2,000,000 Shares
EARTHLINK NETWORK, INC.
Common Stock, par value $.01 per share
UNDERWRITING AGREEMENT
January __, 1997
Invemed Associates, Inc.
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Ladies and Gentlemen:
1. INTRODUCTORY. EarthLink Network, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 2,000,000 shares (the "Firm Shares") of
its authorized but unissued Common Stock, par value $.01 per share ("Common
Stock"), to you (the "Underwriter"). The Company also proposes to issue and
sell to the Underwriter, at the option of the Underwriter, an aggregate of not
more than 300,000 additional shares (the "Optional Shares") of Common Stock, as
set forth in Section 3 below. The Firm Shares and the Optional Shares are
herein collectively referred to as the "Stock." The Company hereby agrees with
the Underwriter as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with, the
Underwriter that:
(i) A registration statement on Form S-1 (File No. 333-15781),
including a form of prospectus, relating to the Stock has been filed
with the Securities and Exchange Commission (the "Commission") and
either (A) has been declared effective under the Securities Act of
1933, as amended (the "Act"), and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment.
If such registration statement ("initial registration statement") has
been declared effective, either (i) an additional registration
statement ("additional registration statement") relating to the Stock
may have been filed with the Commission pursuant to Rule 462(b) ("Rule
462(b)") under the Act and, if so filed, has become effective upon
filing pursuant to such Rule, and the Stock has been duly registered
under the Act pursuant to the initial registration statement and, if
applicable, the additional registration statement or (ii) such an
additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing all of the Stock
will have been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If
the Company does not propose to amend the initial registration
statement or, if an additional registration statement has been filed
and the Company does not propose to amend it and if any post-effective
amendment to either such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement,
the most recent amendment (if any) to each such registration statement
has been declared effective by the Commission or has become effective
upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act or,
in the case of the additional registration statement, Rule 462(b).
For purposes of this Agreement, "Effective Time" with respect to the
initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement
means (i) if the Company has advised the Underwriter that it does not
propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery
of this Agreement, was declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c), or (ii) if the
Company has advised the Underwriter that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended
by such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of
this Agreement but the Company has advised the Underwriter that it
proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration
statement, as amended at its Effective Time, including all information
contained in the additional registration statement (if any) and deemed
to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the Additional
Registration Statement are herein referred to collectively as the
"Registration Statements" and individually as a "Registration
Statement". The form of prospectus relating to the Stock, as first
filed with the Commission pursuant to and in accordance with Rule
424(b) ("Rule 424(b)") under the Act or (if no such filing is required
or until such time as such filing is made) as included in a
Registration Statement, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or distributed
in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
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statements therein not misleading, and (B) on the Effective Date of
the Additional Registration Statement (if any), each Registration
Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required and if the Effective Time of
the Additional Registration Statement is subsequent to the execution
and delivery of this Agreement) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included,
each Registration Statement and the Prospectus will conform, in all
material respects to the requirements of the Act and the Rules and
Regulations, and none of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all material respects to the requirements
of the Act and the Rules and Regulations, neither of such documents
will include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and no Additional
Registration Statement has been filed or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written
information furnished to the Company by the Underwriter specifically
for use therein, it being understood that the only such information is
that described as such in Section 7(b) of this Agreement.
(iii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its place
of incorporation with power and authority (corporate and other) to own
its properties and conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of business requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the Company; and no proceeding
has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(iv) The Company has no subsidiaries and owns no securities of
any other entity, except for investment-grade, interest-bearing
securities.
(v) The Stock and all other outstanding shares of capital stock
of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Stock has been
delivered and paid for in accordance with this Agreement on each
Closing Date (as defined below), such Stock will have been, validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; and the stockholders
of the Company have no preemptive rights with respect to the Stock.
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(vi) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action by the Company and
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or
other instrument or agreement that is material to the Company and to
which the Company is a party or by which it may be bound, or to which
any of the property or assets of the Company is subject; nor will such
action result in any violation of the provisions of the charter or
bylaws of the Company or any applicable law, administrative regulation
or administrative or court decree.
(vii) No consent, approval, authorization or other order of, or
filing with, any court, regulatory body, administrative agency, other
governmental body or any self-regulatory agency is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated herein, except such as have been obtained or
made under the Act and such as may be required under state securities
laws.
(viii) The accountants who have expressed their opinions with
respect to certain of the financial statements and schedules included
in each Registration Statement are independent as required by the Act.
(ix) The financial statements and schedules of the Company
included in each Registration Statement and the Prospectus present
fairly the financial position of the Company as of the respective
dates of such financial statements, and the results of operations and
cash flows of the Company for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as
disclosed in the Prospectus. The financial information set forth in
the Prospectus under "Selected Financial Data" presents fairly, on the
basis stated in the Prospectus, the information set forth therein.
(x) The Company is not in violation of its charter or bylaws or
in default under any consent decree, or in default with respect to any
provision of any lease, loan agreement, franchise, license, permit or
other contractual obligation to which it is a party or by which it may
be bound, or to which any of the property or assets of the Company is
subject; and there does not exist any state of facts which constitutes
an event of default as defined in such documents or which, with notice
or lapse of time, or both, would constitute such an event of default,
in each case except for defaults which neither singly nor in the
aggregate are material to the condition, financial or otherwise, or
the results of operations, business or prospects of the Company.
(xi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its properties, which is required to
be disclosed in a Registration Statement (other than as disclosed
therein), or which, if determined adversely to the Company, could
result in any material adverse change in the condition, financial or
otherwise, or in the results of operations, business or prospects of
the Company, or could materially and adversely affect its property or
assets or the consummation of the transactions contemplated by this
Agreement; and no such actions, suits or proceedings are threatened
or, to the Company's knowledge, contemplated.
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(xii) There are no holders of securities of the Company having
rights to registration thereof except as disclosed in the Prospectus.
No holders of registration rights have such rights with respect to the
offering being made by the Prospectus.
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company.
(xiv) Except as disclosed in the Prospectus, the Company has good
and marketable title to all real properties and all other properties
and assets owned by it, in each case free from liens, encumbrances and
defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by it as described
in the Prospectus; and except as disclosed in the Prospectus, the
Company holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by it as described in the
Prospectus.
(xv) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise,
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Stock.
(xvi) Subsequent to the date of the latest audited financial
statements included in the Prospectus, except as otherwise described
in the Prospectus, (A) the Company has not incurred any material
liabilities or obligations, direct or contingent, nor entered into any
material transactions not in the ordinary course of business, (B)
there has not been any material adverse change in the condition,
financial or otherwise, results of operations, business or prospects
of the Company nor any material change in its capital stock, short-
term debt or long-term debt and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company in any
class of its capital stock.
(xvii) There is no document of a character required to be
described in the Registration Statements or the Prospectus or to be
filed as an exhibit to the Registration Statements which is not
described or filed as required.
(xviii) Except as described in the Prospectus, the Company owns
and possesses all right, title and interest in and to, or has duly
licensed from third parties, all patents, patent rights, trademarks,
copyrights, inventions, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other proprietary rights
("Trade Rights") presently employed by it in connection with the
business now operated by it. Except as described in the Prospectus,
the Company has not received any notice of infringement,
misappropriation or conflict from any third party as to such Trade
Rights which has not been resolved or disposed of, and the Company has
not infringed, misappropriated or otherwise conflicted with material
Trade Rights of any third parties.
(xix) The conduct of the business of the Company is in compliance
in all respects with applicable federal, state, local and foreign laws
and regulations, except where the failure to be in compliance would
not have a material adverse effect upon the condition, financial or
otherwise, results of operations, business or prospects of the
Company.
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(xx) No labor dispute with the employees of the Company exists
or, to the knowledge of the Company, is imminent which might
reasonably be expected to materially adversely affect the condition,
financial or otherwise, results of operations, business or prospects
of the Company; and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors which might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, results of operations, business or prospects
of the Company.
(xxi) The Company is not in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws") and, to its
knowledge, does not own or operate any real property contaminated with
any substance that is subject to any environmental laws, is not liable
for any off-site disposal or contamination pursuant to any
environmental laws and is not subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
might, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the condition, financial or
otherwise, results of operations, business or prospects of the
Company.
(xxii) The Company is not and, after giving effect to the
offering and sale of the Stock, will not be an "investment company",
as defined in the Investment Company Act of 1940, as amended.
(xxiii) No broker, finder, consultant or other person or entity
is entitled to any brokerage, finder's or other fee or commission in
connection with the sale of the Stock, except as may be provided to
the Underwriter by the express terms of this Agreement.
(xxiv) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes.
(b) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter pursuant to
this Agreement or in connection with the consummation of the transactions
contemplated hereby shall be deemed a representation and warranty by the
Company to the Underwriter as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF STOCK. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Company at a
purchase price of $[ ] per share, the Firm Shares.
The Company will deliver certificates representing the Firm Shares to the
Underwriter, against payment of the purchase price in immediately available
funds payable to the order of the Company at the office of ▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 A.M.,
Philadelphia time, on December 24, 1996, or at such other date and time as the
Underwriter and the Company determine, such time and date being herein referred
to as the "First Closing Date." For purposes of Rule 15c6-1 under the Exchange
Act, the First Closing Date (if later than the otherwise applicable settlement
date) shall be the settlement date for payment of funds and delivery of
securities for
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all the Stock sold pursuant to the offering. The certificates for the Firm
Shares so to be delivered will be in definitive form, in such denominations and
registered in such names as the Underwriter requests and will be made available
for checking and packaging at such office in New York, New York as designated by
the Underwriter at least 24 hours prior to the First Closing Date.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriter to purchase up to an
aggregate of 300,000 Optional Shares, at the same purchase price per share to be
paid for the Firm Shares, for use solely in covering any overallotments made by
the Underwriter in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised in whole or in part, from time to time, upon
written notice from the Underwriter given to the Company from time to time not
more than 30 days subsequent to the date of the Prospectus, setting forth the
aggregate number of Optional Shares as to which the Underwriter is exercising
the option. The Company agrees to sell to the Underwriter the number of
Optional Shares specified in such notice and the Underwriter agrees to purchase
such Optional Shares. No Optional Shares shall be sold or delivered unless the
Firm Shares previously have been, or simultaneously are, sold and delivered.
The right to purchase the Optional Shares or any portion thereof may be
exercised from time to time and, to the extent not previously exercised, may be
surrendered and terminated at any time upon notice by the Underwriter to the
Company.
Each time for the delivery of and payment for the Optional Shares (an
"Optional Closing Date", which may be the First Closing Date) (the First Closing
Date and each Optional Closing Date, if any, are sometimes referred to as a
"Closing Date") shall be determined by the Underwriter but shall be not later
than five full business days after written notice of election to purchase
Optional Shares is given. The Company will deliver certificates representing
the Optional Shares being purchased on each Optional Closing Date to the
Underwriter against payment of the purchase price therefor in immediately
available funds made payable to the order of the Company, at the above-mentioned
office of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP. The certificates for the Optional Shares
being purchased on each Optional Closing Date will be in definitive form, in
such denominations and registered in such names as the Underwriter requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at such office in New York, New York as is designated
by the Underwriter at least 24 hours prior to such Optional Closing Date.
4. OFFERING BY UNDERWRITER. It is understood that the Underwriter
proposes to offer the Stock for sale to the public as set forth in the
Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company covenants and agrees
with the Underwriter that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by the Underwriter,
subparagraph (4)) of Rule 424(b) not later than the earlier of (i) the
second business day following the execution and delivery of this Agreement
or (ii) the fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise the Underwriter promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and an
additional registration statement is necessary to register a portion of the
Stock under the Act but the Effective Time thereof has not occurred as of
such
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execution and delivery, the Company will file the additional registration
statement with the Commission pursuant to and in accordance with Rule
462(b) on or prior to 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, on or prior to the time the Prospectus is printed
and distributed to the Underwriter, or will make such filing at such later
date as shall have been consented to by the Underwriter.
(b) The Company will advise the Underwriter promptly of: (i) any
proposal to amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial Registration
Statement, the Additional Registration Statement (if any) or the Prospectus
and will not effect such amendment or supplementation without the
Underwriter's consent; (ii) the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment and or supplementation of
a Registration Statement or the Prospectus; (iii) the issuance by the
Commission of any stop order proceeding in respect of a Registration
Statement or of any notification or other communication relating to the
institution of any stop order proceeding in respect of a Registration
Statement, and the Company will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued; and (iv) of any notification of the suspension of
qualification of the Stock for sale in any jurisdiction or the initiation
or threat of any proceedings for that purpose.
(c) If, at any time when a prospectus relating to the Stock is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Act, the Company promptly
will advise the Underwriter thereof and promptly will prepare and file with
the Commission an amendment or supplement which will correct such statement
or omission or an amendment which will effect such compliance. Neither the
Underwriter's consent to, nor the Underwriter's delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6 of this Agreement.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Underwriter copies of each
Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Underwriter requests. The
Prospectus shall be furnished on or prior to 3:00 P.M., New York time, on
the business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement. All
other documents shall be furnished as soon as available.
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(f) The Company will arrange for the qualification of the Stock for
sale under the blue sky laws of such jurisdictions as the Underwriter
designates, and will continue such qualifications in effect so long as
required for distribution of the Stock.
(g) The Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter, other than the last fiscal
quarter of the fiscal year, ending after the Effective Date of the Initial
Registration Statement (or, if later, the Effective Date of the Additional
Registration Statement), summary financial information of the Company for
such quarter in reasonable detail.
(h) During the period of five years from the date hereof, the Company
will furnish to the Underwriter, as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to the Underwriter (i) as soon as
available, a copy of each report and any proxy statement of the Company
filed with the Commission under the Exchange Act or mailed to stockholders,
and (ii) from time to time, such other information concerning the Company
as the Underwriter may reasonably request.
(i) The Company will use the net proceeds received by it from the
sale of the Stock in the manner specified in the Prospectus under the
caption "Use of Proceeds."
(j) For a period of one year after the date of the initial public
offering of the Stock, the Company will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement (except for a registration statement
on Form S-8 covering shares issuable upon exercise of options granted
under the Company's 1995 Stock Option Plan) under the Act relating to,
any additional shares of its Common Stock or securities convertible into
or exchangeable or exercisable for any shares of its Common Stock, or
publicly disclose the intention to make any such offer, sale, pledge,
disposal or filing, without the prior written consent of the Underwriter,
except issuances of Common Stock pursuant to the conversion or exchange
of convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on October 15, 1996, grants of employee
stock options pursuant to the terms of the Company's 1995 Stock Option Plan
(provided that any options issued to officers and directors of the Company
thereunder may not be exercised at any time on or prior to the first
anniversary of the date of the Prospectus), and issuances of Common Stock
pursuant to the exercise of such options.
(k) The Company will use its best efforts to list for quotation the
Stock on the Nasdaq National Market.
(l) The Company agrees that it shall not accelerate the vesting of
any options of any person with respect to whom the Underwriter has not
obtained the agreement to be provided pursuant to Section 6(k) of this
Agreement.
The Company agrees with the Underwriter that, whether or not the
transactions contemplated hereunder are consummated, the Company will pay (i)
all costs, fees and expenses incurred in connection with the performance of the
Company's obligations hereunder, including, without limiting the generality of
the foregoing, all fees and expenses of legal counsel for the Company and of the
Company's independent accountants, all costs and expenses incurred in connection
with the preparation, printing, filing and distribution of the Registration
Statements, each preliminary prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements thereto,
this Agreement and the blue sky memoranda, and for any travel expenses of the
Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with
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prospective purchasers of the Stock, (ii) all costs, fees and expenses
(including legal fees and disbursements of counsel for the Underwriter) incurred
by the Underwriter in connection with qualifying or registering all or any part
of the Stock for offer and sale under blue sky laws, including the preparation
of blue sky memoranda relating to the Stock, (iii) the fees of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the request
for clearance of such offering with the NASD and the inclusion of the Stock in
Nasdaq National Market, and (iv) all fees and expenses of the Company's transfer
agent, costs of printing the certificates for the Stock and all transfer taxes,
if any, with respect to the sale and delivery of the Stock to the Underwriter.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The obligations of
the Underwriter to purchase and pay for the Firm Shares on the First Closing
Date and the Optional Shares to be purchased on each Optional Closing Date will
be subject to the accuracy of the representations and warranties on the part of
the Company herein set forth, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Underwriter shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the last
amendment or post-effective amendment to the registration statement to be
filed prior to the Effective Time), of Price Waterhouse LLP confirming that
they are independent public accountants within the meaning of the Act and
the Rules and Regulations and stating in effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations;
(ii) on the basis of specified procedures, including (a) a
comparison of the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and (b)
inquiries of officials who have responsibility for financial and
accounting matters as to whether the information conforms in all
material respects with the disclosure requirements of Items 301 and
402, respectively, of Regulation S-K, nothing came to their attention
as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with
the disclosure requirements of Items 301 and 402, respectively, of
Regulation S-K;
(iii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;
(iv) on the basis of the review referred to in clause (iii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
-10-
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) at a specified date not more than five days prior to
the date of this Agreement, there was any change in the capital
stock or total long-term debt of the Company, or any increase in
short-term indebtedness of the Company (other than as a result of
the issuance of a $5,000,000 note to UUNET Technologies, Inc.),
or any decrease in net current assets (other than as a result of
the issuance of a $5,000,000 note to UUNET Technologies, Inc.),
or any material decrease in total assets or stockholders' equity
(without giving effect to the increase in stockholders' equity
resulting from the conversion of the Company's Series A
Convertible Preferred Stock into Common Stock) of the Company as
compared with amounts shown on the latest balance sheet included
in the Prospectus;
(C) for the period from the closing date of the latest
income statement included in the Prospectus to the specified date
referenced in clause (B) above there were any decreases, as
compared with the period of corresponding length ended the date
of the latest statement of operations in the Prospectus, in
revenues or any increase in the total primary or fully diluted
per share amounts of loss before extraordinary items or of net
loss;
except in all cases set forth in clauses (B) and (C) above, for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur; and
(v) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements with the results obtained
from inquiries, a reading of general accounting records of the Company
and other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to be in
agreement with such results.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the last amendment or
post-effective amendment to be filed prior to its Effective Time, (ii) if
the Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by the Underwriter. If the Effective Time of the Additional Registration
Statement
-11-
(if any) is not prior to the execution and delivery of the Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to the Underwriter, or shall have occurred at
such later date as shall have been consented to by the Underwriter. If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Prospectus shall have been
filed with the Commission in accordance with the Act and the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the
Underwriter, shall be contemplated by the Commission.
(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Stock hereunder, the validity and form of
the certificates representing the Stock, the execution and delivery of this
Agreement, and all corporate proceedings and other legal matters incident
thereto, and the form of the Registration Statement and the Prospectus
(except financial statements) shall have been approved by counsel for the
Underwriter exercising reasonable judgment.
(d) The Underwriter shall not have advised the Company that the
Registration Statements or Prospectus, or any amendment or supplement
thereto, contains any untrue statement of fact or omits to state any fact
which the Underwriter has concluded, in good faith, is material and, in the
case of an omission, is required to be stated therein or is necessary to
make the statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred: (i) any change, or any development involving a
prospective change, in the condition (financial or other), results of
operations, business or properties of the Company which, in the judgment of
the Underwriter, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Stock; (ii) any suspension or limitation of trading
in securities generally on the New York Stock Exchange or Nasdaq National
Market, or any setting of minimum prices for trading on such exchange or
market, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iii) any banking
moratorium declared by Federal, New York or California authorities; (iv)
any outbreak or escalation of hostilities or other calamity or crises the
effect of which is such as to make it, in the judgment of the Underwriter,
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Stock; or (v) any material
adverse change in the financial or securities markets beyond normal
fluctuations, which, in the judgment of the Underwriter, makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Stock.
(f) The Underwriter shall have received an opinion, dated such
Closing Date, of Hunton & ▇▇▇▇▇▇▇▇, counsel for the Company, in form and
substance satisfactory to the Underwriter to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; and the
Company has been duly qualified to do business as a foreign
corporation under the laws of, and is in good standing as such in
every other state of the United States where the ownership or leasing
of property, or the conduct of its business
-12-
requires such qualification, except where the failure so to qualify
would not have a material adverse effect upon the Company;
(ii) to the knowledge of such counsel, the Company has no
subsidiaries and owns no securities of any other entity, except for
investment-grade, interest-bearing securities;
(iii) the authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus, and the shares of issued
and outstanding capital stock have been duly authorized and validly
issued and are fully paid and nonassessable;
(iv) the form of certificate for the shares of Stock to be
delivered hereunder is due and proper under the Delaware General
Corporation Law, and when such certificates are delivered to the
Underwriter or upon the Underwriter's order against payment of the
agreed consideration therefor in accordance with the provisions of
this Agreement, the shares of Stock represented thereby will be duly
authorized, validly issued, fully paid and nonassessable and the
stockholders of the Company have no preemptive rights with respect to
the Stock;
(v) to the knowledge of such counsel, there are no holders of
securities of the Company having rights to registration thereof except
as disclosed in the Prospectus; and, to the knowledge of such counsel,
no holders of registration rights have such rights with respect to the
offering being made by the Prospectus;
(vi) no consent, approval, authorization or order of, or filing
with, any governmental agency or body, any court or any self-
regulatory organization is required for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Stock, except such as have been obtained and made under
the Act and such as may be required under state securities or blue sky
laws (as to which state securities laws such counsel need express no
opinion);
(vii) to the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened which are required to
be disclosed in the Registration Statements, other than those
disclosed therein;
(viii) to the knowledge of such counsel, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments, documents or agreements required to be described or
referred to in the Registration Statements or to be filed as exhibits
thereto other than those described or referred to therein or filed as
exhibits thereto; and, to the knowledge of such counsel, no default
exists in the due performance or observance by the Company of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument, agreement or document so described, referred to or filed;
(ix) this Agreement has been duly authorized, executed and
delivered by the Company;
(x) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, the charter or bylaws of the Company,
any statute or any rule or regulation of any governmental
-13-
agency or body, or, to the knowledge of such counsel, any order of any
governmental agency or body or any court having jurisdiction over the
Company or any of its properties, or, to the knowledge of such
counsel, any material agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of the
properties of the Company is subject;
(xi) the information in the Registration Statement, to the
extent that it describes matters of law, statutes, legal and
government proceedings and contracts and other documents, is accurate
in all material respects and fairly presents the information required
to be shown;
(xii) the Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed and
became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
under the Act specified in such opinion on the date specified therein
or was included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and, to the
knowledge of such counsel, no stop order suspending the effectiveness
of a Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; and
(xiii) the Company is not and, after giving effect to the
offering and sale of the Stock and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
Such counsel shall also state that it has participated in conferences
with officers and other representatives of the Company, representatives of
the Underwriter and representatives of the independent certified public
accountants of the Company during which the contents of the Registration
Statements and the Prospectus and related matters were discussed and,
although such counsel does not pass judgment upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in any Registration Statement or the Prospectus, nothing has come
to the attention of such counsel that has caused such counsel to believe
that any part of any Registration Statement or any amendment thereto, as of
its effective date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto,
as of its issue date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading
(except that such counsel need express no opinion as to the financial
statements, financial statement schedules or other financial data included
therein).
(g) The Underwriter shall have received from ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius
LLP, counsel to the Underwriter, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the
validity of the Stock, the Registration Statements, the
-14-
Prospectus and other related matters as the Underwriter may require, and
the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(h) The Underwriter shall have received a certificate, dated such
Closing Date, of the President and Chief Financial Officer of the Company
to the effect that the representations and warranties of the Company in
this Agreement are true and correct on and as of such Closing Date to the
same effect as if made on such Closing Date, that the Company has complied
in all material respects with all agreements and satisfied in all material
respects all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date, that no stop order suspending the
effectiveness of any Registration Statement has been issued and, to their
knowledge, no proceedings for that purpose have been instituted or are
contemplated by the Commission, that the Additional Registration Statement
(if any) satisfying the requirements of subparagraphs (1) and (3) of Rule
462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to the
Underwriter and that there has not been, since the date hereof or since the
respective dates as of which information is given in the Registration
Statements and the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company.
(i) The Underwriter shall have received a letter, dated such Closing
Date, of Price Waterhouse LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than five days prior to such Closing
Date for the purposes of this subsection.
(j) The Stock shall have been duly admitted for quotation on Nasdaq
National Market as of the First Closing Date.
(k) The Company shall have obtained and delivered to the Underwriter
executed copies of an agreement from each securityholder of the Company
that owns, in the aggregate (assuming for this purpose the conversion of
all securities convertible into Common Stock and the exercise of all
options and warrants to purchase Common Stock owned by such
securityholder), 10,000 or more shares of Common Stock, and each director
and each officer of the Company in form and substance satisfactory to the
Underwriter to the effect that such persons will not, for a period of one
year after the date of the Prospectus offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, any shares of Common Stock
or securities convertible into or exchangeable or exercisable for any
shares of Common Stock, or publicly disclose the intention to make any such
offer, sale, pledge or disposal without the prior written consent of the
Underwriter.
The Company will furnish the Underwriter with such manually signed or
conformed copies of such opinions, certificates, letters and documents as
the Underwriter reasonably requests.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, to which the
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, the
Prospectus, or any amendment or
-15-
supplement thereto, or any related preliminary prospectus, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Underwriter for
any legal or other expenses reasonably incurred by the Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by the Underwriter expressly for use
therein, it being understood and agreed that the only such information
provided by the Underwriter consists of the information described as such
in subsection (b) below. The obligation of the Company to indemnify the
Underwriter pursuant hereto is subject to the condition that, insofar as
such losses, claims, damages or liabilities relate to any such untrue
statement, alleged untrue statement, omission or alleged omission made in a
preliminary prospectus, such indemnity shall not inure to the benefit of
the Underwriter, if, but only to the extent that, such losses, claims,
damages or liabilities resulted because (i) the Underwriter failed to
deliver a copy of the Prospectus to such person asserting such losses,
claims, damages or liabilities at or prior to the time delivery of the
Prospectus is required by the Act, unless such failure was due to the
failure of the Company to provide copies of the Prospectus to the
Underwriter, (ii) such untrue statement, omission or alleged omission
contained in a preliminary prospectus was corrected in the Prospectus, and
(iii) the delivery of the Prospectus to such person would have constituted
a valid defense to the losses, claims, damages or liabilities asserted by
such person.
(b) The Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in 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 reliance upon and in conformity
with written information furnished to the Company by the Underwriter
expressly for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred. For all purposes of this Agreement, the information
set forth (i) on the last paragraph of the cover page of the Prospectus,
(ii) on page 2 of the Prospectus regarding stabilization and (iii) in the
fourth and ninth paragraphs under "Underwriting" in the Prospectus is the
only information furnished to the Company by the Underwriter for use in the
Registration Statements or the Prospectus, or any related preliminary
prospectus.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the failure so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be
-16-
entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under subsection (a) or (b) above for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of, or consent to the entry of any
judgment with respect to, any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement or judgment includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriter on the
other from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand
and the Underwriter on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company 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 Underwriter, in each case as set forth 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 or the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the Underwriter
shall not be required to contribute any amount in excess of the amount by
which the underwriting discount applicable to the Stock exceeds the amount
of any damages which the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriter within the meaning of the Act; and the obligations
of the Underwriter under this Section shall be in addition to any liability
which the Underwriter may otherwise have and shall extend, upon the same
terms and conditions,
-17-
to each director of the Company, to each officer of the Company who has
signed a Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers, and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Stock. If for any reason the purchase of the Stock by the
Underwriter is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriter under Section 7 shall remain in
effect, and if any shares of Stock have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the Stock by the Underwriter is
not consummated for any reason other than solely because of the occurrence of
any event specified in clause (ii), (iii), (iv) or (v) of Section 6(e), or
solely because the condition set forth in Section 6(j) is not satisfied solely
due to the failure of the Company to have 400 stockholders, in addition to
paying the costs, fees and expenses referred to in the last paragraph of Section
5, the Company will reimburse the Underwriter for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by it in
connection with the offering of the Stock.
10. NOTICES. All communications hereunder will be in writing and, if sent
to the Underwriter, will be mailed, delivered or sent by facsimile transmission
and confirmed to Invemed Associates, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: President; or, if sent to the Company, will be
mailed, delivered or sent by facsimile transmission and confirmed to its address
set forth in the Registration Statements, Attention: President.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder. No purchaser of Stock from
the Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
-18-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us one of the counterparts hereof, whereupon it will
become a binding agreement between the Company and the Underwriter in accordance
with its terms.
Very truly yours,
EARTHLINK NETWORK, INC.
By:_________________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
INVEMED ASSOCIATES, INC.
By: _____________________________
Name:
Title:
-19-