR MANIPULATION. The Company and, to its
knowledge, each of its directors and officers, has not taken and will not take,
directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Notes.
(gg) LOCK-UP AGREEMENTS. Each officer and director of the company and
each beneficial owner of one or more percent of the outstanding issued share
capital of the Company (or option to acquire the same) has signed an agreement
in the form attached hereto as EXHIBIT A (the "Lock-up Agreements"). The Company
has provided to counsel for the Underwriters a complete and accurate list of all
securityholders of the Company and the number and type of securities held by
each securityholder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the Lock-up Agreements presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other stockholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
(hh) RELATED PARTY TRANSACTIONS. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been accurately
and completely described.
(ii) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, any employee or
agent of the Company or any subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to be disclosed in
the Prospectus.
(jj) ENVIRONMENTAL LAWS. (i) The Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, except where the failure to comply
would not result in a Material Adverse Change, (ii) the Company has received no
notice from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus, (iii) the Company will not be required to make
future material capital expenditures to comply with Environmental Laws and (iv)
no property which is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, ET
SEQ.), or otherwise designated as a contaminated site under applicable state or
local law.
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(kk) ERISA COMPLIANCE. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfounded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(ll) EXCHANGE ACT REPORTS FILED. The Company has filed all reports
required to be filed pursuant to the Securities Act and the Exchange Act.
(mm) FEDERAL RESERVE SYSTEM COMPLIANCE. Neither the Company nor any
agent acting on its behalf has taken, and none of them will take, any action
that might cause this Agreement or the issuance or sale of the Securities to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System or analogous foreign laws and
regulations.
Any certificate signed by an executive officer of the Company and
delivered to the Representative or to counsel for the Underwriters at the
closing of any sale of the Notes shall be deemed to be a representation and
warranty by the Company to each Underwriter as to the matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE NOTES.
(a) THE FIRM NOTES. On the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Company agrees to issue and sell to the Underwriters, and
each Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of [97]% of the principal amount thereof (the
"Purchase Price"), the Firm Notes in the respective principal amount of Firm
Notes as hereinafter set forth. The obligation of each Underwriter to the
Company shall be to purchase from the Company that aggregate principal amount of
Firm Notes which is set forth opposite the name of such Underwriter set forth on
Schedule A.
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(b) THE FIRST CLOSING DATE. Delivery of the Firm Notes to be purchased
by the Underwriters and payment therefor shall be made by the Company and the
Representatives at 6:00 a.m. San Francisco time, at the New York, New York
offices of Xxxxxxx Xxxx LLP (or at such other place as may be agreed upon among
the Representatives and the Company), (i) on the third (3rd) full business day
following the first day that Notes are traded, (ii) if this Agreement is
executed and delivered after 1:30 P.M., San Francisco time, the fourth (4th)
full business day following the day that this Agreement is executed and
delivered or (iii) at such other time and date not later that seven (7) full
business days following the first day that Notes are traded as the
Representative and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "Closing
Date;" PROVIDED, HOWEVER, that if the Company has not made available to the
Representatives copies of the Prospectus within the time provided in Section
4(d) hereof, the Representative may, in its sole discretion, postpone the
Closing Date until no later that two (2) full business days following delivery
of copies of the Prospectus to the Representative. The Firm Notes to be so
delivered will be made available to you at such office or such other location
including, without limitation, in New York, New York, as you may reasonably
request for checking at least one (1) full business day prior to the Closing
Date and will be in such names and denominations as you may request, such
request to be made at least two (2) full business days prior to the Closing
Date. If the Representatives so elect, delivery of the Firm Notes may be made by
credit through full fast transfer to the accounts at the Depository Trust
Company designated by the Representatives.
(c) THE OPTION NOTES; THE SECOND CLOSING DATE. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to an aggregate of $22,500,000 principal amount of Option Notes
from the Company at the Purchase Price. The option granted hereunder is for use
by the Underwriters solely in covering sales of securities in excess of the
aggregate principal amount of Firm Notes. The option granted hereunder may be
exercised at any time upon notice by the Representatives to the Company, which
notice may be given at any time within 30 days from the date of this Agreement.
The time and date of delivery of the Option Notes, if subsequent to the First
Closing Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Option Notes are
to be purchased, each Underwriter agrees, severally and not jointly, to purchase
the aggregate principal amount of Option Notes that bears the same proportion to
the aggregate principal amount of Option Notes to be purchased as the aggregate
principal amount of Firm Notes set forth on SCHEDULE A opposite the name of such
Underwriter bears to the total aggregate principal amount of Firm Notes. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(d) PUBLIC OFFERING OF THE NOTES. The Representatives hereby advise the
Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Notes as soon
after this Agreement has been executed and the
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Registration Statement has been declared effective as the Representatives, in
their sole judgment, have determined is advisable and practicable.
(e) PAYMENT FOR THE NOTES. Payment for the Notes shall be made at the
First Closing Date (and, if applicable, at the Second Closing Date) by wire
transfer in immediately available funds to the order of the Company.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Notes and any Option Notes the Underwriters have agreed to purchase.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc., individually and not as a Representative of
the Underwriters, may (but shall not be obligated to) make payment for any Notes
to be purchased by any Underwriter whose funds shall not have been received by
the Representatives by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
(f) DELIVERY OF THE NOTES. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Notes to an account or accounts at The
Depository Trust Company, as designated by the Representatives for the accounts
of the Representatives and the several Underwriters at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered a credit representing the Option Notes the
Underwriters have agreed to purchase at the First Closing Date (or the Second
Closing Date, as the case may be), to an account or accounts at The Depository
Trust Company as designated by the Representatives for the accounts of the
Representatives and the several Underwriters, against the irrevocable release of
a wire transfer of immediately available funds for the amount of the purchase
price therefor. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
SECTION 3. COVENANTS OF THE COMPANY.
The Company further covenants and agrees with each Underwriter as
follows:
(a) REGISTRATION STATEMENT MATTERS. The Company will (i) use its best
efforts to cause the Registration Statement to be declared effective or, if the
procedure in Rule 430A of the Securities Act is followed, to prepare and timely
file with the Commission under Rule 424(b) under the Securities Act a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A of the Securities Act and (ii) 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 Securities Act. If the Company elects to
rely on Rule 462(b) under the Securities Act, the Company shall file a Rule
462(b) Registration Statement with the Commission in compliance with Rule 462(b)
under the Securities Act prior to the time confirmations are sent or given, as
specified by Rule 462(b)(2)
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under the Securities Act, and shall pay the applicable fees in accordance with
Rule 111 under the Securities Act.
(b) SECURITIES ACT COMPLIANCE. The Company will advise the
Representatives promptly (i) when the Registration Statement or any
post-effective amendment thereto shall be declared effective, (ii) of receipt of
any comments from the Commission, (iii) of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information and (iv) 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.
(c) BLUE SKY COMPLIANCE. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Notes for sale under the securities laws of such jurisdictions (both national
and foreign) as the Representatives may reasonably request 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 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 theNotes.
(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS. The Company will comply with the Securities Act and the Exchange
Act, and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Notes 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 Representatives or counsel for 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, and furnish at its own
expense to the Underwriters and to dealers, 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.
(e) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The
Company agrees to furnish the Representatives, without charge, during the period
beginning on the date hereof and ending on the later of the First Closing Date
or such date, as in the opinion of counsel for the Underwriters, the Prospectus
is no longer required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), as many copies of the
Prospectus and any amendments and supplements thereto as the Representatives may
request.
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(f) INSURANCE. The Company shall obtain Directors and Officers
liability insurance in the minimum amount of $10.0 million which shall apply to
the offering contemplated hereby.
(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the ninety (90)
day period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Company Notes has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, promptly prepare, consult with you
concerning the substance of and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(h) USE OF PROCEEDS. The Company shall apply the net proceeds from the
sale of the Notes sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(i) TRANSFER AGENT. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(j) EARNINGS STATEMENT. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering a period of at least 12
months beginning after the effective date of the Registration Statement that
satisfies the provisions of Section 11(a) of the Securities Act.
(k) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under the
Exchange Act as required by the NASD.
(l) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company
will not, without the prior written consent of FleetBoston Xxxxxxxxx Xxxxxxxx
Inc., for a period of 90 days following the date of the Prospectus, offer, sell
or contract to sell, or otherwise dispose of or enter into any transaction which
is designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any of its Common Stock or any
securities convertible into, or exchangeable for, Common Stock; PROVIDED,
HOWEVER, that the Company may (i) issue Common Stock upon conversion of the
Notes, (ii) issue and sell Common Stock pursuant to any director or employee
stock option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the date of the Prospectus and described in the Prospectus
so long as at the time of such issuance or sale, the Company already has or
otherwise obtains a Lock-Up Agreement in the form of Exhibit ___ from such
holder providing that none of those shares of Common Stock may be transferred
during the period of 90 days from the date that the Registration Statement is
declared effective (the "Lock-Up Period") and the Company shall enter stop
transfer instructions with its transfer agent and registrar against the transfer
of any such Common Stock, (iii) the Company may issue
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the shares of Common Stock to be issued in a concurrent offering as described in
the Prospectus, and (iv) the Company may issue Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding at the date of
the Prospectus and described in the Prospectus. Notwithstanding the foregoing,
FleetBoston Xxxxxxxxx Xxxxxxxx Inc. agrees it will not unreasonably withhold
consent to the issuance of equity securities in connection with an acquisition.
(m) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of three
years from the date hereof the Company will furnish to the Representatives (i)
as soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, stockholders' equity and
cash flows for the year then ended and the unqualified opinion thereon of the
Company's independent public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K
or other report filed by the Company with the Commission, the National
Association of Securities Dealers, LLC or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
(n) DEPOSITORY TRUST COMPANY. The Company shall use its best efforts to
permit the Notes to be eligible for clearance and settlement through the
Depository Trust Company.
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Notes as
provided herein on the First Closing Date and, with respect to the Option Notes,
the Second Closing Date, shall be subject to the accuracy of the representations
and warranties on the part of the Company set forth in Section 1 hereof as of
the date hereof and as of the First Closing Date as though then made and, with
respect to the Option Notes, as of the Second Closing Date as though then made,
to the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS, NO STOP ORDER, NO
OBJECTION FROM THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, LLC. The
Registration Statement shall have been declared effective prior to the execution
of this Agreement, or at such later date as shall be consented to in writing by
you; and no stop order suspending the effectiveness thereof shall have been
issued and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of Underwriters' Counsel; and the National Association
of Securities Dealers, LLC shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(b) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Notes and the authorization, issuance and delivery of the Common Stock issuable
upon conversion of the Notes, shall have been in
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form and substance reasonably satisfactory to Underwriters' Counsel, and such
counsel shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this Section 4.
(c) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and
delivery of this Agreement and prior to the First Closing Date, or the Second
Closing Date, as the case may be, there shall not have been any Material Adverse
Change in the condition (financial or otherwise), earnings, operations, business
or prospects of the Company and its subsidiaries considered as one enterprise
from that described in the Registration Statement or Prospectus, which, in your
sole judgment, is material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the Notes as
contemplated by the Prospectus.
(d) OPINION OF COUNSEL FOR THE COMPANY. You shall have received on the
First Closing Date and the Second Closing Date, as the case may be, an opinion
of Xxxxxxx Xxxx LLP counsel for the Company substantially in the form of EXHIBIT
B attached hereto, dated the First Closing Date or the Second Closing Date, as
the case may be, addressed to the Underwriters and with reproduced copies or
signed counterparts thereof for each of the Underwriters.
(e) OPINION OF GOVERNMENT REGULATION COUNSEL FOR THE COMPANY. You shall
have received on the First Closing Date and the Second Closing Date, as the case
may be, an opinion of Xxxxxxx Berlin Xxxxxxx Xxxxxxxx, LLP, government
regulation counsel for the Company substantially in the form of EXHIBIT C
attached hereto.
(f) OPINION OF COUNSEL FOR THE UNDERWRITERS. You shall have received on
the First Closing Date and the Second Closing Date, as the case may be, an
opinion of Xxxxxx & Bird LLP, substantially in the form of EXHIBIT D hereto. The
Company shall have furnished to such counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.
(g) ACCOUNTANTS' COMFORT LETTER. You shall have received on the First
Closing Date and on the Second Closing Date, as the case may be, a letter from
Xxxxxx Xxxxxxxx LLP addressed to the Underwriters, dated the First Closing Date
or the Second Closing Date, as the case may be, confirming that they are
independent certified public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published Rules and Regulations
and based upon the procedures described in such letter delivered to you
concurrently with the execution of this Agreement (herein called the "Original
Letter"), but carried out to a date not more than four (4) business days prior
to the First Closing Date or the Second Closing Date, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the First Closing Date or the Second
Closing Date, as the case may be, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of such letter, or to reflect the availability of
more recent financial statements, data or information. The letter shall not
disclose any change in the condition (financial or otherwise), earnings,
operations, business or prospects of the Company and its subsidiaries considered
as one enterprise from that described in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it,
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in your sole judgment, impracticable or inadvisable to proceed with the public
offering of the Notes as contemplated by the Prospectus. The Original Letter
from Xxxxxx Xxxxxxxx LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Securities Act
and the applicable published Rules and Regulations, (ii) set forth their opinion
with respect to their examination of the consolidated balance sheet of the
Company as of December 31, 1998 and 1999 and related consolidated statements of
operations, shareholders' equity, and cash flows for the twelve (12) months
ended December 31, 1997, 1998 and 1999, and (iii) address other matters agreed
upon by Xxxxxx Xxxxxxxx LLP and you. In addition, you shall have received from
Xxxxxx Xxxxxxxx LLP a letter addressed to the Company and made available to you
for the use of the Underwriters 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 consolidated
financial statements as of December 31, 1999, did not disclose any weaknesses in
internal controls that they considered to be material weaknesses.
(h) OFFICERS' CERTIFICATE. You shall have received on the First Closing
Date and the Second Closing Date, as the case may be, a certificate of the
Company, dated the First Closing Date or the Second Closing Date, as the case
may be, signed by the Chief Executive Officer and Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this Agreement
are true and correct, as if made on and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied in all material respects with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior
to the First Closing Date or the Second Closing Date, as the case may
be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;
(iii) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained all material information required to be
included therein by the Securities Act and in all material respects
conformed to the requirements of the Securities Act, the Registration
Statement and the Prospectus, and any amendments or supplements
thereto, did not and does not include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made not misleading; and, since the
effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented Prospectus
which has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been
(a) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or
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prospects of the Company and its subsidiaries considered as one
enterprise, (b) any transaction that is material to the Company and its
subsidiaries considered as one enterprise, except transactions entered
into in the ordinary course of business, (c) any obligation, direct or
contingent, that is material to the Company and its subsidiaries
considered as one enterprise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course of
business, (d) except as described in the Prospectus, any change in the
capital stock or outstanding indebtedness of the Company or any of its
subsidiaries that is material to the Company and its subsidiaries
considered as one enterprise, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any
of its subsidiaries, or (f) any loss or damage (whether or not insured)
to the property of the Company or any of its subsidiaries which has
been sustained or will have been sustained which has had or would
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or
prospects of the Company and its subsidiaries considered as one
enterprise.
(i) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY. The
Company shall have obtained and delivered to you an agreement in the form of
EXHIBIT A attached hereto from each officer and director of the Company, and
each beneficial owner of one or more percent of the outstanding issued share
capital of the Company (including holders of options to acquire the same).
(j) STOCK EXCHANGE LISTING. The Common Stock issuable upon conversion
of the Notes shall have been approved for quotation on the Nasdaq National
Market, subject only to official notice of issuance.
(k) COMPLIANCE WITH PROSPECTUS DELIVERY REQUIREMENTS. The Company shall
have complied with the provisions of Section 3(e) hereof with respect to the
furnishing of Prospectuses.
(l) INDENTURE MATTERS. The Indenture shall have been duly executed and
delivered by the Company and the Trustee and the Notes shall have been duly
executed and delivered by the Company and duly authenticated by the Trustee.
(m) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date
and the Second Closing Date, as the case may be, the Representative and counsel
for the Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Notes as contemplated herein, or in order
to evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Notes, at any time prior to the
Second Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 5 (Payment of Expenses),
Section 6 (Reimbursement
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of Underwriters' Expenses), Section 7 (Indemnification and Contribution) and
Section 10 (Representations and Indemnities to Survive Delivery) shall at all
times be effective and shall survive such termination.
SECTION 5. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby,
including, without limitation, (i) all expenses incident to the issuance and
delivery of the Notes (including all printing and engraving costs), (ii) all
fees and expenses of the registrar and transfer agent of the Common Stock, (iii)
all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Notes to the Underwriters, (iv) all fees and expenses
of the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Notes for offer and
sale under the state securities or blue sky laws or the provincial securities
laws of Canada or any other country, and, if requested by the Representatives,
preparing and printing a "Blue Sky Survey," an "International Blue Sky Survey"
or other memorandum, and any supplements thereto, advising the Underwriters of
such qualifications, registrations and exemptions, (vii) the filing fees
incident to the NASD review and approval of the Underwriters' participation in
the offering and distribution of theNotes, (viii) the fees and expenses
associated with obtaining approval for the quotation of the Common Stock
issuable upon conversion of the Notes on the Nasdaq National Market, (ix) all
reasonable costs and expenses incident to the preparation and undertaking of
"road show" presentations to be made to prospective investors, and (x) all other
fees, costs and expenses referred to in Item 13 of Part II of the Registration
Statement, PROVIDED, that in no event shall the Company be required to pay in
excess of $20,000 in respect of the fees and expenses of Underwriter's counsel,
pursuant to this Section 5, or Section 5 of the Underwriting Agreement, dated as
of the date hereof, relating to the Company's concurrent public offering of
Common Stock. Except as provided in this Section 5, Section 6, and Section 7
hereof, the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement
is terminated by the Representative pursuant to Section 4, Section 7, Section 8
or Section 9, or if the sale to the Underwriters of the Notes on the First
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representatives and the
other Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably and actually incurred by the Representatives and
the Underwriters prior to the date of termination in connection with the
proposed purchase and the offering and sale of the Notes, including, without
limitations, to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
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SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION OF THE UNDERWRITERS. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling per-son
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld or
delayed), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; or (ii)
upon any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under applicable law; or (v) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Note 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 any matter
covered by clause (i), (ii), (iii) or (iv) above, provided that the Company
shall not be liable under this clause (v) to the extent that a court of
competent jurisdiction shall have determined by a final judgment 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 bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the reasonable fees
and disbursements of counsel chosen by FleetBoston Xxxxxxxxx Xxxxxxxx Inc.) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; PROVIDED,
HOWEVER, that the foregoing indemnity agreement shall not apply to any loss,
claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by the Representatives expressly
for use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further, that
with respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person asserting
any loss, claim, damage, liability or expense purchasedNotes, or any person
controlling such Underwriter, if copies of the Prospectus were timely delivered
to the Underwriter pursuant to Section 2 and a copy of the Prospectus. (as then
amended or supplemented if the Company shall
-21-
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the Notes
to such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or expense.
The indemnity agreement set forth in this Section 7(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue or alleged
untrue statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary prospectus, the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use therein and (ii) in whole or in part upon any
failure of any Underwriter to perform its obligations hereunder or under
applicable law; and to reimburse the Company, or any such director, officer or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The indemnity agreement set forth in this
Section 7(b) shall be in addition to any liabilities that each Underwriter may
otherwise have.
(c) INFORMATION PROVIDED BY THE UNDERWRITERS. The Company hereby
acknowledges that the only information that the Underwriters have furnished to
the Company expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) are the
statements set forth in the table in the first paragraph, the second paragraph,
the third paragraph and the tenth paragraph under the caption "Underwriting" in
the Prospectus; and the Underwriters confirm that such statements are true and
correct in all material respects.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it
-22-
may have to any indemnified party for contribution or otherwise than under the
indemnity agreement contained in this Section 7 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (FleetBoston Xxxxxxxxx Xxxxxxxx Inc. in the case of Section
7(b) and Section 8), representing the indemnified parties who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this Section 7 shall not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed, 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 against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by Section 7(d) hereof, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement, compromise or consent to the entry
of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was
or could have been sought
-23-
hereunder by such indemnified party, unless such settlement, compromise or
consent includes (i) an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(f) CONTRIBUTION. If the indemnification provided for in this Section 7
is unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Notes. 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 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 on the
one hand and the Underwriter 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 bears to the total underwriting discount
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 omission to state a material fact
relates to information supplied by the Company 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 and Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(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 7(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 7(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 (f), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Notes purchased by such
Underwriter and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 7(f) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) TIMING OF ANY PAYMENTS OF INDEMNIFICATION. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party
-24-
as such losses, claims, damages, liabilities or expenses are incurred, but in
all cases, no later than thirty (30) days of invoice to the indemnifying party.
(h) SURVIVAL. The indemnity and contribution agreements contained in
this Section 7 and the representation 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 Notes 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 7.
(i) ACKNOWLEDGEMENTS OF PARTIES. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Securities Act and the Exchange Act.
SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Notes that
it or they have agreed to purchase on such date, and the aggregate principal
amount of Notes which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed 10% of the aggregate principal
amount of Notes to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the aggregate principal amount of
Firm Notes set forth opposite their respective names on SCHEDULE A bears to the
aggregate principal amount of Firm Notes set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Notes which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Notes and the
aggregate principal amount of Notes with respect to which such default occurs
exceeds 10% of the aggregate principal amount of Notes to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Notes are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, and Section 7 shall at all times be
effective and shall survive such termination. In any such case either the
Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, but in no event for
longer than seven days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected.
-25-
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 9. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date, this Agreement may be terminated by the Representatives by notice given to
the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the National Association of
Securities Dealers, LLC; (ii) a general banking moratorium shall have been
declared by any of federal, state, or local authorities; (iii) there shall have
occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective change in United States' or international political, financial or
economic conditions, as in the reasonable judgment of the Representatives is
material and adverse and makes it impracticable or inadvisable to market the
Notes in the manner and on the terms described in the Prospectus or to enforce
contracts for the sale of securities; (iv) in the reasonable judgment of the
Representatives there shall have occurred any Material Adverse Change; or (v)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the reasonable judgment of
the Representatives may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 9 shall be without
liability on the part of (a) the Company to any Underwriter, except that the
Company shall be obligated to reimburse the expenses of the Representatives and
the Underwriters pursuant to Sections 5 and 6 hereof, (b) any Underwriter to the
Company, or (c) of any party hereto to any other party except that the
provisions of Section 7 shall at all times be effective and shall survive such
termination.
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their respective partners, officers or directors
or any controlling person, as the case may be, and will survive delivery of and
payment for the Notes sold hereunder and any termination of this Agreement.
SECTION 11. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
-26-
If to the Representatives:
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
Copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx, Esq.
If to the Company
iBasis, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: President
Copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq. and Xxxxx X. Xxxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 12. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 9 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7, and to their
respective successors, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Notes as
such from any of the Underwriters merely by reason of such purchase.
SECTION 13. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be
-27-
deemed to be made such minor changes (and only such minor changes) as are
necessary to make it valid and enforceable.
SECTION 14. GOVERNING LAW PROVISIONS.
(a) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the State of New York (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "Related Judgment"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
(c) WAIVER OF IMMUNITY. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
SECTION 15. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
[The remainder of this page has been intentionally left blank.]
-28-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
IBASIS, INC.
By:__________________________
Name: _______________________
Title:_______________________
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives as of the date first above written.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXXX SECURITIES INC.
U.S. BANCORP XXXXX XXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
On their behalf and on behalf of each of the several underwriters named in
SCHEDULE A hereto.
BY: FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
By: _________________________________
Authorized Signatory
EXHIBIT A
SCHEDULE OF UNDERWRITERS
------------------------------------------ -------------------------------------
Underwriter Aggregate Principal Amount of
Firm Notes to be Purchased
------------------------------------------ -------------------------------------
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
------------------------------------------ -------------------------------------
Chase Securities Inc.
------------------------------------------ -------------------------------------
U.S. Bancorp. Xxxxx Xxxxxxx Inc.
------------------------------------------ -------------------------------------
Xxxx Xxxxxxxx Incorporated
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
TOTAL UNDERWRITERS (__) $150,000,000
------------------------------------------ -------------------------------------
EXHIBIT B
OPINION OF COUNSEL FOR THE COMPANY
(1) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the DGCL.
(2) The Company has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Prospectus.
(3) The Company is presently qualified to do business as a foreign
corporation in each jurisdiction within the United States in which it owns or
leases real property as described in the Registration Statement, except where
the failure to be so qualified would not have a Material Adverse Effect.
(4) Immediately after the closing of the Offering, the authorized
capital stock of the Company will consist of (i) eighty-five million
(85,000,000) shares of common stock, $0.001 par value per share (the "COMMON
STOCK"), and (ii) fifteen million (15,000,000) shares of preferred stock, $0.001
par value per share, and there will be no shares of any other class of capital
stock authorized. All of the shares of Common Stock issued and outstanding after
the closing of the Offering will have been duly authorized and validly issued
and will be fully paid and non-assessable. The shares of Common Stock issued and
outstanding after the closing of the Offering will not have been issued in
violation of, or subject to, any preemptive right, co-sale right, registration
right, right of first refusal or other similar right provided by (A) the
Restated Charter, the By-laws, or the DGCL, or (B), to our knowledge, any
agreement or instrument to which the Company is a party or by which the Company
is bound.
(5) The Company has the corporate power and authority to enter into
the Underwriting Agreement and the Indenture and to issue, sell and deliver to
the Underwriters the Notes to be issued and sold by the Company thereunder and
to consummate the transactions contemplated thereby.
(6) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms (except
that we express no opinion as to the enforceability of the indemnification and
contribution provisions of the Underwriting Agreement).
(7) The Indenture has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and is a valid and binding obligation of the Company, enforceable in
accordance with its terms.
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxxxxxx & Xxxxx LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
November 16, 1999
Page 2
(8) The Notes have been duly authorized on behalf of the Company, and
(assuming due execution, authentication, issuance and delivery as provided in
the Indenture) will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture and enforceable in accordance with
their terms; the Notes will not have been issued in violation of or subject to
any preemptive right, co-sale right, registration right, right of first refusal
or other similar right provided by (A) the Restated Charter, the By-laws, or the
DGCL, or (B), to our knowledge, any agreement or instrument to which the Company
is a party or by which the Company is bound.
(9) The Shares initially issuable by the Company upon conversion of the
Notes have been duly authorized and reserved for issuance and, when issued and
delivered by the Company upon such conversion, will be duly and validly issued
and fully paid and nonassessable, and will not have been issued in violation of
or subject to any preemptive right, co-sale right, registration right, right of
first refusal or other similar right provided by (A) the Restated Charter, the
By-laws, or the DGCL, or (B), to our knowledge, any agreement or instrument to
which the Company is a party or by which the Company is bound.
(10) The statements in the Prospectus under the caption "Description of
the Notes," insofar as such statements purport to summarize provisions of the
Notes and the Indenture, are accurate summaries in all material respects of the
provisions purported to be summarized therein.
(11) The Registration Statement has become effective under the Act and,
to our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act.
(12) The Registration Statement and the Prospectus (other than the
financial statements (including supporting schedules) and financial data and
information and information derived therefrom, as to which we express no
opinion), as of the effective date of the Registration Statement, complied as to
form in all material respects with the requirements of the Act and the
applicable rules and regulations promulgated thereunder.
(13) The information in the Prospectus under the caption "Description
of Capital Stock," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by us and is a fair summary of such matters and
conclusions, provided that we give no opinion as to the number of shares of
Common Stock or preferred stock outstanding. .
(14) The description in the Registration Statement and the Prospectus
of the Restated Charter and the By-laws under the caption "Delaware Law and
Certain Certificate of Incorporation and By-Law Provisions," to the extent that
it constitutes matters of law or legal
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conclusions, is accurate in all material respects and fairly presents the
information with respect thereto required to be presented by the Act.
(15) To our knowledge, there are no agreements, contracts, leases or
documents to which the Company is a party of a character required to be
described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which are not described or
referred to therein or filed as required.
(16) The performance of the Underwriting Agreement and the Indenture
and the consummation of the transactions contemplated therein (other than
performance of the Company's indemnification obligations thereunder, concerning
which no opinion is expressed) will not (a) result in any violation of the
Restated Charter or the By-laws or (b) to our knowledge, result in a material
breach or violation of any of the terms and provisions of, or constitute a
default under, any bond, debenture, note or other evidence of indebtedness, or
any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument known to us to which the Company is a
party or by which its properties are bound, or any applicable statute, rule or
regulation known to us or, to our knowledge, any order, writ or decree of any
court, government or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries, or over any of their properties or
operations (except that we express no opinion as to the Company's performance of
its obligations under the indemnification and contribution provisions of the
Underwriting Agreement, to the extent such performance may be considered to
violate securities laws or public policy).
(17) No consent, approval, authorization or order of or qualification
with any Federal or Massachusetts court, government or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations is necessary in connection with the
consummation by the Company of the transactions contemplated under the
Underwriting Agreement or the Indenture, except (i) such as have been obtained
under the Act, the Exchange Act or the Trust Indenture Act of 1939, (ii) such as
may be required under state or other securities or Blue Sky laws in connection
with the purchase and the distribution of the Shares by the Underwriters, or
(iii) such as may be required by the National Association of Securities Dealers,
LLC.
(18) To our knowledge, there are no legal or governmental proceedings
pending or overtly threatened against the Company or any of its subsidiaries of
a character required to be disclosed in the Registration Statement or the
Prospectus by the Act, other than those described therein.
(19) To our knowledge, except as referred to in the Registration
Statement and Prospectus, no holders of any shares of Common Stock or other
securities of the Company have
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registration rights with respect to securities of the Company and, except as
referred to in the Registration Statement and Prospectus, all holders of
securities of the Company having rights known to us to the registration of such
shares of Common Stock or other securities because of the filing of the
Registration Statement by the Company have, with respect to the offering
contemplated thereby, waived such rights or such rights have expired by reason
of lapse of time following notification of the Company's intent to file the
Registration Statement.
(20) The Company is not and, after giving effect to the offering and
the sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
***
In addition, we have participated in certain conferences with officers
and other representatives of the Company and representatives of the independent
accountants of the Company, at which conferences the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although we do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, no facts have come to our attention that have caused us to believe
that, as of its effective date, the Registration Statement (other than the
financial statements and related schedules and other financial and statistical
data therein, as to which we express no view) 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 or that, as of its
date, the Prospectus (other than the financial statements and related schedules
and other financial and statistical data therein, as to which we express no
view) contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as of the date
hereof, as applicable, either the Registration Statement or the Prospectus
(other than the financial statements and related schedules and other financial
and statistical data therein, as to which we express no view) contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
EXHIBIT C
OPINION OF GOVERNMENT REGULATION COUNSEL FOR THE COMPANY
1. The statements in the Registration Statement under the captions "Risk Factors
- Risk related to the Internet and Internet Telephony Industry" and "Business -
Government Regulation" (to the extent that the discussion in these sections
pertains to the Telecommunications Laws), insofar as such statements constitute
a summary of the legal matters, documents or proceedings pertaining to the
Companies, fairly summarize such matters referred to therein.
EXHIBIT D
OPINION OF COUNSEL FOR THE UNDERWRITERS
1. The Notes to be issued by the Company have been duly authorized and
(assuming due execution, authentication, issuance and delivery as provided in
the Indenture) will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture and enforceable in accordance with
their terms.
2. The Registration Statement complied as to form in all material
respects with the requirements of the Act; the Registration Statement has become
effective under the Act and, to our knowledge, no stop order proceedings with
respect thereto have been instituted or threatened or are pending under the Act.
3. The Underwriting Agreement and the Indenture have been duly
authorized, executed and delivered by the Company.
In connection with the preparation of the Registration Statement and
the Prospectus, we have participated in conferences with officers and
representatives of the Company, counsel for the Company and the independent
accountants of the Company, at which conferences we made inquiries of such
officers, representatives and others and discussed the contents of the
Registration Statement and the Prospectus. While the limitations inherent in the
independent verification of factual matters and the character of determinations
involved in the registration process are such that we are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus, based
on such participation, inquiries and discussion, no facts have come to our
attention that would lead us to believe that the Registration Statement (except
for financial statements, schedules, and other financial information contained
therein or omitted therefrom, as to which we express no belief) at the time it
became effective (but after giving effect to changes incorporated pursuant to
Rule 430A under the Act) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Registration Statement,
the Prospectus and any amendment or supplement thereto (except for financial
statements, schedules and other financial information contained therein or
omitted therefrom, as to which we express no belief), as of the date thereof or
as of the date of this opinion, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
