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EXHIBIT 1.1
FUTURELINK CORP.
6,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
____________, 2000
BEAR, STEARNS & CO. INC.
C.E. UNTERBERG TOWBIN
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__________, 2000
Bear, Stearns & Co. Inc.
C.E. Unterberg, Towbin
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
FutureLink Corp., a corporation organized and existing under the laws of
Delaware (the "Company"), proposes, subject to the terms and conditions stated
herein, to issue and sell to Bear, Stearns & Co. Inc. and C.E. Unterberg,
Towbin, as representatives (the "Representatives") of the several underwriters
named on Schedule I hereto (collectively, the "Underwriters"), an aggregate of
6,000,000 shares (the "Firm Shares") of its common stock, $0.0001 par value (the
"Common Stock"), and, for the sole purpose of covering over-allotments in
connection with the sale of the Firm Shares, at the option of the Underwriters,
up to an additional 900,000 shares (the "Additional Shares") of Common Stock.
The Firm Shares and any Additional Shares purchased by the Underwriters are
referred to herein as the "Shares." The Shares are more fully described in the
Registration Statement referred to below.
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. THE COMPANY REPRESENTS AND
WARRANTS TO, AND AGREES WITH, EACH OF THE UNDERWRITERS THAT:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (No. 333-30178), and a
related preliminary prospectus for the registration under the Securities Act of
1933, as amended (the "Securities Act"), of shares of Common Stock, which
registration statement, as amended, has been declared effective by the
Commission and copies of which have heretofore been delivered to the
Underwriters. The registration statement, as amended at the time it became
effective, including the exhibits and information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act or otherwise, is hereinafter referred to as the
"Registration Statement." If the Company has filed or is required pursuant to
the terms hereof to file a registration statement pursuant to Rule 462(b) under
the Securities Act registering additional shares of Common Stock (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference herein
to the term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than the Registration Statement, no other document
has heretofore been filed with the Commission with respect to the sale of the
Shares (other than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act (the "Securities Act
Regulations"), each in the form heretofore delivered to the Underwriters). No
stop order suspending the effectiveness of the Registration Statement has been
issued and no
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proceeding for that purpose has been initiated or, to the Company's knowledge,
threatened by the Commission. The Company, if required by the Securities Act
Regulations, proposes to file a prospectus with the Commission pursuant to Rule
424(b) of the Securities Act Regulations. That prospectus, in the form in which
it is to be filed with the Commission pursuant to Rule 424(b) of the Securities
Act Regulations, is hereinafter referred to as the "Prospectus," except that, if
any revised prospectus or prospectus supplement shall be provided to the
underwriters by the Company for use in connection with the offering and sale of
the Shares (the "Offering") which differs from the Prospectus (whether or not
such revised prospectus or prospectus supplement is required to be filed by the
Company pursuant to Rule 424(b) of the Securities Act Regulations), the term
"Prospectus" shall refer to such revised prospectus or shall include such
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement or filed
with the Commission pursuant to Rule 424 under the Securities Act is hereafter
called a "Preliminary Prospectus." All references in this Agreement to the
Registration Statement, a Rule 462(b) Registration Statement, a Preliminary
Prospectus and the Prospectus, or any amendments of or supplements to any of the
foregoing, shall be deemed to include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").
(b) The Registration Statement and the Prospectus, at the time the
Registration Statement became effective and as of the Closing Date (as defined
in Section 2(b) below), and each Preliminary Prospectus as of the date thereof,
complied and comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations, and did not and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus, as of the date hereof (unless the term
"Prospectus" refers to a prospectus that has been provided to the Underwriters
by the Company for use in connection with the offering of the Shares, which
differs from the Prospectus filed with the Commission pursuant to Rule 424(b) of
the Securities Act Regulations, in which case at the time it is first provided
to the Underwriters for such use) and on the Closing Date, does not and will not
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this Section 1(b) shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by any Underwriter expressly for use in the
Registration Statement or the Prospectus. Each Preliminary Prospectus and
Prospectus filed as part of the Registration Statement, as part of any amendment
thereto or pursuant to Rule 424 under the Securities Act Regulations, if filed
by electronic transmission pursuant to Regulation S-T under the Securities Act,
was identical to the copy thereof delivered to the Underwriters for use in
connection with the Offering (except as may be permitted by Regulation S-T under
the Securities Act). There are no contracts or other documents required to be
described in the Prospectus or filed as exhibits to the Registration Statement
under the Securities Act that have not been described or filed therein as
required, and there are no business relationships
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or related-party transactions involving the Company or any of its subsidiaries
or any other person required to be described in the Prospectus that have not
been described therein.
(c) Each of the Company and its subsidiaries (i) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, (ii) has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is currently being conducted and as described in the
Prospectus, and (iii) is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified or in good standing
does not and would not (x) individually or in the aggregate, result in a
material adverse effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and its
subsidiaries, taken as a whole, (y) interfere with or adversely affect the
issuance or marketability of the Shares pursuant hereto or (z) in any manner
draw into question the validity of this Agreement (any of the events set forth
in clauses (x), (y) or (z) being a "Material Adverse Effect").
(d) All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable, and
were not issued in violation of, or subject to, any preemptive or similar
rights. The Shares, when issued, delivered and sold in accordance with this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, and will not be issued in violation of, or subject to, any
preemptive or similar rights. As of December 31, 1999, after giving effect to
the issuance and sale of the Shares pursuant hereto, the Company would have had
the pro forma consolidated capitalization as set forth in the Prospectus under
the caption "Capitalization."
(e) All of the outstanding capital stock of, or other ownership
interests in, the Company's subsidiaries are owned by the Company, free and
clear of any security interest, claim, lien, limitation on voting rights or
encumbrance; and all such securities have been duly authorized and validly
issued, are fully paid and nonassessable, and were not issued in violation of
any preemptive or similar rights.
(f) Except as disclosed in the Prospectus, there are not currently,
and will not be as a result of the Offering, any outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire or
instruments convertible into or exchangeable for, any capital stock or other
equity interest of the Company or any of its subsidiaries.
(g) The Common Stock (including the Shares) is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and is listed for quotation on the Nasdaq National Market ("Nasdaq"). The
Company has taken no action designed to delist or terminate the registration of,
or likely to have the effect of delisting or terminating the registration of,
the Common Stock under the Exchange Act or from Nasdaq, nor has the Company
received any notification that the Commission or Nasdaq is contemplating
terminating such registration or listing.
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(h) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby, including, without
limitation, the corporate power and authority to issue, sell and deliver the
Shares as provided herein.
(i) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
insofar as the indemnification and contribution provisions hereof may be limited
by applicable law or equitable principles and subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity.
(j) Neither the Company nor any of its subsidiaries is, nor after
giving effect to the Offering will be, (i) in violation of its charter or
bylaws, (ii) in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it is or may be bound or to which any of its
properties is or may be subject, or (iii) in violation of any local, state or
federal law, statute, ordinance, rule, regulation, requirement, judgment or
court decree applicable to the Company or any of its subsidiaries or any of
their assets or properties (whether owned or leased) other than, in the case of
clauses (ii) and (iii), any default or violation that (A) would not have a
Material Adverse Effect or (B) is disclosed in the Prospectus. There exists no
condition that, with notice, the passage of time or otherwise, would constitute
a default by the Company nor any of its subsidiaries under any of the items
described in clauses (i) through (iii) above, except any default that (x) would
not have a Material Adverse Effect or (y) is disclosed in the Prospectus.
(k) None of (i) the execution, delivery or performance by the Company
of this Agreement, (ii) the issuance and sale of the Shares, or (iii) the
consummation by the Company of the transactions contemplated hereby and in the
Prospectus violates, conflicts with, or constitutes a breach of any of the terms
or provisions of, or a default under (or an event that with notice or the lapse
of time or both would constitute a default), or requires consent which has not
been obtained under, or results in the imposition of a lien or encumbrance on
any properties of the Company or any of its subsidiaries, or an acceleration of
any indebtedness of the Company or any of its subsidiaries pursuant to, (A) the
charter or bylaws of the Company or any of its subsidiaries, (B) any bond,
debenture, note, indenture, mortgage, deed of trust, contract or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is or may be bound or to which any
of their properties is or may be subject, (C) any statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their assets or
properties or (D) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties (whether owned or leased),
except in the case of clauses (B), (C) and (D) for such violations, conflicts,
breaches, defaults, failures to obtain consent, impositions of liens or
accelerations that would not, singly or in the aggregate, have a Material
Adverse Effect. Other than as described in the Prospectus, no consent, approval,
authorization or order of, or filing,
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registration, qualification, license or permit of or with any court or
governmental agency or authority is required for (A) the execution and delivery
of and performance by the Company of the obligations hereunder, (B) the issuance
and sale of the Shares, or (C) the consummation by the Company of the
transactions contemplated hereby, except (x) such as have been obtained or made
under the Securities Act and state securities or blue sky laws and regulations
or such as may be required by the National Association of Securities Dealers,
Inc. (the "NASD") or (y) where the failure to obtain any such consent, approval,
authorization or order of, or to make or obtain any filing, registration,
qualification, license or permit would not have a Material Adverse Effect.
(l) There is (i) no action, suit, investigation or proceeding before
or by any court, arbitrator or governmental agency or authority now pending or,
to the knowledge of the Company or any of its subsidiaries, threatened to which
the Company or any of its subsidiaries is or may be a party or to which the
business or property of the Company or any of its subsidiaries is or may be
subject, (ii) no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency, or (iii) no injunction,
restraining order or order of any nature by a federal or state court or foreign
court of competent jurisdiction to which the Company or any of its subsidiaries
is or may be subject or to which the business, assets, or property of the
Company or any of its subsidiaries are or may be subject that, in the case of
clauses (i), (ii) and (iii) above, (A) is required to be disclosed in the
Prospectus and is not so disclosed, or (B) would have a Material Adverse Effect.
(m) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental agency that prevents the
issuance of the Shares or prevents or suspends the use of the Prospectus; no
injunction, restraining order or order of any kind by a federal or state court
of competent jurisdiction has been issued that prevents the issuance of the
Shares or prevents or suspends the sale of the Shares in any jurisdiction
referred to in Section 1(c) hereof or that could adversely affect the
consummation of the transactions contemplated hereby or by the Prospectus; and
every request of any securities authority or agency of any jurisdiction for
additional information has been complied with in all material respects.
(n) No labor problem or disturbance with the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company, is
threatened which would have a Material Adverse Effect.
(o) Neither the Company nor any of its subsidiaries has violated (A)
any federal, state or local law or foreign law relating to discrimination in
hiring, promotion or pay of employees, (B) any applicable wage or hour laws or
(C) any provision of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations thereunder
(collectively, "ERISA"), which in the case of clause (A), (B) or (C) above would
have a Material Adverse Effect.
(p) Neither the Company nor any of its subsidiaries has violated any
environmental, safety or similar law or regulation applicable to it or its
business or property relating to the protection of human health and safety, the
environment or hazardous or toxic
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substances or wastes, pollutants or contaminants ("Environmental Laws"), lacks
any permit, license or other approval required of it under applicable
Environmental Laws or is violating any term or condition of such permit, license
or approval, which would have a Material Adverse Effect.
(q) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the Prospectus
as owned by it, free and clear of all liens, charges, encumbrances and
restrictions, except such as are described in the Prospectus or as would not
have a Material Adverse Effect, (ii) peaceful and undisturbed possession of its
properties under all material leases to which it is a party as lessee, (iii) all
licenses, certificates, permits, authorizations, approvals, franchises and other
rights from, and has made all declarations and filings with, all federal, state
and local authorities, all self-regulatory authorities and all courts and other
tribunals (each an "Authorization") necessary to engage in the business
conducted by it in the manner described in the Prospectus, except as described
in the Prospectus or where the failure to hold any such Authorization would not
have a Material Adverse Effect and (iv) not received any notice that any
governmental body or agency is considering limiting, suspending or revoking any
such Authorization. Except where the failure to be in full force and effect
would not have a Material Adverse Effect, all such Authorizations are valid and
in full force and effect, and each of the Company and its subsidiaries is in
compliance in all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory authorities
having jurisdiction with respect thereto. All material leases to which the
Company or any of its subsidiaries is a party are valid and binding, and no
default by the Company or any of its subsidiaries has occurred and is continuing
thereunder and, to the best knowledge of the Company and its subsidiaries, no
material defaults by the landlord are existing under any such lease that would
have a Material Adverse Effect.
(r) Except as described in the Prospectus, the Company and its
subsidiaries own, possess or have the right to employ such patents, patent
rights, licenses, inventions, copyrights, know-how, trade secrets and other
proprietary or confidential information, software, systems or procedures,
trademarks, service marks and trade names, inventions, computer programs,
technical data and information (collectively, the "Intellectual Property
Rights") presently employed by it in connection with the businesses now operated
by it or which are proposed to be operated by it or its subsidiaries. The
Intellectual Property Rights are owned, to the Company's knowledge, free and
clear of and without violating any right, claimed right, charge, encumbrance,
pledge, security interest, restriction or lien of any kind of any other person,
and neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with any asserted Intellectual Property Rights of
others with respect to any of the foregoing, except as disclosed in the
Prospectus or as would not have a Material Adverse Effect. The use of the
Intellectual Property Rights in connection with the business and operations of
the Company and its subsidiaries does not infringe on the rights of any person,
except as disclosed in the Prospectus or would not have a Material Adverse
Effect.
(s) Neither the Company nor any of its subsidiaries nor, to the best
knowledge of the Company, any of their respective officers, directors, partners,
employees,
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agents or affiliates or any other person acting on behalf of the Company or any
of its subsidiaries has, directly or indirectly, given or agreed to give any
money, gift or similar benefit to any customer, supplier, employee or agent of a
customer or supplier, official or employee of any governmental agency (domestic
or foreign), instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is or may be in a position to help or hinder the business of the
Company or any of its subsidiaries (or assist the Company or any of its
subsidiaries in connection with any actual or proposed transaction), which (i)
might subject the Company or any of its subsidiaries to any damage or penalty in
any civil, criminal or governmental litigation or proceeding (domestic or
foreign), (ii) if not given in the past, might have had a material adverse
effect on the assets, business or operations of the Company or any of its
subsidiaries or (iii) if not continued in the future, might have a Material
Adverse Effect.
(t) All material tax returns required to be filed by the Company and
each of its subsidiaries in all jurisdictions have been so filed. All taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due or claimed to be due from such entities or that are due and payable
have been paid, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without penalty
or interest. To the knowledge of the Company, there are no material proposed
additional tax assessments against the Company or the assets or property of the
Company or any of its subsidiaries. The Company has provided adequate charges,
accruals and reserves as set forth in the financial statements included in the
Prospectus in respect of all material federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or
any of its consolidated subsidiaries has not been finally determined.
(u) Neither the Company nor any of its subsidiaries is, nor upon
consummation of the transactions contemplated hereby or in the Prospectus will
be, (i) an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended or
(ii) a "holding company" or a "subsidiary company" or an "affiliate" of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(v) Except as disclosed in the Prospectus, there are no holders of
securities of the Company or any of its subsidiaries who, by reason of the
execution by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby, have the right to request or demand that
the Company or any of its subsidiaries register under the Securities Act or
analogous foreign laws and regulations securities held by them, other than any
such right that has been duly waived.
(w) Each of the Company and its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with its management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with its management's
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general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals, and
appropriate action is taken with respect to any differences therein.
(x) Each of the Company and its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses. Such insurance
insures against such losses and risks as are adequate in accordance with
customary industry practice to protect the Company and its subsidiaries and
their respective businesses. Neither the Company nor any of its subsidiaries has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in force on
the date hereof, subject only to changes made in the ordinary course of
business, consistent with past practice, which do not, individually or in the
aggregate, materially alter the coverage thereunder or the risks covered
thereby. The Company has no knowledge 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 or as presently
contemplated and at a cost that would not result in a Material Adverse Effect.
(y) The Company has not (i) taken, 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 any security of the Company to
facilitate the sale or resale of the Shares or (ii) since the date of the
Preliminary Prospectus (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of, Shares or (B) paid or agreed to pay to
any person any compensation for soliciting another to purchase any other
securities of the Company.
(z) The Company and its subsidiaries and any "employee benefit plan"
(as defined under 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 any of its subsidiaries, any member of any group of
organizations described in Section 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 unfunded 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) Section 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
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Code is so qualified, and nothing has occurred, whether by action or failure to
act, that would cause the loss of such qualification.
(aa) Subsequent to the dates as of which information is given in the
Prospectus and up to the Closing Date, except as set forth in the Prospectus,
(i) neither the Company nor any of its subsidiaries has incurred any liabilities
or obligations, direct or contingent, that are material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole, nor entered
into any transaction not in the ordinary course of business, (ii) neither the
Company nor any of its subsidiaries has incurred any liabilities or obligations,
direct or contingent, that will be material to the Company and its subsidiaries
taken as a whole, (iii) there has not been, individually or in the aggregate,
any change or development that would have a Material Adverse Effect; (iv) there
has been no dividend or distribution of any kind declared, paid or made by the
Company or any of its subsidiaries on any class of its capital stock; (v) there
has been no change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or any of its
subsidiaries; (vi) there has been no revaluation by the Company or any of its
subsidiaries of any of their assets; (vii) there has been no increase in the
salary or other compensation payable or to become payable by the Company or any
of its subsidiaries to any of their officers, directors, employees or advisors,
nor any declaration, payment or commitment or obligation of any kind for the
payment by the Company or any of its subsidiaries of a bonus or other additional
salary or compensation to any such person; (viii) there has been no amendment or
termination of any material contract, agreement or license to which the Company
or any of its subsidiaries is a party or by which it is bound; (ix) there has
been no waiver or release of any material right or claim of the Company or any
subsidiary, including any write-off or other compromise of any material account
receivable of the Company or any subsidiary; and (x) there has been no change in
pricing or royalties set or charged by the Company or any subsidiary to their
respective customers or licensees or in pricing or royalties set or charged by
persons who have licensed Intellectual Property Rights to the Company or any of
its subsidiaries.
(bb) Ernst & Young 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 included in the Prospectus, are
independent public or certified public accountants within the meaning of
Regulation S-X under the Securities Act and the Exchange Act.
(cc) The financial statements, together with the related notes,
included in the Prospectus present fairly in all material respects 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. Such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as expressly stated in the related
notes. The financial data set forth in the Prospectus under the captions
"Prospectus Summary--Summary Consolidated Financial Data," "Capitalization,"
"Acquisitions" and "Pro Forma Condensed Consolidated Financial Information,"
fairly present the information set forth therein on a basis consistent with that
of the audited financial statements contained in the Prospectus.
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(dd) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and any other person that would
give rise to a valid claim against the Company or any of the Underwriters for a
brokerage commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Shares.
(ee) The statements (including the assumptions described therein)
included in the Prospectus (i) are within the coverage of Rule 175(b) under the
Securities Act to the extent such data constitute forward looking statements as
defined in Rule 175(c) and (ii) were made by the Company with a reasonable basis
and reflect the Company's good faith estimate of the matters described therein.
(ff) None of the Company and its subsidiaries, nor any of the
Company's suppliers or customers, has experienced any Year 2000 issues with its
computer systems and applications that have had or will have a Material Adverse
Effect.
(gg) The conditions for use of Form SB-2, as set forth in the
Securities Act Regulations, have been satisfied by the Company.
(hh) Each certificate signed by any officer of the Company and
delivered to the Underwriters or Underwriters' Counsel pursuant to this
Agreement shall be deemed to be a representation and warranty by the Company to
the Underwriters as to the matters covered thereby.
The Company acknowledges that each of the Underwriters and, for purposes of
the opinions to be delivered to the Underwriters pursuant to Section 6 hereof,
counsel to the Company and counsel to the Underwriters, will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance.
II. PURCHASE, SALE AND DELIVERY OF THE SHARES.
A. ON THE BASIS OF THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
HEREIN CONTAINED, BUT SUBJECT TO THE TERMS AND CONDITIONS HEREIN SET FORTH,
THE COMPANY AGREES TO SELL TO THE UNDERWRITERS AND THE UNDERWRITERS,
SEVERALLY AND NOT JOINTLY, AGREE TO PURCHASE FROM THE COMPANY, AT A PURCHASE
PRICE PER SHARE OF $ , THE NUMBER OF FIRM SHARES SET FORTH OPPOSITE THE
NAME OF EACH UNDERWRITER IN SCHEDULE I HERETO PLUS ANY ADDITIONAL NUMBER OF
SHARES WHICH SUCH UNDERWRITER MAY BECOME OBLIGATED TO PURCHASE PURSUANT TO
THE PROVISIONS OF SECTION 9 HEREOF.
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<PAGE> 12
B. PAYMENT OF THE PURCHASE PRICE FOR, AND DELIVERY OF CERTIFICATES FOR, THE
FIRM SHARES SHALL BE MADE AT THE OFFICE OF LATHAM & WATKINS, 633 WEST FIFTH
STREET, SUITE 4000, LOS ANGELES, CALIFORNIA, 90071, OR AT SUCH OTHER PLACE
AS SHALL BE AGREED UPON BY THE UNDERWRITERS AND THE COMPANY, AT 10:00 A.M.
(PACIFIC TIME) ON __________, 2000 (UNLESS POSTPONED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 9 HEREOF), AFTER THE DETERMINATION OF THE PUBLIC
OFFERING PRICE OF THE FIRM SHARES, OR SUCH OTHER TIME NOT LATER THAN TEN
BUSINESS DAYS AFTER SUCH DATE AS SHALL BE AGREED UPON BY THE UNDERWRITERS
AND THE COMPANY (SUCH TIME AND DATE OF PAYMENT AND DELIVERY BEING HEREIN
CALLED THE "CLOSING DATE"). PAYMENT SHALL BE MADE TO THE COMPANY BY WIRE
TRANSFER IN SAME DAY FUNDS, AGAINST DELIVERY TO THE UNDERWRITERS OF
CERTIFICATES FOR THE FIRM SHARES TO BE PURCHASED BY THEM. CERTIFICATES FOR
THE FIRM SHARES SHALL BE REGISTERED IN SUCH NAME OR NAMES AND IN SUCH
AUTHORIZED DENOMINATIONS AS THE UNDERWRITERS MAY REQUEST IN WRITING AT LEAST
TWO FULL BUSINESS DAYS PRIOR TO THE CLOSING DATE. THE COMPANY WILL PERMIT
THE UNDERWRITERS TO EXAMINE AND PACKAGE SUCH CERTIFICATES FOR DELIVERY AT
LEAST ONE FULL BUSINESS DAY PRIOR TO THE CLOSING DATE.
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<PAGE> 13
C. IN ADDITION, THE COMPANY HEREBY GRANTS TO THE UNDERWRITERS THE OPTION,
FROM TIME TO TIME, TO PURCHASE UP TO 900,000 ADDITIONAL SHARES AT THE SAME
PURCHASE PRICE PER SHARE TO BE PAID BY THE UNDERWRITERS TO THE COMPANY FOR
THE FIRM SHARES AS SET FORTH IN THIS SECTION 2 FOR THE SOLE PURPOSE OF
COVERING OVER-ALLOTMENTS IN THE SALE OF FIRM SHARES BY THE UNDERWRITERS.
THIS OPTION MAY BE EXERCISED AT ANY TIME, OR FROM TIME TO TIME, IN WHOLE OR
IN PART, ON OR BEFORE THE THIRTIETH DAY FOLLOWING THE DATE OF THE
PROSPECTUS, BY WRITTEN NOTICE BY THE UNDERWRITERS TO THE COMPANY. SUCH
NOTICE SHALL SET FORTH THE AGGREGATE NUMBER OF ADDITIONAL SHARES AS TO WHICH
THE OPTION IS BEING EXERCISED AND THE DATE AND TIME, AS REASONABLY
DETERMINED BY THE UNDERWRITERS, WHEN THE ADDITIONAL SHARES ARE TO BE
DELIVERED (SUCH DATE AND TIME BEING HEREIN SOMETIMES REFERRED TO AS AN
"ADDITIONAL CLOSING DATE"); PROVIDED, HOWEVER, THAT NO ADDITIONAL CLOSING
DATE SHALL BE EARLIER THAN THE CLOSING DATE OR EARLIER THAN THE SECOND FULL
BUSINESS DAY AFTER THE DATE ON WHICH THE OPTION SHALL HAVE BEEN EXERCISED OR
LATER THAN THE EIGHTH FULL BUSINESS DAY AFTER THE DATE ON WHICH THE OPTION
SHALL HAVE BEEN EXERCISED (UNLESS SUCH TIME AND DATE ARE POSTPONED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9 HEREOF). CERTIFICATES FOR THE
ADDITIONAL SHARES SHALL BE REGISTERED IN SUCH NAME OR NAMES AND IN SUCH
AUTHORIZED DENOMINATIONS AS THE UNDERWRITERS MAY REQUEST IN WRITING AT LEAST
TWO FULL BUSINESS DAYS PRIOR TO THE ADDITIONAL CLOSING DATE. THE COMPANY
WILL PERMIT THE UNDERWRITERS TO EXAMINE AND PACKAGE SUCH CERTIFICATES FOR
DELIVERY AT LEAST ONE FULL BUSINESS DAY PRIOR TO THE ADDITIONAL CLOSING
DATE.
D. THE NUMBER OF ADDITIONAL SHARES TO BE SOLD TO EACH UNDERWRITER SHALL BE
THE NUMBER THAT BEARS THE SAME RATIO TO THE AGGREGATE NUMBER OF ADDITIONAL
SHARES BEING PURCHASED AS THE NUMBER OF FIRM SHARES SET FORTH OPPOSITE THE
NAME OF SUCH UNDERWRITER IN SCHEDULE I HERETO (OR SUCH NUMBER INCREASED AS
SET FORTH IN SECTION 9 HEREOF) BEARS TO THE TOTAL NUMBER OF FIRM SHARES
BEING PURCHASED FROM THE COMPANY, SUBJECT, HOWEVER, TO SUCH ADJUSTMENTS TO
ELIMINATE ANY FRACTIONAL SHARES AS THE UNDERWRITERS IN THEIR SOLE DISCRETION
SHALL MAKE.
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<PAGE> 14
E. PAYMENT FOR THE ADDITIONAL SHARES BEING PURCHASED AT SUCH TIME SHALL BE
MADE BY WIRE TRANSFER IN SAME DAY FUNDS PAYABLE TO THE ORDER OF THE COMPANY
AT THE OFFICE OF LATHAM & WATKINS, 633 WEST FIFTH STREET, SUITE 4000, LOS
ANGELES, CALIFORNIA, 90071, OR SUCH OTHER LOCATION AS MAY BE MUTUALLY
ACCEPTABLE, UPON DELIVERY OF THE CERTIFICATES FOR SUCH ADDITIONAL SHARES TO
THE UNDERWRITERS.
III. OFFERING. UPON THE UNDERWRITERS' AUTHORIZATION OF THE RELEASE OF THE FIRM
SHARES, THE UNDERWRITERS PROPOSE TO OFFER THE SHARES FOR SALE TO THE PUBLIC UPON
THE TERMS SET FORTH IN THE PROSPECTUS.
IV. COVENANTS OF THE COMPANY. THE COMPANY COVENANTS AND AGREES WITH EACH OF THE
UNDERWRITERS THAT:
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<PAGE> 15
A. THE COMPANY SHALL NOTIFY THE UNDERWRITERS IMMEDIATELY (AND, IF REQUESTED
BY THE UNDERWRITERS, SHALL CONFIRM SUCH NOTICE IN WRITING) (I) WHEN ANY
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE,
(II) OF ANY REQUEST BY THE COMMISSION FOR ANY AMENDMENT OF OR SUPPLEMENT TO
THE REGISTRATION STATEMENT OR THE PROSPECTUS OR FOR ANY ADDITIONAL
INFORMATION, (III) OF THE MAILING OR THE DELIVERY TO THE COMMISSION FOR
FILING OF THE PROSPECTUS OR ANY AMENDMENT OF OR SUPPLEMENT TO THE
REGISTRATION STATEMENT OR THE PROSPECTUS OR ANY DOCUMENT TO BE FILED
PURSUANT TO THE EXCHANGE ACT DURING ANY PERIOD WHEN THE PROSPECTUS IS
REQUIRED TO BE DELIVERED UNDER THE SECURITIES ACT, (IV) OF THE ISSUANCE BY
THE COMMISSION OF ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT OR ANY POST-EFFECTIVE AMENDMENT THERETO OR OF THE
INITIATION OR THREATENING OF ANY PROCEEDING THEREFOR, (V) OF THE RECEIPT OF
ANY COMMENTS OR INQUIRIES FROM THE COMMISSION, AND (VI) OF THE RECEIPT BY
THE COMPANY OF ANY NOTIFICATION WITH RESPECT TO THE SUSPENSION OF THE
QUALIFICATION OF THE SHARES FOR SALE IN ANY JURISDICTION OR THE INITIATION
OR THREATENING OF ANY PROCEEDING FOR THAT PURPOSE. IF THE COMMISSION
PROPOSES TO ISSUE OR ISSUES A STOP ORDER AT ANY TIME, THE COMPANY SHALL MAKE
EVERY REASONABLE EFFORT TO PREVENT THE ISSUANCE OF ANY SUCH STOP ORDER AND,
IF ISSUED, TO OBTAIN THE LIFTING OF SUCH ORDER AS SOON AS POSSIBLE. THE
COMPANY SHALL NOT FILE ANY POST-EFFECTIVE AMENDMENT TO THE REGISTRATION
STATEMENT OR ANY AMENDMENT OF OR SUPPLEMENT TO THE PROSPECTUS (INCLUDING ANY
REVISED PROSPECTUS THAT THE COMPANY PROPOSES FOR USE BY THE UNDERWRITERS IN
CONNECTION WITH THE OFFERING OF THE SHARES, WHICH DIFFERS FROM THE
PROSPECTUS FILED WITH THE COMMISSION PURSUANT TO RULE 424(B) OF THE
SECURITIES ACT REGULATIONS, WHETHER OR NOT SUCH REVISED PROSPECTUS IS
REQUIRED TO BE FILED PURSUANT TO RULE 424(B) OF THE SECURITIES ACT
REGULATIONS) TO WHICH THE UNDERWRITERS OR UNDERWRITERS' COUNSEL (AS DEFINED
BELOW) REASONABLY OBJECT, SHALL FURNISH THE UNDERWRITERS WITH COPIES OF ANY
SUCH AMENDMENT OR SUPPLEMENT A REASONABLE AMOUNT OF TIME PRIOR TO SUCH
PROPOSED FILING OR USE, AS THE CASE MAY BE, AND SHALL NOT FILE ANY SUCH
AMENDMENT OR SUPPLEMENT OR USE ANY SUCH PROSPECTUS TO WHICH THE UNDERWRITERS
OR UNDERWRITERS' COUNSEL REASONABLY OBJECT.
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<PAGE> 16
B. IF ANY EVENT OCCURS AS A RESULT OF WHICH THE PROSPECTUS WOULD, IN THE
REASONABLE JUDGMENT OF THE UNDERWRITERS OR THE COMPANY, INCLUDE AN UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT REQUIRED TO
BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT
OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, OR IF IT IS
NECESSARY AT ANY TIME TO AMEND OR SUPPLEMENT THE PROSPECTUS OR THE
REGISTRATION STATEMENT TO COMPLY WITH THE SECURITIES ACT OR THE SECURITIES
ACT REGULATIONS, THE COMPANY SHALL NOTIFY THE UNDERWRITERS PROMPTLY AND
PREPARE AND FILE WITH THE COMMISSION AN APPROPRIATE AMENDMENT OR SUPPLEMENT
(IN FORM AND SUBSTANCE SATISFACTORY TO THE UNDERWRITERS) THAT WILL CORRECT
SUCH STATEMENT OR OMISSION OR WILL EFFECT SUCH COMPLIANCE.
C. THE COMPANY HAS DELIVERED TO THE UNDERWRITERS FIVE SIGNED COPIES OF THE
REGISTRATION STATEMENT AS ORIGINALLY FILED, INCLUDING EXHIBITS, AND ALL
AMENDMENTS THERETO, AND THE COMPANY SHALL PROMPTLY DELIVER TO EACH OF THE
UNDERWRITERS, FROM TIME TO TIME DURING THE PERIOD THAT THE PROSPECTUS IS
REQUIRED TO BE DELIVERED UNDER THE SECURITIES ACT, SUCH NUMBER OF COPIES OF
THE PROSPECTUS AND THE REGISTRATION STATEMENT, AND ALL AMENDMENTS OF AND
SUPPLEMENTS TO SUCH DOCUMENTS, IF ANY, AS THE UNDERWRITERS MAY REQUEST.
D. THE COMPANY SHALL ENDEAVOR, IN GOOD FAITH AND IN COOPERATION WITH THE
UNDERWRITERS, TO QUALIFY THE SHARES FOR OFFERING AND SALE UNDER THE
SECURITIES LAWS OF SUCH JURISDICTIONS AS THE UNDERWRITERS MAY DESIGNATE AND
TO MAINTAIN SUCH QUALIFICATION IN EFFECT FOR SO LONG AS REQUIRED FOR THE
DISTRIBUTION THEREOF; EXCEPT THAT IN NO EVENT WILL THE COMPANY BE OBLIGATED
IN CONNECTION THEREWITH TO QUALIFY AS A FOREIGN CORPORATION OR TO EXECUTE A
GENERAL CONSENT TO SERVICE OF PROCESS.
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<PAGE> 17
E. THE COMPANY SHALL MAKE GENERALLY AVAILABLE (WITHIN THE MEANING OF SECTION
11(A) OF THE SECURITIES ACT) TO ITS SECURITY HOLDERS AND TO THE UNDERWRITERS
AS SOON AS PRACTICABLE, BUT NOT LATER THAN 45 DAYS AFTER THE END OF ITS
FISCAL QUARTER IN WHICH THE FIRST ANNIVERSARY DATE OF THE EFFECTIVE DATE OF
THE REGISTRATION STATEMENT OCCURS (OR, IF SUCH FISCAL QUARTER IS THE
COMPANY'S FOURTH FISCAL QUARTER, NOT LATER THAN 90 DAYS AFTER THE END OF
SUCH QUARTER), AN EARNINGS STATEMENT (IN FORM COMPLYING WITH THE PROVISIONS
OF RULE 158 OF THE SECURITIES ACT REGULATIONS) COVERING A PERIOD OF AT LEAST
TWELVE CONSECUTIVE MONTHS BEGINNING AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT (AS DEFINED IN RULE 158(C) OF THE SECURITIES ACT
REGULATIONS).
F. DURING THE PERIOD OF 180 DAYS FROM THE DATE OF THE PROSPECTUS, THE
COMPANY SHALL NOT, DIRECTLY OR INDIRECTLY, WITHOUT THE PRIOR WRITTEN CONSENT
OF BEAR STEARNS, ISSUE, SELL, OFFER OR AGREE TO SELL, GRANT ANY OPTION FOR
THE SALE OF, PLEDGE, MAKE ANY SHORT SALE OF, MAINTAIN ANY SHORT POSITION
WITH RESPECT TO, ESTABLISH OR MAINTAIN A "PUT EQUIVALENT POSITION" (WITHIN
THE MEANING OF RULE 16A-1(H) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED) WITH RESPECT TO, ENTER INTO ANY SWAP, DERIVATIVE TRANSACTION OR
OTHER ARRANGEMENT (WHETHER ANY SUCH TRANSACTION IS TO BE SETTLED BY DELIVERY
OF COMMON STOCK, OTHER SECURITIES, CASH OR OTHER CONSIDERATION) THAT
TRANSFERS TO ANOTHER, IN WHOLE OR IN PART, ANY OF THE ECONOMIC CONSEQUENCES
OF OWNERSHIP, OR OTHERWISE DISPOSE OF, ANY COMMON STOCK (OR ANY SECURITIES
CONVERTIBLE INTO, EXERCISABLE FOR OR EXCHANGEABLE FOR COMMON STOCK) OR
INTEREST THEREIN OF THE COMPANY OR ANY CAPITAL STOCK OF ANY OF ITS
SUBSIDIARIES, EXCEPT THAT THE COMPANY MAY ISSUE (I) SHARES OF COMMON STOCK
AND OPTIONS TO PURCHASE SHARES OF COMMON STOCK UNDER ITS FUTURELINK
DISTRIBUTION CORP. STOCK OPTION PLAN, (II) SHARES OF COMMON STOCK IN
CONNECTION WITH STRATEGIC RELATIONSHIPS AND ACQUISITIONS OF BUSINESSES,
TECHNOLOGIES AND PRODUCTS COMPLEMENTARY TO THOSE OF THE COMPANY, SO LONG AS
THE RECIPIENTS OF SUCH SHARES AGREE TO BE BOUND BY A LOCK-UP AGREEMENT,
SUBSTANTIALLY IN THE FORM OF EXHIBIT B HERETO (WHICH SHALL PROVIDE THAT ANY
TRANSFEREES AND ASSIGNS OF SUCH RECIPIENTS WILL BE BOUND BY THE LOCK-UP
AGREEMENT), FOR THE REMAINDER OF SUCH 180-DAY PERIOD.
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<PAGE> 18
G. DURING A PERIOD OF THREE YEARS FROM THE DATE OF THE PROSPECTUS, THE
COMPANY SHALL FURNISH TO THE UNDERWRITERS COPIES OF (I) ALL REPORTS TO ITS
STOCKHOLDERS AND (II) ALL REPORTS, FINANCIAL STATEMENTS AND PROXY OR
INFORMATION STATEMENTS FILED BY THE COMPANY WITH THE COMMISSION OR ANY
NATIONAL SECURITIES EXCHANGE.
H. THE COMPANY SHALL APPLY THE PROCEEDS FROM THE SALE OF THE SHARES AS SET
FORTH UNDER "USE OF PROCEEDS" IN THE PROSPECTUS.
I. IF THE COMPANY ELECTS TO RELY UPON RULE 462(B) OF THE SECURITIES ACT
REGULATIONS, THE RULE 462(B) REGISTRATION STATEMENT SHALL HAVE BECOME
EFFECTIVE BY 10:00 P.M., NEW YORK CITY TIME, ON THE DATE OF THIS AGREEMENT,
NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF THE REGISTRATION STATEMENT OR
ANY PART THEREOF SHALL HAVE BEEN ISSUED AND NO PROCEEDING FOR THAT PURPOSE
SHALL HAVE BEEN INITIATED OR THREATENED BY THE COMMISSION, AND ALL REQUESTS
FOR ADDITIONAL INFORMATION ON THE PART OF THE COMMISSION SHALL HAVE BEEN
COMPLIED WITH TO THE UNDERWRITERS' REASONABLE SATISFACTION.
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<PAGE> 19
J. THE COMPANY, DURING THE PERIOD WHEN THE PROSPECTUS IS REQUIRED TO BE
DELIVERED UNDER THE SECURITIES ACT OR THE EXCHANGE ACT, SHALL FILE ALL
DOCUMENTS REQUIRED TO BE FILED WITH THE COMMISSION PURSUANT TO SECTION 13,
14 OR 15 OF THE EXCHANGE ACT WITHIN THE TIME PERIODS SET FORTH IN THE
EXCHANGE ACT AND THE RULES AND REGULATIONS THEREUNDER.
V. PAYMENT OF EXPENSES. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT ARE CONSUMMATED OR THIS AGREEMENT IS TERMINATED, THE COMPANY HEREBY
AGREES TO PAY ALL COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF THE
OBLIGATIONS OF THE COMPANY HEREUNDER, INCLUDING THOSE IN CONNECTION WITH (A) THE
PREPARATION, PRINTING, DUPLICATION, FILING AND DISTRIBUTION OF THE REGISTRATION
STATEMENT, AS ORIGINALLY FILED AND ALL AMENDMENTS THERETO (INCLUDING ALL
EXHIBITS THERETO), ANY PRELIMINARY PROSPECTUS, THE PROSPECTUS AND ANY AMENDMENTS
THEREOF OR SUPPLEMENTS THERETO (INCLUDING, WITHOUT LIMITATION, FEES AND EXPENSES
OF THE COMPANY'S ACCOUNTANTS AND COUNSEL), THE UNDERWRITING DOCUMENTS (INCLUDING
THIS AGREEMENT, THE AGREEMENT AMONG UNDERWRITERS AND THE SELLING AGREEMENT) AND
ALL OTHER DOCUMENTS RELATED TO THE PUBLIC OFFERING OF THE SHARES (INCLUDING
THOSE SUPPLIED TO THE UNDERWRITERS IN QUANTITIES AS HEREINABOVE STATED), (B) THE
ISSUANCE, TRANSFER AND DELIVERY OF THE SHARES TO THE UNDERWRITERS, INCLUDING ANY
TRANSFER OR OTHER TAXES PAYABLE THEREON, (C) THE QUALIFICATION OF THE SHARES
UNDER STATE OR FOREIGN SECURITIES OR BLUE SKY LAWS, INCLUDING THE COSTS OF
PRINTING AND MAILING A PRELIMINARY AND FINAL "BLUE SKY MEMORANDUM" AND THE FEES
OF COUNSEL FOR THE UNDERWRITERS IN CONNECTION THEREWITH AND SUCH COUNSEL'S
DISBURSEMENTS IN RELATION THERETO, (D) THE LISTING OF THE SHARES FOR QUOTATION
ON NASDAQ, (E) THE FILING FEES OF THE COMMISSION AND THE NASD, (F) THE COST OF
PRINTING CERTIFICATES REPRESENTING THE SHARES, (G) THE COSTS AND CHARGES OF ANY
TRANSFER AGENT OR REGISTRAR.
VI. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. THE OBLIGATION OF THE UNDERWRITERS
TO PURCHASE AND PAY FOR THE FIRM SHARES AND THE ADDITIONAL SHARES, AS PROVIDED
HEREIN, SHALL BE SUBJECT TO THE ACCURACY OF THE REPRESENTATIONS AND WARRANTIES
OF THE COMPANY HEREIN CONTAINED, AS OF THE DATE HEREOF AND AS OF THE CLOSING
DATE (FOR PURPOSES OF THIS SECTION 6, "CLOSING DATE" SHALL REFER TO THE CLOSING
DATE FOR THE FIRM SHARES AND ANY ADDITIONAL CLOSING DATE, IF DIFFERENT, FOR THE
ADDITIONAL SHARES), TO THE ABSENCE FROM ANY CERTIFICATES, OPINIONS, WRITTEN
STATEMENTS OR LETTERS FURNISHED TO THE UNDERWRITERS OR TO LATHAM & WATKINS
("UNDERWRITERS' COUNSEL") PURSUANT TO THIS SECTION 6 OF ANY MATERIAL
MISSTATEMENT OR OMISSION, TO THE PERFORMANCE BY THE COMPANY OF ITS OBLIGATIONS
HEREUNDER, AND TO THE FOLLOWING ADDITIONAL CONDITIONS:
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<PAGE> 20
A. PRIOR TO THE CLOSING DATE, THE REGISTRATION STATEMENT SHALL HAVE BECOME
EFFECTIVE AND, ON THE CLOSING DATE, NO STOP ORDER SUSPENDING THE
EFFECTIVENESS OF THE REGISTRATION STATEMENT SHALL HAVE BEEN ISSUED UNDER THE
SECURITIES ACT OR ANY PROCEEDINGS THEREFOR INITIATED OR, TO THE COMPANY'S
KNOWLEDGE, THREATENED BY THE COMMISSION. THE PROSPECTUS SHALL HAVE BEEN
FILED WITH THE COMMISSION PURSUANT TO RULE 424(B) OF THE SECURITIES ACT
REGULATIONS WITHIN THE PRESCRIBED TIME PERIOD AND, PRIOR TO THE CLOSING
DATE, THE COMPANY SHALL HAVE PROVIDED EVIDENCE SATISFACTORY TO THE
UNDERWRITERS OF SUCH TIMELY FILING.
B. ALL OF THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED IN
THIS AGREEMENT SHALL BE TRUE AND CORRECT ON THE DATE HEREOF AND ON THE
CLOSING DATE WITH THE SAME FORCE AND EFFECT AS IF MADE ON AND AS OF THE DATE
HEREOF AND THE CLOSING DATE, RESPECTIVELY. THE COMPANY SHALL HAVE PERFORMED
OR COMPLIED WITH ALL OF THE AGREEMENTS HEREIN CONTAINED AND REQUIRED TO BE
PERFORMED OR COMPLIED WITH BY IT ON OR PRIOR TO THE CLOSING DATE.
C. THE PROSPECTUS SHALL HAVE BEEN PRINTED AND COPIES DISTRIBUTED TO THE
UNDERWRITERS NOT LATER THAN 10:00 A.M., NEW YORK CITY TIME, ON THE SECOND
BUSINESS DAY FOLLOWING THE DATE OF THIS AGREEMENT OR AT SUCH LATER DATE AND
TIME AS TO WHICH THE UNDERWRITERS MAY AGREE, AND NO STOP ORDER SUSPENDING
THE QUALIFICATION OR EXEMPTION FROM QUALIFICATION OF THE SHARES IN ANY
JURISDICTION REFERRED TO IN SECTION 4(C)] SHALL HAVE BEEN ISSUED AND NO
PROCEEDINGS FOR THAT PURPOSE SHALL HAVE BEEN COMMENCED OR SHALL BE PENDING
OR THREATENED BY THE COMMISSION.
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<PAGE> 21
D. NO ACTION SHALL HAVE BEEN TAKEN, AND NO STATUTE, RULE, REGULATION OR
ORDER SHALL HAVE BEEN ENACTED, ADOPTED OR ISSUED BY ANY GOVERNMENTAL AGENCY
THAT WOULD, AS OF THE CLOSING DATE, PREVENT THE ISSUANCE OF THE SHARES; AND
NO ACTION, SUIT OR PROCEEDING SHALL HAVE BEEN COMMENCED AND BE PENDING
AGAINST OR AFFECTING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED AGAINST
THE COMPANY OR ANY OF ITS SUBSIDIARIES BEFORE ANY COURT OR ARBITRATOR OR ANY
GOVERNMENTAL BODY, AGENCY OR OFFICIAL THAT (I) WOULD HAVE A MATERIAL ADVERSE
EFFECT OR (II) HAS NOT BEEN DISCLOSED IN THE PROSPECTUS.
E. SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THE PROSPECTUS AND
EXCEPT AS CONTEMPLATED BY THE PROSPECTUS, (I) THERE SHALL NOT HAVE BEEN ANY
MATERIAL ADVERSE CHANGE, OR ANY DEVELOPMENT THAT IS REASONABLY LIKELY TO
RESULT IN A MATERIAL ADVERSE CHANGE, IN THE CAPITAL STOCK OR THE LONG-TERM
DEBT, OR ANY MATERIAL INCREASE IN THE SHORT-TERM DEBT, OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES FROM THAT SET FORTH IN THE PROSPECTUS, (II) NO DIVIDEND
OR DISTRIBUTION OF ANY KIND SHALL HAVE BEEN DECLARED, PAID OR MADE BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES ON ANY CLASS OF ITS CAPITAL STOCK, (III)
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES SHALL HAVE INCURRED ANY
LIABILITIES OR OBLIGATIONS, DIRECT OR CONTINGENT, THAT ARE MATERIAL,
INDIVIDUALLY OR IN THE AGGREGATE, TO THE COMPANY AND ITS SUBSIDIARIES TAKEN
AS A WHOLE AND THAT ARE REQUIRED TO BE DISCLOSED ON A BALANCE SHEET OR IN
NOTES THERETO IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
AND ARE NOT DISCLOSED IN THE PROSPECTUS. SINCE THE DATE HEREOF AND SINCE THE
DATES AS OF WHICH INFORMATION IS GIVEN IN THE PROSPECTUS, THERE SHALL NOT
HAVE OCCURRED ANY MATERIAL ADVERSE EFFECT.
F. THE UNDERWRITERS SHALL HAVE RECEIVED A CERTIFICATE, DATED THE CLOSING
DATE, SIGNED ON BEHALF OF THE COMPANY BY EACH OF THE COMPANY'S CHIEF
EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE UNDERWRITERS, CONFIRMING, AS OF THE CLOSING
DATE, THE MATTERS SET FORTH IN PARAGRAPHS (A) THROUGH (E) OF THIS SECTION 6
AND THAT, AS OF THE CLOSING DATE, THE OBLIGATIONS OF THE COMPANY TO BE
PERFORMED HEREUNDER ON OR PRIOR THERETO HAVE BEEN DULY PERFORMED IN ALL
MATERIAL RESPECTS.
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<PAGE> 22
G. THE UNDERWRITERS SHALL HAVE RECEIVED AN OPINION, DATED THE CLOSING DATE,
IN FORM AND SUBSTANCE SATISFACTORY TO THE UNDERWRITERS AND UNDERWRITERS'
COUNSEL, OF PAUL, HASTINGS, JANOFSKY & WALKER LLP, COUNSEL FOR THE COMPANY,
TO THE EFFECT SET FORTH IN EXHIBIT A HERETO.
H. THE UNDERWRITERS SHALL HAVE RECEIVED AN OPINION, DATED THE CLOSING DATE,
IN FORM AND SUBSTANCE SATISFACTORY TO THE UNDERWRITERS, OF LATHAM & WATKINS,
COUNSEL TO THE UNDERWRITERS, COVERING SUCH MATTERS AS ARE CUSTOMARILY
COVERED IN SUCH OPINIONS.
I. LATHAM & WATKINS SHALL HAVE BEEN FURNISHED WITH SUCH DOCUMENTS, IN
ADDITION TO THOSE SET FORTH ABOVE, AS THEY MAY REASONABLY REQUIRE FOR THE
PURPOSE OF ENABLING THEM TO REVIEW OR PASS UPON THE MATTERS REFERRED TO IN
THIS SECTION 6 AND IN ORDER TO EVIDENCE THE ACCURACY, COMPLETENESS OR
SATISFACTION IN ALL MATERIAL RESPECTS OF ANY OF THE REPRESENTATIONS,
WARRANTIES OR CONDITIONS HEREIN CONTAINED.
J. AT THE TIME THIS AGREEMENT IS EXECUTED AND ON THE CLOSING DATE THE
UNDERWRITERS SHALL HAVE RECEIVED FROM ERNST & YOUNG LLP, INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY AND ITS SUBSIDIARIES, DATED, RESPECTIVELY, AS OF
THE DATE OF THIS AGREEMENT AND AS OF THE CLOSING DATE, CUSTOMARY COMFORT
LETTERS ADDRESSED TO THE UNDERWRITERS AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE UNDERWRITERS AND UNDERWRITERS' COUNSEL WITH RESPECT TO THE FINANCIAL
STATEMENTS AND CERTAIN FINANCIAL INFORMATION OF THE COMPANY AND ITS
SUBSIDIARIES CONTAINED IN THE PROSPECTUS.
K. AT THE TIME THIS AGREEMENT IS EXECUTED, THE UNDERWRITERS SHALL HAVE
RECEIVED A "LOCK-UP" AGREEMENT, SUBSTANTIALLY IN THE FORM ATTACHED AS
EXHIBIT B HERETO, FROM EACH OF THE OFFICERS, DIRECTORS AND STOCKHOLDERS OF
THE COMPANY IDENTIFIED ON SCHEDULE II HERETO.
L. ON THE CLOSING DATE, THE SHARES SHALL HAVE BEEN APPROVED FOR QUOTATION ON
NASDAQ.
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<PAGE> 23
M. AT THE TIME THIS AGREEMENT IS EXECUTED AND ON THE CLOSING DATE, THE NASD
SHALL NOT HAVE WITHDRAWN, OR GIVEN NOTICE OF AN INTENTION TO WITHDRAW, ITS
APPROVAL OF THE FAIRNESS OF THE TERMS AND ARRANGEMENTS OF THE UNDERWRITING
OF THE OFFERING OF THE SHARES BY THE UNDERWRITERS.
N. EACH OF THE AGREEMENTS FILED AS EXHIBITS TO THE REGISTRATION STATEMENT
SHALL BE IN FULL FORCE AND EFFECT, AND NO PARTY TO ANY SUCH AGREEMENT SHALL
HAVE GIVEN ANY NOTICE OF TERMINATION OR AMENDMENT OF ANY MATERIAL PROVISION
THEREOF, OR OF ANY INTENTION TO TERMINATE OR AMEND ANY MATERIAL PROVISION
THEREOF, TO ANY OTHER PARTY, AND NO EVENT SHALL HAVE OCCURRED THAT WOULD
PREVENT ANY PARTY FROM SUBSTANTIALLY PERFORMING ITS OBLIGATIONS UNDER SUCH
AGREEMENTS.
O. ALL OPINIONS, CERTIFICATES, LETTERS AND OTHER DOCUMENTS REQUIRED BY THIS
SECTION 6 TO BE DELIVERED BY THE COMPANY WILL BE IN COMPLIANCE WITH THE
PROVISIONS HEREOF ONLY IF THEY ARE REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE UNDERWRITERS. THE COMPANY SHALL FURNISH THE UNDERWRITERS
WITH SUCH CONFORMED COPIES OF SUCH OPINIONS, CERTIFICATES, LETTERS AND OTHER
DOCUMENTS AS BEAR STEARNS REQUESTS. PRIOR TO OR ON THE CLOSING DATE, THE
COMPANY SHALL HAVE FURNISHED TO THE UNDERWRITERS SUCH FURTHER INFORMATION,
CERTIFICATES AND DOCUMENTS AS THE UNDERWRITERS MAY REASONABLY REQUEST.
If any of the conditions specified in this Section 6 have not been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to the Underwriters or to
Underwriters' Counsel pursuant to this Section 6 are not in all material
respects reasonably satisfactory in form and substance to the Underwriters and
to Underwriters' Counsel, all obligations of the Underwriters hereunder may be
canceled by the Underwriters on, or at any time prior to, the Closing Date, and
the obligations of the Underwriters to purchase Additional Shares may be
canceled by the Underwriters on, or at any time prior to, the applicable
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone, telecopy, telex or telegraph, confirmed in
writing.
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VII. INDEMNIFICATION.
A. THE COMPANY AGREES TO INDEMNIFY AND HOLD HARMLESS EACH UNDERWRITER AND
EACH PERSON, IF ANY, WHO CONTROLS ANY UNDERWRITER WITHIN THE MEANING OF
SECTION 15 OF THE SECURITIES ACT OR SECTION 20(A) OF THE EXCHANGE ACT
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES AND EXPENSES
WHATSOEVER AS INCURRED (INCLUDING, BUT NOT LIMITED TO, ATTORNEYS' FEES AND
ANY AND ALL EXPENSES WHATSOEVER INCURRED IN INVESTIGATING, PREPARING FOR OR
DEFENDING AGAINST ANY LITIGATION, COMMENCED OR THREATENED, OR ANY CLAIM
WHATSOEVER, AND ANY AND ALL AMOUNTS PAID IN SETTLEMENT OF ANY CLAIM OR
LITIGATION), JOINT OR SEVERAL, TO WHICH THEY OR ANY OF THEM MAY BECOME
SUBJECT UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR OTHERWISE, INSOFAR AS
SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES (OR ACTIONS IN RESPECT
THEREOF) ARISE OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OR ALLEGED
UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN THE REGISTRATION STATEMENT,
AS ORIGINALLY FILED OR ANY AMENDMENT THEREOF, OR ANY RELATED PRELIMINARY
PROSPECTUS OR THE PROSPECTUS, OR IN ANY SUPPLEMENT THERETO OR AMENDMENT
THEREOF, OR ARISE OUT OF OR ARE BASED UPON THE OMISSION OR ALLEGED OMISSION
TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY
TO MAKE THE STATEMENTS THEREIN NOT MISLEADING; PROVIDED, HOWEVER, THAT THE
COMPANY WILL NOT BE LIABLE IN ANY SUCH CASE TO THE EXTENT, BUT ONLY TO THE
EXTENT, THAT ANY SUCH LOSS, LIABILITY, CLAIM, DAMAGE OR EXPENSE ARISES OUT
OF, OR IS BASED UPON, ANY SUCH UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT
OR OMISSION OR ALLEGED OMISSION MADE THEREIN IN RELIANCE UPON, AND IN
CONFORMITY WITH, WRITTEN INFORMATION FURNISHED TO THE COMPANY BY OR ON
BEHALF OF ANY UNDERWRITER THROUGH THE REPRESENTATIVES EXPRESSLY FOR USE
THEREIN. THIS INDEMNITY AGREEMENT WILL BE IN ADDITION TO ANY LIABILITY THAT
THE COMPANY MAY OTHERWISE HAVE, INCLUDING UNDER THIS AGREEMENT.
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<PAGE> 25
EACH UNDERWRITER SEVERALLY, AND NOT JOINTLY, AGREES TO INDEMNIFY AND
HOLD HARMLESS THE COMPANY AND EACH OTHER PERSON, IF ANY, WHO CONTROLS THE
COMPANY WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT OR SECTION 20(A)
OF THE EXCHANGE ACT, AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES
AND EXPENSES WHATSOEVER AS INCURRED (INCLUDING, BUT NOT LIMITED TO, REASONABLE
ATTORNEYS' FEES AND ANY AND ALL EXPENSES WHATSOEVER INCURRED IN INVESTIGATING,
PREPARING FOR OR DEFENDING AGAINST ANY LITIGATION, COMMENCED OR THREATENED, OR
ANY CLAIM WHATSOEVER, AND ANY AND ALL AMOUNTS PAID IN SETTLEMENT OF ANY CLAIM OR
LITIGATION), JOINT OR SEVERAL, TO WHICH THEY OR ANY OF THEM MAY BECOME SUBJECT
UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR OTHERWISE, INSOFAR AS SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES OR EXPENSES (OR ACTIONS IN RESPECT THEREOF) ARISE
OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A
MATERIAL FACT CONTAINED IN THE REGISTRATION STATEMENT, AS ORIGINALLY FILED OR
ANY AMENDMENT THEREOF, OR ANY RELATED PRELIMINARY PROSPECTUS, PRELIMINARY
PROSPECTUS SUPPLEMENT OR PROSPECTUS, OR IN ANY AMENDMENT THEREOF OR SUPPLEMENT
THERETO, OR ARISE OUT OF OR ARE BASED UPON THE OMISSION OR ALLEGED OMISSION TO
STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE
THE STATEMENTS THEREIN NOT MISLEADING, IN EACH CASE TO THE EXTENT, BUT ONLY TO
THE EXTENT, THAT ANY SUCH LOSS, LIABILITY, CLAIM, DAMAGE OR EXPENSE ARISES OUT
OF OR IS BASED UPON ANY SUCH UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR
OMISSION OR ALLEGED OMISSION MADE THEREIN IN RELIANCE UPON AND IN CONFORMITY
WITH WRITTEN INFORMATION FURNISHED TO THE COMPANY BY OR ON BEHALF OF ANY
UNDERWRITER EXPRESSLY FOR USE THEREIN; PROVIDED, HOWEVER, THAT IN NO CASE SHALL
ANY UNDERWRITER BE LIABLE OR RESPONSIBLE FOR ANY AMOUNT IN EXCESS OF THE
UNDERWRITING DISCOUNT APPLICABLE TO THE SHARES PURCHASED BY SUCH UNDERWRITER
HEREUNDER. THIS INDEMNITY WILL BE IN ADDITION TO ANY LIABILITY THAT ANY
UNDERWRITER MAY OTHERWISE HAVE, INCLUDING UNDER THIS AGREEMENT.
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<PAGE> 26
B. PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PARTY UNDER SUBSECTION (A), (B)
OR (C) ABOVE OF NOTICE OF THE COMMENCEMENT OF ANY ACTION, SUCH INDEMNIFIED
PARTY SHALL, IF A CLAIM IN RESPECT THEREOF IS TO BE MADE AGAINST THE
INDEMNIFYING PARTY UNDER SUCH SUBSECTION, NOTIFY EACH PARTY AGAINST WHOM
INDEMNIFICATION IS TO BE SOUGHT IN WRITING OF THE COMMENCEMENT THEREOF (BUT
THE FAILURE SO TO NOTIFY AN INDEMNIFYING PARTY SHALL NOT RELIEVE IT FROM ANY
LIABILITY THAT IT MAY HAVE UNDER THIS SECTION 7 EXCEPT TO THE EXTENT THAT IT
HAS BEEN PREJUDICED IN ANY MATERIAL RESPECT BY SUCH FAILURE OR FROM ANY
LIABILITY THAT IT MAY OTHERWISE HAVE). IN CASE ANY SUCH ACTION IS BROUGHT
AGAINST ANY INDEMNIFIED PARTY, AND IT NOTIFIES AN INDEMNIFYING PARTY OF THE
COMMENCEMENT THEREOF, THE INDEMNIFYING PARTY WILL BE ENTITLED TO PARTICIPATE
THEREIN, AND TO THE EXTENT IT MAY ELECT BY WRITTEN NOTICE DELIVERED TO THE
INDEMNIFIED PARTY PROMPTLY AFTER RECEIVING THE AFORESAID NOTICE FROM SUCH
INDEMNIFIED PARTY, TO ASSUME THE DEFENSE THEREOF WITH COUNSEL REASONABLY
SATISFACTORY TO SUCH INDEMNIFIED PARTY. NOTWITHSTANDING THE FOREGOING, THE
INDEMNIFIED PARTY OR PARTIES SHALL HAVE THE RIGHT TO EMPLOY ITS OR THEIR OWN
COUNSEL IN ANY SUCH CASE, BUT THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE
AT THE EXPENSE OF SUCH INDEMNIFIED PARTY OR PARTIES UNLESS (I) THE
EMPLOYMENT OF SUCH COUNSEL SHALL HAVE BEEN AUTHORIZED IN WRITING BY THE
INDEMNIFYING PARTIES IN CONNECTION WITH THE DEFENSE OF SUCH ACTION, (II) THE
INDEMNIFYING PARTIES SHALL NOT HAVE EMPLOYED COUNSEL TO TAKE CHARGE OF THE
DEFENSE OF SUCH ACTION WITHIN A REASONABLE PERIOD OF TIME AFTER NOTICE OF
COMMENCEMENT OF THE ACTION, OR (III) SUCH INDEMNIFIED PARTY OR PARTIES SHALL
HAVE REASONABLY CONCLUDED THAT THERE MAY BE DEFENSES AVAILABLE TO IT OR THEM
THAT ARE DIFFERENT FROM OR ADDITIONAL TO THOSE AVAILABLE TO ONE OR ALL OF
THE INDEMNIFYING PARTIES (IN WHICH CASE THE INDEMNIFYING PARTY OR PARTIES
SHALL NOT HAVE THE RIGHT TO DIRECT THE DEFENSE OF SUCH ACTION ON BEHALF OF
THE INDEMNIFIED PARTY OR PARTIES), IN ANY OF WHICH EVENTS SUCH FEES AND
EXPENSES OF COUNSEL SHALL BE BORNE BY THE INDEMNIFYING PARTIES; PROVIDED,
HOWEVER, THAT THE INDEMNIFYING PARTY UNDER SUBSECTION (A), (B) OR (C) ABOVE
SHALL ONLY BE LIABLE FOR THE LEGAL EXPENSES OF ONE COUNSEL (IN ADDITION TO
ANY LOCAL COUNSEL) FOR ALL INDEMNIFIED PARTIES IN EACH JURISDICTION IN WHICH
ANY CLAIM OR ACTION IS BROUGHT. ANYTHING IN THIS SUBSECTION TO THE CONTRARY
NOTWITHSTANDING, AN INDEMNIFYING PARTY SHALL NOT BE LIABLE FOR ANY
SETTLEMENT OF ANY CLAIM OR ACTION EFFECTED WITHOUT ITS PRIOR WRITTEN
CONSENT; PROVIDED, HOWEVER, THAT SUCH CONSENT WAS NOT UNREASONABLY WITHHELD.
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<PAGE> 27
VIII. CONTRIBUTION. IN ORDER TO PROVIDE FOR CONTRIBUTION IN CIRCUMSTANCES IN
WHICH THE INDEMNIFICATION PROVIDED FOR IN SECTION 7 HEREOF IS FOR ANY REASON
HELD TO BE UNAVAILABLE FROM ANY INDEMNIFYING PARTY OR IS INSUFFICIENT TO HOLD
HARMLESS A PARTY INDEMNIFIED THEREUNDER, THE COMPANY AND THE UNDERWRITERS SHALL
CONTRIBUTE TO THE AGGREGATE LOSSES, LIABILITIES, CLAIMS, DAMAGES AND EXPENSES OF
THE NATURE CONTEMPLATED BY SUCH INDEMNIFICATION PROVISION (INCLUDING ANY
INVESTIGATION, LEGAL AND OTHER EXPENSES INCURRED IN CONNECTION WITH, AND ANY
AMOUNT PAID IN SETTLEMENT OF, ANY ACTION, SUIT OR PROCEEDING OR ANY CLAIMS
ASSERTED, BUT AFTER DEDUCTING IN THE CASE OF LOSSES, LIABILITIES, CLAIMS,
DAMAGES AND EXPENSES SUFFERED BY THE COMPANY ANY CONTRIBUTION RECEIVED BY THE
COMPANY FROM PERSONS, OTHER THAN THE UNDERWRITERS, WHO MAY ALSO BE LIABLE FOR
CONTRIBUTION, INCLUDING PERSONS WHO CONTROL THE COMPANY WITHIN THE MEANING OF
SECTION 15 OF THE SECURITIES ACT OR SECTION 20(A) OF THE EXCHANGE ACT, OFFICERS
OF THE COMPANY WHO SIGNED THE REGISTRATION STATEMENT AND DIRECTORS OF THE
COMPANY) AS INCURRED TO WHICH THE COMPANY AND ONE OR MORE OF THE UNDERWRITERS
MAY BE SUBJECT, IN SUCH PROPORTIONS AS IS APPROPRIATE TO REFLECT THE RELATIVE
BENEFITS RECEIVED BY THE COMPANY AND THE UNDERWRITERS FROM THE OFFERING OF THE
SHARES OR, IF SUCH ALLOCATION IS NOT PERMITTED BY APPLICABLE LAW OR
INDEMNIFICATION IS NOT AVAILABLE AS A RESULT OF THE INDEMNIFYING PARTY NOT
HAVING RECEIVED NOTICE AS PROVIDED IN SECTION 7 HEREOF, IN SUCH PROPORTION AS IS
APPROPRIATE TO REFLECT NOT ONLY THE RELATIVE BENEFITS REFERRED TO ABOVE BUT ALSO
THE RELATIVE FAULT OF THE COMPANY AND THE UNDERWRITERS IN CONNECTION WITH THE
STATEMENTS OR OMISSIONS THAT RESULTED IN SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES OR EXPENSES, AS WELL AS ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS. THE
RELATIVE BENEFITS RECEIVED BY THE COMPANY ON THE ONE HAND AND THE UNDERWRITERS
ON THE OTHER HAND SHALL BE DEEMED TO BE IN THE SAME PROPORTION AS (X) THE TOTAL
PROCEEDS FROM THE OFFERING (NET OF UNDERWRITING DISCOUNTS AND COMMISSIONS BUT
BEFORE DEDUCTING EXPENSES) RECEIVED BY THE COMPANY AND (Y) THE UNDERWRITING
DISCOUNTS AND COMMISSIONS RECEIVED BY THE UNDERWRITERS, RESPECTIVELY, IN EACH
CASE AS SET FORTH IN THE TABLE ON THE COVER PAGE OF THE PROSPECTUS. THE RELATIVE
FAULT OF THE COMPANY AND THE UNDERWRITERS 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 AN UNDERWRITER, AND THE PARTIES' RELATIVE
INTENT, KNOWLEDGE, ACCESS TO INFORMATION AND OPPORTUNITY TO CORRECT OR PREVENT
SUCH STATEMENT OR OMISSION. THE COMPANY AND THE UNDERWRITERS AGREE THAT IT WOULD
NOT BE JUST AND EQUITABLE IF CONTRIBUTION PURSUANT TO THIS SECTION 8 WERE
DETERMINED BY PRO RATA ALLOCATION (EVEN IF THE UNDERWRITERS WERE TREATED AS ONE
ENTITY FOR SUCH PURPOSE) OR BY ANY OTHER METHOD OF ALLOCATION THAT DOES NOT TAKE
INTO ACCOUNT THE EQUITABLE CONSIDERATIONS REFERRED TO ABOVE. NOTWITHSTANDING THE
PRECEDING PROVISIONS OF THIS SECTION 8, (I) IN NO CASE SHALL ANY UNDERWRITER BE
LIABLE OR RESPONSIBLE FOR ANY AMOUNT IN EXCESS OF THE UNDERWRITING DISCOUNT
APPLICABLE TO THE SHARES PURCHASED BY SUCH UNDERWRITER HEREUNDER, 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
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<PAGE> 28
GUILTY OF SUCH FRAUDULENT MISREPRESENTATION. NOTWITHSTANDING THE PROVISIONS OF
THIS SECTION 8 AND THE PRECEDING SENTENCE, NO UNDERWRITER SHALL BE REQUIRED TO
CONTRIBUTE ANY AMOUNT IN EXCESS OF THE AMOUNT BY WHICH THE TOTAL PRICE AT WHICH
THE SHARES UNDERWRITTEN BY IT AND DISTRIBUTED TO THE PUBLIC WERE OFFERED TO THE
PUBLIC EXCEEDS THE AMOUNT OF ANY DAMAGES THAT SUCH UNDERWRITER HAS OTHERWISE
BEEN REQUIRED TO PAY BY REASON OF SUCH UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OR OMISSION OR ALLEGED OMISSION. FOR PURPOSES OF THIS SECTION 8, EACH
PERSON, IF ANY, WHO CONTROLS AN UNDERWRITER WITHIN THE MEANING OF SECTION 15 OF
THE SECURITIES ACT OR SECTION 20(A) OF THE EXCHANGE ACT SHALL HAVE THE SAME
RIGHTS TO CONTRIBUTION AS SUCH UNDERWRITER, AND EACH PERSON, IF ANY, WHO
CONTROLS THE COMPANY WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT OR
SECTION 20(A) OF THE EXCHANGE ACT, EACH OFFICER OF THE COMPANY WHO SHALL HAVE
SIGNED THE REGISTRATION STATEMENT AND EACH DIRECTOR OF THE COMPANY SHALL HAVE
THE SAME RIGHTS TO CONTRIBUTION AS THE COMPANY, SUBJECT IN EACH CASE TO CLAUSES
(I) AND (II) OF THE FIFTH SENTENCE OF THIS SECTION 8. ANY PARTY ENTITLED TO
CONTRIBUTION SHALL, PROMPTLY AFTER RECEIPT OF NOTICE OF THE COMMENCEMENT OF ANY
ACTION, SUIT OR PROCEEDING AGAINST SUCH PARTY IN RESPECT OF WHICH A CLAIM FOR
CONTRIBUTION MAY BE MADE AGAINST ANOTHER PARTY OR PARTIES, NOTIFY EACH PARTY OR
PARTIES FROM WHOM CONTRIBUTION MAY BE SOUGHT, BUT THE FAILURE SO TO NOTIFY SUCH
PARTY OR PARTIES SHALL NOT RELIEVE THE PARTY OR PARTIES FROM WHOM CONTRIBUTION
MAY BE SOUGHT FROM ANY OBLIGATION IT OR THEY MAY HAVE UNDER THIS SECTION 8 OR
OTHERWISE. NO PARTY SHALL BE LIABLE FOR CONTRIBUTION WITH RESPECT TO ANY ACTION
OR CLAIM SETTLED WITHOUT ITS PRIOR WRITTEN CONSENT; PROVIDED, HOWEVER, THAT SUCH
CONSENT WAS NOT UNREASONABLY WITHHELD.
IX. DEFAULT BY AN UNDERWRITER.
A. IF ANY UNDERWRITER OR UNDERWRITERS SHALL DEFAULT IN ITS OR THEIR
OBLIGATION TO PURCHASE FIRM SHARES OR ADDITIONAL SHARES HEREUNDER, AND IF
THE FIRM SHARES OR ADDITIONAL SHARES WITH RESPECT TO WHICH SUCH DEFAULT
RELATES DO NOT (AFTER GIVING EFFECT TO ARRANGEMENTS, IF ANY, MADE BY THE
UNDERWRITERS PURSUANT TO SUBSECTION (B) BELOW) EXCEED IN THE AGGREGATE 10%
OF THE NUMBER OF FIRM SHARES OR ADDITIONAL SHARES, AS THE CASE MAY BE, THE
FIRM SHARES OR ADDITIONAL SHARES THAT SUCH DEFAULTING UNDERWRITER OR
UNDERWRITERS AGREED BUT FAILED OR REFUSED TO PURCHASE SHALL BE PURCHASED BY
THE NON-DEFAULTING UNDERWRITERS IN PROPORTION TO THE RESPECTIVE PROPORTIONS
THAT THE NUMBERS OF FIRM SHARES SET FORTH OPPOSITE THEIR RESPECTIVE NAMES IN
SCHEDULE I HERETO BEAR TO THE AGGREGATE NUMBER OF FIRM SHARES SET FORTH
OPPOSITE THE NAMES OF THE NON-DEFAULTING UNDERWRITERS.
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<PAGE> 29
B. IN THE EVENT THAT SUCH DEFAULT RELATES TO MORE THAN 10% OF THE FIRM
SHARES OR ADDITIONAL SHARES, AS THE CASE MAY BE, THE UNDERWRITERS MAY IN
THEIR DISCRETION ARRANGE FOR THEMSELVES OR FOR ANOTHER PARTY OR PARTIES
(INCLUDING ANY NON-DEFAULTING UNDERWRITER OR UNDERWRITERS WHO SO AGREE) TO
PURCHASE SUCH FIRM SHARES OR ADDITIONAL SHARES TO WHICH SUCH DEFAULT RELATES
ON THE TERMS CONTAINED HEREIN. IN THE EVENT THAT WITHIN FIVE CALENDAR DAYS
AFTER SUCH A DEFAULT THE UNDERWRITERS DO NOT ARRANGE FOR THE PURCHASE OF THE
FIRM SHARES OR ADDITIONAL SHARES, AS THE CASE MAY BE, TO WHICH SUCH DEFAULT
RELATES AS PROVIDED IN THIS SECTION 9, THIS AGREEMENT OR, IN THE CASE OF A
DEFAULT WITH RESPECT TO ADDITIONAL SHARES, THE OBLIGATIONS OF THE
UNDERWRITERS TO PURCHASE AND OF THE COMPANY TO SELL ADDITIONAL SHARES, SHALL
THEREUPON TERMINATE, WITHOUT LIABILITY ON THE PART OF THE COMPANY WITH
RESPECT THERETO (EXCEPT IN EACH CASE AS PROVIDED IN SECTIONS 5, 7(A) AND 8
HEREOF) OR THE UNDERWRITERS, BUT NOTHING IN THIS AGREEMENT SHALL RELIEVE A
DEFAULTING UNDERWRITER OR UNDERWRITERS OF ITS OR THEIR LIABILITY, IF ANY, TO
THE OTHER UNDERWRITERS AND THE COMPANY FOR DAMAGES OCCASIONED BY ITS OR
THEIR DEFAULT HEREUNDER.
C. IN THE EVENT THAT THE FIRM SHARES OR ADDITIONAL SHARES TO WHICH THE
DEFAULT RELATES ARE TO BE PURCHASED BY THE NON-DEFAULTING UNDERWRITERS OR BY
ANOTHER PARTY OR PARTIES AS AFORESAID, THE UNDERWRITERS OR THE COMPANY SHALL
HAVE THE RIGHT TO POSTPONE THE CLOSING DATE OR ADDITIONAL CLOSING DATE, AS
THE CASE MAY BE, FOR A PERIOD NOT EXCEEDING FIVE BUSINESS DAYS, IN ORDER TO
EFFECT WHATEVER CHANGES MAY THEREBY BE MADE NECESSARY IN THE REGISTRATION
STATEMENT OR THE PROSPECTUS OR IN ANY OTHER DOCUMENTS AND ARRANGEMENTS, AND
THE COMPANY AGREES TO FILE PROMPTLY ANY AMENDMENT OF OR SUPPLEMENT TO THE
REGISTRATION STATEMENT OR THE PROSPECTUS THAT, IN THE OPINION OF
UNDERWRITERS' COUNSEL, MAY THEREBY BE MADE NECESSARY OR ADVISABLE. THE TERM
"UNDERWRITER" AS USED IN THIS AGREEMENT SHALL INCLUDE ANY PARTY SUBSTITUTED
UNDER THIS SECTION 9 WITH LIKE EFFECT AS IF IT HAD ORIGINALLY BEEN A PARTY
TO THIS AGREEMENT WITH RESPECT TO SUCH FIRM SHARES OR ADDITIONAL SHARES.
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<PAGE> 30
X. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. ALL REPRESENTATIONS AND
WARRANTIES, COVENANTS AND AGREEMENTS OF THE UNDERWRITERS AND THE COMPANY
CONTAINED IN THIS AGREEMENT, INCLUDING THE AGREEMENTS CONTAINED IN SECTION 5,
THE INDEMNITY AGREEMENTS CONTAINED IN SECTION 7 AND THE CONTRIBUTION AGREEMENTS
CONTAINED IN SECTION 8, SHALL REMAIN OPERATIVE AND IN FULL FORCE AND EFFECT
REGARDLESS OF ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY UNDERWRITER OR ANY
CONTROLLING PERSON THEREOF OR BY OR ON BEHALF OF THE COMPANY, ANY OF ITS
OFFICERS AND DIRECTORS, OR ANY CONTROLLING PERSON OF THE COMPANY, AND SHALL
SURVIVE DELIVERY OF AND PAYMENT FOR THE SHARES TO AND BY THE UNDERWRITERS. THE
REPRESENTATIONS CONTAINED IN SECTION 1 AND THE AGREEMENTS CONTAINED IN SECTIONS
5, 7, 8, 11(D) AND 12 HEREOF SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT,
INCLUDING TERMINATION PURSUANT TO SECTION 9 OR 11 HEREOF.
XI. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
A. THIS AGREEMENT SHALL BECOME EFFECTIVE UPON THE EXECUTION AND DELIVERY OF
A COUNTERPART HEREOF BY EACH OF THE PARTIES HERETO.
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<PAGE> 31
B. THE UNDERWRITERS SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AT ANY
TIME PRIOR TO THE CLOSING DATE OR THE OBLIGATIONS OF THE UNDERWRITERS TO
PURCHASE ADDITIONAL SHARES AT ANY TIME PRIOR TO THE RELEVANT ADDITIONAL
CLOSING DATE, AS THE CASE MAY BE, IF ON OR PRIOR TO SUCH DATE (I) THE
COMPANY FAILS, REFUSES OR IS UNABLE TO PERFORM IN ANY MATERIAL RESPECT ANY
AGREEMENT ON ITS PART TO BE PERFORMED HEREUNDER, (II) ANY OTHER CONDITION TO
THE OBLIGATIONS OF THE UNDERWRITERS HEREUNDER PROVIDED IN SECTION 6 IS NOT
FULFILLED WHEN AND AS REQUIRED IN ANY MATERIAL RESPECT, (III) IN THE
REASONABLE JUDGMENT OF THE UNDERWRITERS ANY CHANGE OF CIRCUMSTANCE OCCURS
SINCE THE RESPECTIVE DATES AS OF WHICH INFORMATION IS GIVEN IN THE
PROSPECTUS THAT COULD HAVE A MATERIAL ADVERSE EFFECT, OTHER THAN AS SET
FORTH IN THE PROSPECTUS, OR (IV) (A) ANY DOMESTIC OR INTERNATIONAL EVENT OR
ACT OR OCCURRENCE HAS MATERIALLY ADVERSELY AFFECTED, OR IN THE REASONABLE
JUDGMENT OF THE UNDERWRITERS WILL IN THE IMMEDIATE FUTURE MATERIALLY
ADVERSELY AFFECT, THE MARKET FOR THE COMPANY'S SECURITIES OR FOR SECURITIES
IN GENERAL; OR (B) TRADING IN SECURITIES GENERALLY ON THE NYSE OR QUOTATIONS
ON NASDAQ IS SUSPENDED OR MATERIALLY LIMITED, OR MINIMUM OR MAXIMUM PRICES
FOR TRADING ARE ESTABLISHED, OR MAXIMUM RANGES FOR PRICES FOR SECURITIES ARE
REQUIRED, ON SUCH EXCHANGE, OR BY SUCH EXCHANGE OR OTHER REGULATORY BODY OR
GOVERNMENTAL AUTHORITY HAVING JURISDICTION; OR (C) A BANKING MORATORIUM IS
DECLARED BY FEDERAL OR STATE AUTHORITIES, OR A MORATORIUM IN FOREIGN
EXCHANGE TRADING BY MAJOR INTERNATIONAL BANKS OR PERSONS IS DECLARED; OR (D)
THERE IS AN OUTBREAK OR ESCALATION OF ARMED HOSTILITIES INVOLVING THE UNITED
STATES ON OR AFTER THE DATE HEREOF, OR IF THERE HAS BEEN A DECLARATION BY
THE UNITED STATES OF A NATIONAL EMERGENCY OR WAR, THE EFFECT OF WHICH IS, IN
THE UNDERWRITERS' JUDGMENT, TO MAKE IT INADVISABLE OR IMPRACTICABLE TO
PROCEED WITH THE OFFERING, SALE AND DELIVERY OF THE FIRM SHARES OR
ADDITIONAL SHARES, AS THE CASE MAY BE, ON THE TERMS AND IN THE MANNER
CONTEMPLATED BY THE PROSPECTUS; OR (E) THERE IS SUCH A MATERIAL ADVERSE
CHANGE IN GENERAL ECONOMIC, POLITICAL OR FINANCIAL CONDITIONS OR IF THE
EFFECT OF INTERNATIONAL CONDITIONS ON THE FINANCIAL MARKETS IN THE UNITED
STATES IS SUCH AS, IN THE UNDERWRITERS' REASONABLE JUDGMENT, MAKES IT
INADVISABLE OR IMPRACTICABLE TO PROCEED WITH THE OFFERING, SALE AND DELIVERY
OF THE FIRM SHARES OR THE ADDITIONAL SHARES, AS THE CASE MAY BE, ON THE
TERMS AND IN THE MANNER CONTEMPLATED BY THE PROSPECTUS.
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<PAGE> 32
C. ANY NOTICE OF TERMINATION PURSUANT TO THIS SECTION 11 SHALL BE BY
TELEPHONE, TELECOPY, TELEX, OR TELEGRAPH, CONFIRMED IN WRITING BY LETTER.
D. IF THIS AGREEMENT IS TERMINATED PURSUANT TO ANY OF THE PROVISIONS HEREOF
(OTHER THAN PURSUANT TO SECTION 9(B) OR 11(B) HEREOF), OR IF THE SALE OF THE
SHARES PROVIDED FOR HEREIN IS NOT CONSUMMATED BECAUSE ANY CONDITION TO THE
OBLIGATIONS OF THE UNDERWRITERS SET FORTH HEREIN IS NOT SATISFIED OR BECAUSE
OF ANY REFUSAL, INABILITY OR FAILURE ON THE PART OF THE COMPANY TO PERFORM
ANY AGREEMENT HEREIN OR COMPLY WITH ANY PROVISION HEREOF, THE COMPANY SHALL,
SUBJECT TO DEMAND BY THE UNDERWRITERS, REIMBURSE THE UNDERWRITERS FOR ALL
REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING THE FEES AND EXPENSES OF THEIR
COUNSEL) INCURRED BY THE UNDERWRITERS IN CONNECTION HEREWITH.
XII. UNDERWRITERS' INFORMATION. THE COMPANY AND THE UNDERWRITERS SEVERALLY
ACKNOWLEDGE THAT THE STATEMENTS SET FORTH IN (I) THE LAST PARAGRAPH OF THE
OUTSIDE FRONT COVER OF THE PROSPECTUS CONCERNING THE DELIVERY OF SHARES TO THE
UNDERWRITERS AND THE OFFERING OF SUCH SHARES BY THE UNDERWRITERS, (II) THE THIRD
PARAGRAPH UNDER THE CAPTION "UNDERWRITING" IN THE PROSPECTUS CONCERNING THE
PROPOSED PUBLIC OFFERING PRICE, DISCOUNT AND CONCESSIONS AND (III) THE TWELFTH
PARAGRAPH UNDER THE CAPTION "UNDERWRITING" IN THE PROSPECTUS CONCERNING
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK, CONSTITUTE THE ONLY INFORMATION FURNISHED IN WRITING BY OR ON
BEHALF OF ANY UNDERWRITER EXPRESSLY FOR USE IN THE REGISTRATION STATEMENT, ANY
RELATED PRELIMINARY PROSPECTUS OR PRELIMINARY PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, OR IN ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO, AS THE CASE MAY
BE.
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<PAGE> 33
XIII. NOTICES. ALL COMMUNICATIONS HEREUNDER, EXCEPT AS MAY BE OTHERWISE
SPECIFICALLY PROVIDED HEREIN, SHALL BE IN WRITING AND, IF SENT TO THE
UNDERWRITERS, SHALL BE MAILED, DELIVERED, TELEGRAPHED OR TELECOPIED (AND WHICH
SHALL BE CONFIRMED IN WRITING) TO THE UNDERWRITERS, C/O BEAR, STEARNS & CO.
INC., 245 PARK AVENUE, NEW YORK, NEW YORK 10167, ATTENTION: CORPORATE FINANCE
DEPARTMENT, TELECOPY NUMBER: (212) 272-3092, WITH A COPY TO LATHAM & WATKINS,
633 WEST FIFTH STREET, SUITE 4000, LOS ANGELES, CALIFORNIA 90071, ATTENTION:
PAMELA B. KELLY, TELECOPY NUMBER: (213) 891-8763, AND, IF SENT TO THE COMPANY,
SHALL BE MAILED, DELIVERED, TELEGRAPHED OR TELECOPIED (AND WHICH SHALL BE
CONFIRMED IN WRITING) TO FUTURELINK CORP., 6 MORGAN, SUITE 100, IRVINE,
CALIFORNIA 92618, ATTENTION: __________, TELECOPY NUMBER: (949) 837-4433, WITH A
COPY TO PAUL, HASTINGS, JANOFSKY & WALKER LLP, 345 CALIFORNIA STREET, SAN
FRANCISCO, CALIFORNIA 94104, ATTENTION: THOMAS R. POLLACK, TELECOPY NUMBER:
(415) 217-5333.
XIV. PARTIES. THIS AGREEMENT SHALL INURE SOLELY TO THE BENEFIT OF, AND SHALL BE
BINDING UPON, THE UNDERWRITERS, THE COMPANY AND THE CONTROLLING PERSONS,
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS REFERRED TO IN SECTIONS 7 AND 8, AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND NO OTHER PERSON SHALL HAVE OR BE
CONSTRUED TO HAVE ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR IN
RESPECT OF OR BY VIRTUE OF THIS AGREEMENT OR ANY PROVISION HEREIN CONTAINED. THE
TERM "SUCCESSORS AND ASSIGNS" SHALL NOT INCLUDE A PURCHASER, IN ITS CAPACITY AS
SUCH, OF SHARES FROM ANY OF THE UNDERWRITERS.
XV. CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED WITHIN NEW YORK, WITHOUT GIVING ANY EFFECT TO ANY PROVISIONS THEREOF
RELATING TO CONFLICTS OF LAW. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
XVI. CAPTIONS. THE CAPTIONS INCLUDED IN THIS AGREEMENT ARE INCLUDED SOLELY FOR
CONVENIENCE OF REFERENCE AND ARE NOT TO BE CONSIDERED A PART OF THIS AGREEMENT.
XVII. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN VARIOUS COUNTERPARTS,
WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.
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<PAGE> 34
If the foregoing correctly sets forth the understanding among the
Underwriters and the Company, please sign in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
FUTURELINK CORP.
By:
--------------------------------------------
Name:
Title:
Accepted as of the date first above written:
BEAR, STEARNS & CO. INC.
By:
-----------------------------------------
Name:
Title:
C.E. UNTERBERG, TOWBIN
By:
-----------------------------------------
Name:
Title:
<PAGE> 35
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Bear, Stearns & Co. Inc.................................................[ ]
C.E. Unterberg, Towbin..................................................[ ]
Total...................................................................[ ]
===
<PAGE> 36
SCHEDULE II
INDIVIDUALS DELIVERING A LOCK-UP AGREEMENT PURSUANT TO SECTION 6(k)
[To Come]
<PAGE> 37
EXHIBIT A
FORM OF OPINION OF PAUL, HASTINGS, JANOFSKY & WALKER LLP
1. Each of the Company and its subsidiaries (i) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, (ii) has the corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is being conducted and as described in the Prospectus, and (iii)
is duly qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification and being in good
standing, except where the failure to be so qualified or in good standing does
not and would not, singly or in the aggregate, result in a Material Adverse
Effect.
2. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable,
and were not issued in violation of or subject to any statutory preemptive
rights. The authorized, issued and outstanding capital stock of the Company
conforms in all respects to the description thereof set forth in the Prospectus.
3. The Shares, when issued, delivered and sold in accordance with
the Underwriting Agreement, will be duly authorized and validly issued, fully
paid and nonassessable, and will not be issued in violation of or subject to any
statutory preemptive rights.
4. All of the outstanding capital stock of or other ownership
interests in the Company's subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and were not issued in violation of or
subject to any statutory preemptive rights, and are owned by the Company free
and clear of any security interest, claim, lien, limitation on voting rights or
encumbrance.
5. Except as disclosed in the Prospectus, there are not currently,
and will not be as a result of the Offering, any outstanding rights, warrants,
or options to acquire or instruments convertible into or exchangeable for, any
capital stock or other equity interest of the Company or any of its
subsidiaries.
6. The Common Stock (including the Shares) is registered pursuant to
Section 12(g) of the Exchange Act and the Shares are approved for quotation on
Nasdaq.
7. The Company has the corporate power and authority to execute,
deliver and perform its obligations under the Underwriting Agreement and to
consummate the transactions contemplated thereby and in the Prospectus,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Shares as provided therein.
8. The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and is validly binding and enforceable
against the Company in accordance with its terms.
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9. The Registration Statement and Prospectus comply as to form in
all material respects with the requirements for registration statements on Form
SB-2 under the Securities Act and the Securities Act Regulations. There are no
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein, and such descriptions or references are correct in all
material respects.
10. The Registration Statement has become effective under the
Securities Act, and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission and all filings required by Rule 424(b) of the
Securities Act Regulations have been made.
11. Neither (A) the execution, delivery or performance by the
Company of the Underwriting Agreement nor (B) the issuance and sale of the
Shares violates, conflicts with or constitutes a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the lapse of
time or both would constitute a default), or requires consent which has not been
obtained under, or results in the imposition of a lien or encumbrance on any
properties of the Company or any of its Significant Subsidiaries, or an
acceleration of any indebtedness of the Company or any of its Significant
Subsidiaries pursuant to, (i) the charter or bylaws of the Company or any of its
Significant Subsidiaries, (ii) any bond, debenture, note, indenture, mortgage,
deed of trust, contract or other agreement or instrument to which the Company or
any of its Significant Subsidiaries is a party or by which the Company or any of
its Significant Subsidiaries or their property is or may be bound, which bond,
debenture, note, indenture, mortgage, deed of trust, contract or other agreement
or instrument is filed as an exhibit to the Registration Statement (iii) any
statute, rule or regulation applicable to the Company or any of its Significant
Subsidiaries or any of their assets or properties or (iv) any judgment, order or
decree of any court or governmental agency or authority having jurisdiction over
the Company or any of its Significant Subsidiaries or any of their assets or
properties, except in the case of clauses (ii), (iii) and (iv) for such
violations, conflicts, breaches, defaults, failures to obtain consents,
impositions of liens or accelerations that (x) would not, singly or in the
aggregate, have a Material Adverse Effect or (y) are described in the
Prospectus.
12. Other than as described in the Prospectus, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with any court or governmental agency or authority is required for
(1) the execution and delivery of and performance by the Company of its
obligations under the Underwriting Agreement or (2) the issuance and sale of the
Shares, except (i) such as have been obtained or made under the Securities Act
and state securities or blue sky laws and regulations or such as may be required
or (ii) where the failure to obtain any such consent, approval, authorization or
order, or to make or obtain any filing, registration, qualification, license or
permit would not have a Material Adverse Effect.
13. Neither the Company nor any of its Significant Subsidiaries is,
nor upon consummation of the transactions contemplated by the Underwriting
Agreement or in the Prospectus will be, (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended or (ii) a
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"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
14. Except as set forth in the Underwriting Agreement or in the
Prospectus, to such counsel's knowledge, after reasonable inquiry, there are no
holders of any securities of the Company who, by reason of the execution of the
Underwriting Agreement or the consummation by the Company of the transactions
contemplated thereby, have the right to request or demand that the Company
register under the Act securities held by them.
15. There is (i) no action, suit, investigation or proceeding before
or by any court or governmental agency or authority now pending or, to the
knowledge of such counsel, threatened to which the Company or any of its
subsidiaries is or may be a party or to which the business or property of the
Company or any of its subsidiaries is or may be subject, (ii) to the knowledge
of such counsel, no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency, or (iii) no injunction,
restraining order or order of any nature, to the knowledge of such counsel, by a
federal or state court of competent jurisdiction to which the Company or any of
its subsidiaries is or may be subject or to which the business, assets or
property of the Company or any of its subsidiaries are or may be subject that,
in the case of clauses (i), (ii) and (iii) above, (x) is required to be
disclosed in the Prospectus and that is not so disclosed, or (y) would have a
Material Adverse Effect.
16. The statements under the captions "Business--Litigation,"
"Management--Employment Agreements," "Management--Stock Option Plan,"
"Description of Capital Stock" and "Shares Eligible for Future Sale" in the
Prospectus and Item 24 of Part II of the Registration Statement, in each case,
insofar as such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present the information required with
respect to such legal matters, documents and proceedings and fairly summarize
the matters referred to therein in all material respects.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company, the Underwriters and their representatives at
which the contents of the Registration Statement and Prospectus and related
matters were discussed, and no facts have come to our attention which led us to
believe that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b) or Rule 434 of the Securities
Act Regulations, if applicable), or any amendment thereof prior to the Closing
Date as of the date of such amendment, contained an untrue statement of a
material fact or omitted to state any fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
as of its date (or any amendment thereof or supplement thereto prior to the
Closing Date as of the date of such amendment or supplement) and as of the
Closing Date contained or contains an untrue statement of a material fact or
omitted or omits to state any 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 (excluding all financial statements and related notes,
the financial statement schedules and other financial data included therein).
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EXHIBIT B
LOCK-UP AGREEMENT
____________, 2000
BEAR, STEARNS & CO. INC.
C.E. Unterberg, Towbin
as Representatives of the several Underwriters
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Re: FutureLink Corp.
Ladies and Gentlemen:
In consideration of the agreement of the several Underwriters,
for which Bear, Stearns & Co. Inc. and C.E. Unterberg, Towbin intend to act as
Representatives, to underwrite a proposed public offering (the "Offering") of
shares of common stock, $.0001 par value per share (the "Common Stock"), of
FutureLink Corp., a corporation organized under the laws of the State of
Delaware (the "Company"), as contemplated by a registration statement on Form
SB-2 filed with the Securities and Exchange Commission, the undersigned hereby
(i) agrees that the undersigned will not, directly or indirectly, during a
period of 180 days from the date of the final prospectus for the Offering (the
"Lock-Up Period"), without the prior written consent of Bear, Stearns & Co.
Inc., issue, sell, offer or agree to sell, grant any option for the sale of,
pledge, make any short sale of, maintain any short position with respect to,
establish or maintain a "put equivalent position" (within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended) with respect to,
enter into any swap, derivative transaction or other arrangement (whether any
such transaction is to be settled by delivery of Common Stock, other securities,
cash or other consideration) that transfers to another, in whole or in part, any
of the economic consequences of ownership, or otherwise dispose of, any Common
Stock (or any securities convertible into, exercisable for or exchangeable for
Common Stock) or interest therein of the Company or any capital stock of any of
its subsidiaries and (ii) authorizes the Company during the Lock-Up Period to
cause the transfer agent for the Common Stock to decline to transfer or to note
stop transfer restrictions on the transfer books and records of the Company with
respect to, any shares of Common Stock and any securities convertible into or
exercisable or exchangeable for Common Stock for which the undersigned is the
record holder and, in the case of any such shares or securities for which the
undersigned is the beneficial but not the record holder, agrees to cause the
record holder thereof to cause the transfer agent to decline to transfer or to
note stop transfer restrictions on such books and records with respect to, such
shares or securities.
The undersigned further agrees, from the date hereof until the
end of the Lock-Up Period, the undersigned will not exercise and will waive his,
her or its rights, if any, to require the Company to register any shares of
Common Stock beneficially owned by the undersigned.
<PAGE> 41
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into the agreements set forth
herein, and that, upon request, the undersigned will execute any additional
documents necessary in connection with any enforcement hereof. The obligations
of the undersigned hereunder shall be binding upon the successors and assigns of
the undersigned.
Very truly yours,
[See list of parties to execute lock-ups]
