2,632,778 Shares*
D&K HEALTHCARE RESOURCES, INC.
Common Stock
_______________________
UNDERWRITING AGREEMENT
St. Petersburg, Florida
__________, 2001
Xxxxxxx Xxxxx & Associates, Inc.
X.X. Xxxxxxx & Sons, Inc.
As Representatives of the Several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Gentlemen:
D&K Healthcare Resources, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated in this Agreement, to issue
and sell an aggregate of 2,000,000 authorized and unissued shares (the "Company
Firm Shares") of Common Stock, $.01 par value per share (the "Common Stock"), of
the Company, to the several Underwriters named in Schedule I to this Agreement
(the "Underwriters"), subject to the terms and conditions stated in this
Agreement. Certain stockholders of the Company, named in Schedule II hereto (the
"Selling Stockholders"), propose, subject to the terms and conditions stated in
this Agreement, to sell an aggregate of 632,778 authorized and outstanding
shares (the "Stockholder Firm Shares") of the Common Stock, to the Underwriters.
The Company Firm Shares and the Stockholder Firm Shares are collectively
referred to as the "Firm Shares." In addition, the Company has agreed to sell to
the Underwriters, upon the terms and conditions set forth in this Agreement, up
to an additional 394,917 shares (the "Additional Shares") of the Common Stock to
cover over-allotments by the Underwriters, if any. The Firm Shares and the
Additional Shares are collectively referred to as the "Shares."
Each of the Company and the Selling Stockholders wishes to confirm as
follows its agreement with you and the other several Underwriters, on whose
behalf you are acting, in connection with the several purchases of the Shares
from the Company and the Selling Stockholders.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 (File No. 333-60146), including a
prospectus subject to completion, relating to the Shares. Such registration
statement (including all financial schedules and exhibits), as amended at the
time when it becomes effective and as may thereafter be amended by post-
effective amendment, is referred to in this Agreement as the "Registration
Statement." The prospectus in the form included in the Registration Statement,
or, if the prospectus included in the Registration Statement omits information
in reliance upon Rule 430A under the Act and such information is included in a
prospectus filed with the Commission pursuant to Rule 424(b) under the Act or as
part of a post-effective amendment to the Registration Statement after the
Registration Statement becomes effective, the prospectus as so filed, is
referred to in this
-----------------------
* Plus an additional 394,917 shares subject to Underwriters' over-allotment
option
Agreement as the "Prospectus." If the Company elects to rely on Rule 434 under
the Act, all references to the Prospectus shall be deemed to include, without
limitation, the form of prospectus and the term sheet contemplated by Rule 434,
taken together, provided to the Underwriters by the Company in reliance on Rule
434 under the Act. If the Company files another registration statement with the
Commission to register a portion of the Shares pursuant to Rule 462(b) under the
Act (the "Rule 462 Registration Statement"), then any reference to "Registration
Statement" in this Agreement shall be deemed to include the registration
statement on Form S-3 (File No. 333-______) and the Rule 462 Registration
Statement, as each such registration statement may be amended pursuant to the
Act. The prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of such Registration
Statement with the Commission and as such prospectus is amended from time to
time until the date of the Prospectus are collectively referred to in this
Agreement as the "Prepricing Prospectus." Any reference in this Agreement to the
Registration Statement, any Prepricing Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference pursuant
to Item 12 of Form S-3 under the Act, as of the date of the Registration
Statement, such Prepricing Prospectus or the Prospectus, as the case may be, and
any reference to any amendment or supplement to the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
in this Agreement, the term "Incorporated Documents" means the documents which
at the time are incorporated by reference in the Registration Statement, any
Prepricing Prospectus, the Prospectus, or any amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell the
Company Firm Shares, and each Selling Stockholder hereby agrees to sell such
number of Stockholder Firm Shares as is set forth opposite such Selling
Stockholder's name on Schedule I to this Agreement, to the Underwriters and,
upon the basis of the representations, warranties and agreements of the Company
and the Selling Stockholders contained in this Agreement and subject to all the
terms and conditions set forth in this Agreement, each Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholders at a purchase price of $_____ per Share (the "purchase price per
Share"), the aggregate number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
The Company also agrees to sell to the Underwriters, and upon the basis of
the representations, warranties and agreements of the Company contained in this
Agreement and subject to all the terms and conditions set forth in this
Agreement, the Underwriters shall have the right for 30 days from the date of
the Prospectus to purchase from the Company, up to 394,917 Additional Shares, at
the purchase price per Share for the Firm Shares. The Additional Shares may be
purchased solely for the purpose of covering over-allotments, if any, made in
connection with the offering of the Firm Shares. If any Additional Shares are to
be purchased, each Underwriter, severally and not jointly, agrees to purchase
the number of Additional Shares (subject to such adjustments as you may
determine to avoid fractional shares) which bears the same proportion to the
total number of Additional Shares to be purchased by the Underwriters as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I to this Agreement bears to the total number of Firm Shares.
3. Terms of Public Offering. The Company has been advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of the Firm Shares and payment therefor shall be made at the
offices of Xxxxxxx Xxxxx & Associates, Inc., 880
0
Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx, at 10:00 a.m., St. Petersburg,
Florida time four business days after the date of this Agreement (the "Closing
Date"). The place of delivery for the Firm Shares and the Closing Date may be
varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the offices of Xxxxxxx Xxxxx &
Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx, at 10:00 a.m.,
St. Petersburg, Florida time, on such date or dates (the "Additional Closing
Date") (which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than three nor later than ten business
days after the giving of the notice hereinafter referred to) as shall be
specified in a written notice from you on behalf of the Underwriters to the
Company of the Underwriters' determination to purchase a number, specified in
such notice, of Additional Shares. Such notice may be given to the Company by
you at any time within 30 days after the date of the Prospectus. The place of
closing for the Additional Shares and the Additional Closing Date may be varied
by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased under this Agreement shall be registered in such names and in such
denominations as you shall request prior to 1:00 p.m., St. Petersburg, Florida
time, not later than the second full business day preceding the Closing Date or
the Additional Closing Date, as the case may be. Such certificates shall be made
available to you in St. Petersburg, Florida for inspection and packaging not
later than 9:30 a.m., St. Petersburg, Florida time, on the business day
immediately preceding the Closing Date or the Additional Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased under this Agreement shall be delivered to you on the
Closing Date or the Additional Closing Date, as the case may be, against payment
of the purchase price therefor by wire transfer in immediately available funds
to the account specified by the Company and the Selling Stockholders, as the
case may be, to the Representatives no later than the business day prior to the
Closing Date or the Additional Closing Date, as the case may be. If the
Representatives so elect, delivery of the Shares may be made by credit through
full fast transfer to the accounts at the Depository Trust Company designated by
the Representatives.
The certificates in negotiable form for the Stockholder Firm Shares have
been placed in custody (for delivery under this Agreement) under the Custody
Agreement (as defined below). Each Selling Stockholder agrees that the
certificates for the Shares for such Selling Stockholder so held in custody are
subject to the interests of the Underwriters under this Agreement, that the
arrangements made by such Selling Stockholder for such custody, including the
Power of Attorney (as defined below) is to that extent irrevocable and that the
obligations of such Selling Stockholder under this Agreement shall not be
terminated by the act of such Selling Stockholder or by operation of law,
whether by the death or incapacity of such Selling Stockholder or the occurrence
of any other event, except as specifically provided in this Agreement or in the
Custody Agreement. If any Selling Stockholder should die or be incapacitated, or
if any other such event should occur, before the delivery of the certificates
for the Shares to be sold by such Selling Stockholder under this Agreement, such
Shares, except as specifically provided in this Agreement or in the Custody
Agreement, shall be delivered by the Custodian (as defined below) in accordance
with the terms and conditions of this Agreement as if such death, incapacity or
other event had not occurred, regardless of whether the Custodian shall have
received notice of such death or other event.
5. Covenants and Agreements of the Company. The Company covenants and
agrees with the several Underwriters as follows:
a. The Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective, if it has not already
become effective, and will advise you promptly and, if requested by you, will
confirm such advice in writing (i) when the Registration Statement has become
effective (if not effective as of the time and date of this
3
Agreement) and when any post-effective amendment to the Registration
Statement becomes effective, (ii) if Rule 430A under the Act is employed,
when the Prospectus has been timely filed pursuant to Rule 424(b) under the
Act, (iii) of any request by the Commission for amendments or supplements
to the Registration Statement, any Prepricing Prospectus or the Prospectus
or for additional information, (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of the suspension of qualification of the Shares for offering or sale in
any jurisdiction or the initiation (or threatened initiation) of any
proceeding for such purposes and (v) within the period of time referred to
in Section 5(e) below, of any change in the Company's condition (financial
or other), business, prospects, properties, net worth or results of
operations, or of any event that comes to the attention of the Company that
makes any statement made in the Registration Statement or the Prospectus
(as then amended or supplemented) untrue in any material respect or that
requires the making of any additions thereto or changes therein in order to
make the statements therein not misleading in any material respect, or of
the necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at anytime the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal or lifting of such order at the earliest possible
time. If the Company elects to rely on Rule 434 under the Act, the Company
will provide the Underwriters with copies of the form of Rule 434
Prospectus (including copies of a term sheet that complies with the
requirements of Rule 434 under the Act), in such number as the Underwriters
may reasonably request, and file with the Commission in accordance with
Rule 424(b) of the Act the form of Prospectus complying with Rule 434(c) of
the Act before the close of business on the first business day immediately
following the date of this Agreement. If the Company elects not to rely on
Rule 434 under the Act, the Company will provide the Underwriters with
copies of the form of Prospectus, in such number as the Underwriters may
reasonably request, and file with the Commission such Prospectus in
accordance with Rule 424(b) of the Act before the close of business on the
first business day immediately following the date of this Agreement.
b. The Company will furnish to you, without charge, two signed
duplicate originals of the Registration Statement as originally filed with
the Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you, without
charge, such number of conformed copies of the Registration Statement as
originally filed and of each amendment thereto as you may reasonably
request.
c. The Company will not file any Rule 462 Registration Statement or
any amendment to the Registration Statement or make any amendment or
supplement to the Prospectus unless (A) you shall have previously been
advised thereof and been given a reasonable opportunity to review such
filing, amendment or supplement, and (B) you have not reasonably objected
to such filing, amendment or supplement after being so advised and having
been given a reasonable opportunity to review same.
d. Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such
quantities as you have requested or may hereafter reasonably request,
copies of each form of the Prepricing Prospectus. The Company consents to
the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, prior to the date of
the Prospectus, of each Prepricing Prospectus so furnished by the Company.
e. As soon after the execution and delivery of this Agreement as is
practicable and thereafter from time to time for such period as in the
reasonable opinion of counsel for the
4
Underwriters a prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or a dealer, and for so long a
period as you may request for the distribution of the Shares, the Company
will deliver to each Underwriter and each dealer, without charge, as many
copies of the Prospectus (and of any amendment or supplement thereto) as
they may reasonably request. The Company consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with
the provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters
and by all dealers to whom Shares may be sold, both in connection with the
offering and sale of the Shares and for such period of time thereafter as
the Prospectus is required by the Act to be delivered in connection with
sales by any Underwriter or dealer. If at any time prior to the later of
(i) the completion of the distribution of the Shares pursuant to the
offering contemplated by the Registration Statement or (ii) the expiration
of prospectus delivery requirements with respect to the Shares under
Section 4(3) of the Act and Rule 174 thereunder, any event shall occur that
in the judgment of the Company or in the opinion of counsel for the
Underwriters is required to be set forth in the Prospectus (as then amended
or supplemented) or should be set forth therein in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the
Prospectus to comply with the Act or any other law, the Company will
promptly prepare and, subject to Sections 5(a) and 5(c) of this Agreement,
file with the Commission and use its best efforts to cause to become
effective as promptly as possible an appropriate supplement or amendment
thereto, and will furnish to each Underwriter and to each dealer who has
previously requested Prospectuses, without charge, a reasonable number of
copies thereof.
f. The Company will cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers
under the securities or Blue Sky laws of such jurisdictions as you may
reasonably designate and will file such consents to service of process or
other documents as may be reasonably necessary in order to effect and
maintain such registration or qualification for so long as required to
complete the distribution of the Shares; provided that in no event shall
the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject
it to general service of process in suits, other than those arising out of
the offering or sale of the Shares, in any jurisdiction where it is not now
so subject. In each jurisdiction in which the Shares shall have been
qualified as above provided, the Company will make and file such statements
and reports in each year as are or may be required by the laws of such
jurisdiction. In the event that the qualification of the Shares in any
jurisdiction is suspended, the Company shall so advise you promptly in
writing.
g. The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and the Rule 462 Registration Statement, if any, and ending not
later than 15 months thereafter, as soon as practicable after the end of
such period, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act, and will
advise you in writing when such statement has been made so available.
h. During the period ending three years from the date of this
Agreement, the Company will furnish to you and, upon your request, to each
of the other Underwriters, (i) as soon as available, a copy of each proxy
statement, quarterly or annual report or other report of the Company mailed
to stockholders or filed with the Commission, the National Association of
Securities Dealers, Inc. (the "NASD") or The Nasdaq Stock Market's National
Market ("Nasdaq") or any securities exchange and (ii) from time to time
such other
5
information concerning the Company as you may reasonably request. Until the
termination of the offering of the Shares, the Company will timely file all
documents, and any amendments to previously filed documents, required to be
filed by it pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
i. If this Agreement shall terminate or shall be terminated after
execution pursuant to any provision of this Agreement (except pursuant to a
termination under Section 11 of this Agreement) or if this Agreement shall
be terminated by the Underwriters because of any inability, failure or
refusal on the part of the Company to perform any agreement in this
Agreement or to comply with any of the terms or provisions of this
Agreement or to fulfill any of the conditions of this Agreement, the
Company agrees to reimburse you and the other Underwriters for all out-of-
pocket expenses (including travel expenses and reasonable fees and expenses
of counsel for the Underwriters) reasonably incurred by you in connection
herewith.
j. The Company will apply the net proceeds from the sale of the
Shares to be sold by it under this Agreement in accordance in all material
respects with the statements under the caption "Use of Proceeds" in the
Prospectus.
k. If Rule 430A under the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act.
l. For a period of 90 days after the date of the Prospectus first
filed pursuant to Rule 424(b) under the Act, without your prior written
consent, the Company will not, directly or indirectly, issue, sell, offer
or contract to sell or otherwise dispose of or transfer any shares of
Common Stock or securities convertible into or exchangeable or exercisable
for shares of Common Stock (collectively, "Company Securities") or any
rights to purchase Company Securities, except to the Underwriters pursuant
to this Agreement and except for grants of options pursuant to the
Company's stock option plans in effect as of the date of this Agreement,
and except for the issuance of shares of Common Stock in exchange for
shares of common stock of Pharmaceutical Buyers, Inc., pursuant to
contracted obligations existing on the date of this Agreement.
m. Prior to the Closing Date or the Additional Closing Date, as the
case may be, the Company will furnish to you, as promptly as possible,
copies of any unaudited interim consolidated financial statements of the
Company and its subsidiaries for any period subsequent to the periods
covered by the financial statements appearing in the Prospectus.
n. The Company will comply with all provisions of any undertakings
contained in the Registration Statement.
o. The Company will not at any time, directly or indirectly take any
action designed, or which might reasonably be expected to cause or result
in, or which will constitute, stabilization or manipulation of the price of
the shares of Common Stock to facilitate the sale or resale of any of the
Shares.
p. If at any time during the 90-day period after the first date that
any of the Shares are released by you for sale to the public, any rumor,
publication, or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Common Stock
(including the Shares) has been or is likely to be materially affected
(regardless of whether such rumor, publication, or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
promptly consult with you concerning the advisability
6
and substance of, and, if appropriate, disseminate, a press release or
other public statement responding to or commenting on such rumor,
publication, or event.
q. The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of each state where
necessary to permit market making transactions and secondary trading, and
will comply with such Blue Sky laws and will continue such qualifications,
registrations and exemptions in effect for a period of five years after the
date of this Agreement.
r. The Company will timely file with Nasdaq all documents and
notices required by Nasdaq of companies that have or will issue securities
that are traded in the over-the-counter market and quotations for which are
reported by Nasdaq.
6. Representations and Warranties of the Company.
---------------------------------------------
The Company hereby represents and warrants to each Underwriter on the date
of this Agreement, and shall be deemed to represent and warrant to each
Underwriter on the Closing Date and the Additional Closing Date, as the case may
be, that:
a. The Company satisfies all of the requirements of the Act for use
of Form S-3 for the offering of the Shares contemplated hereby. Each
Prepricing Prospectus included as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto, or
filed pursuant to Rule 424(a) under the Act, complied when so filed in all
material respects with the provisions of the Act, except that this
representation and warranty does not apply to statements in or omissions
from such Prepricing Prospectus (or any amendment or supplement thereto)
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein. No order preventing or
suspending the use of any Prepricing Prospectus has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other jurisdiction.
b. The Registration Statement in the form in which it becomes
effective and also in such form as it may be when any post-effective
amendment thereto shall become effective, and the Prospectus, and any
supplement or amendment thereto when filed with the Commission under Rule
424(b) under the Act, will comply in all material respects with the
provisions of the Act and will not at any such times contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the
Prospectus (or any amendment or supplement thereto) made in reliance upon
and in conformity with information relating to any Underwriter furnished to
the Company in writing by or on behalf of any Underwriter through you
expressly for use therein.
c. The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when
such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
and any further Incorporated Documents so filed will, when they are filed,
conform in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder; no such Incorporated Document
when it was filed (or, if an amendment with respect to any such document
was filed, when such amendment was filed), contained an untrue statement of
a material fact or omitted to state a material
7
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and no such further Incorporated
Document, when it is filed, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
d. The capitalization of the Company is as set forth in the
Prospectus as of the date set forth therein. All the outstanding shares of
the capital stock of the Company have been, and as of the Closing Date, and
the Additional Closing Date, as the case may be, will be, duly authorized
and validly issued, are fully paid and nonassessable and are free of any
preemptive or similar rights; except as set forth in the Prospectus, the
Company is not a party to or bound by any outstanding options, warrants, or
similar rights to subscribe for, or contractual obligations to issue, sell,
transfer or acquire, any of its capital stock or any securities convertible
into or exchangeable for any of such capital stock; the Shares to be issued
and sold to the Underwriters by the Company under this Agreement have been
duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms of this Agreement will be
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; the capital stock of the Company conforms to the
description thereof in the Registration Statement and the Prospectus (or
any amendment or supplement thereto); and the delivery of certificates for
the Shares against payment therefor pursuant to the terms of this
Agreement, will pass valid title to the Shares, free and clear of any
claim, encumbrance or defect in title, to the several Underwriters
purchasing such shares in good faith and without notice of any lien, claim
or encumbrance. The certificates for the Shares are in valid and sufficient
form.
e. Each of the Company and its subsidiaries is a corporation duly
organized and validly existing as a corporation in good standing (or with
active status) under the laws of the state of its incorporation with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and qualified to conduct its business and
is in good standing (or has active status) in each jurisdiction or place
where the nature of its properties or the conduct of its business requires
such registration or qualification, except where the failure to so register
or qualify does not have a material adverse effect on the condition
(financial or other), business, properties, net worth, results of
operations or prospects of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect").
f. The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned by the Company free and clear of any
security interests, liens, encumbrances, equities or claims. The Company
does not have any subsidiaries and does not own a material interest in or
control, directly or indirectly, any other corporation, partnership, joint
venture, association, trust or other business organization, except for (i)
Pharmaceutical Buyers, Inc., a Colorado-based group purchasing organization
(ii) xxxxxxxxxxxxxxx.xxx, an internet service company and (iii) those set
forth in exhibit 21 to the Annual Report on Form 10-K of the Company for
the fiscal year ended June 30, 2000. As used in this Agreement,
subsidiaries shall mean direct and indirect subsidiaries of the Company.
g. There are no legal or governmental proceedings pending or, to the
best knowledge of the Company, threatened, against the Company or its
subsidiaries or to which the Company or its subsidiaries or any of their
respective properties are subject, that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) but are not described as required. Except as described in the
Prospectus, there is no action, suit, inquiry, proceeding, or investigation
by or before any
8
court or governmental or other regulatory or administrative agency or
commission pending or, to the knowledge of the Company, threatened, against
or involving the Company or its subsidiaries, which might individually or
in the aggregate prevent or adversely affect the transactions contemplated
by this Agreement or result in a Material Adverse Effect, nor is there any
basis for any such action, suit, inquiry, proceeding, or investigation.
There are no agreements, contracts, indentures, leases or other instruments
that are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or to be filed as an
exhibit to or incorporated by reference in the Registration Statement that
are not described or filed or incorporated by reference as required by the
Act. All such contracts to which the Company or any of its subsidiaries is
a party have been duly authorized, executed and delivered by the Company or
the applicable subsidiary, constitute valid and binding agreements of the
Company or the applicable subsidiary and are enforceable against the
Company or the applicable subsidiary in accordance with the terms thereof,
and neither the Company nor the applicable subsidiary, nor to the Company's
knowledge, any other party, is in breach of or in default under any of such
contracts.
h. Neither the Company nor any of its subsidiaries is: (i) in
violation of (A) its certificate of incorporation or bylaws or (B) any law,
ordinance, administrative or governmental rule or regulation applicable to
the Company or any of its subsidiaries the violation of which would have a
Material, Adverse Effect or (C) any decree of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries; or (ii) in default in any material respect in the performance
of any obligation, agreement or condition contained in (A) any bond,
debenture, note or any other evidence of indebtedness, or (B) any material
agreement, indenture, lease or other instrument to which the Company or any
of its subsidiaries is a party or by which any of their properties may be
bound; and there does not exist any state of facts which constitutes an
event of default on the part of the Company or any of its subsidiaries as
defined in such documents or which, with notice or lapse of time or both,
would constitute such an event of default.
i. The Company's execution and delivery of this Agreement and the
performance by the Company of its obligations under this Agreement have
been duly and validly authorized by the Company, and this Agreement has
been duly executed and delivered by the Company, and this Agreement
constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally or by general
equitable principles.
j. Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby or
thereby (i) requires any consent, approval, authorization or other order of
or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as may
be required for the registration of the Shares under the Act, the listing
of the Shares for trading on Nasdaq, and compliance with the securities or
Blue Sky laws of various jurisdictions, all of which will be, or have been,
effected in accordance with this Agreement and except for the NASD's
clearance of the underwriting terms of the offering contemplated hereby as
required under the NASD's Rules of Fair Practice), (ii) conflicts with or
will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate of incorporation or bylaws of the Company or
any agreement, indenture, lease or other instrument to which the Company or
any of its subsidiaries is a party or by which any of its properties may be
bound, (iii) violates any statute, law, regulation, ruling, filing,
judgment, injunction, order or decree applicable to the Company or any of
its subsidiaries or any of their properties, or (iv) results
9
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries.
k. Except as described in the Prospectus, neither the Company nor
any of its subsidiaries has outstanding, and at the Closing Date and the
Additional Closing Date, as the case may be, neither the Company nor any of
its subsidiaries will have outstanding, any options to purchase, or any
warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any shares of
Common Stock or any such warrants or convertible securities or obligations.
No holder of securities of the Company has rights to the registration of
any securities of the Company as a result of or in connection with the
filing of the Registration Statement or the consummation of the
transactions contemplated by this Agreement that have not been satisfied or
heretofore waived in writing.
x. Xxxxxx Xxxxxxxx LLP, the certified public accountants who have
certified the financial statements filed as part of the Registration
Statement and the Prospectus (or any amendment or supplement thereto), are
independent public accountants as required by the Act.
m. The financial statements, together with related schedules and
notes, included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the financial position,
results of operations and changes in financial position of the Company on
the basis stated in the Registration Statement at the respective dates or
for the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved and all adjustments necessary for a fair presentation of the
results for such period have been made, and the other financial and
statistical information and data set forth in the Registration Statement
and Prospectus (and any amendment or supplement thereto) is accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of the Company. No other financial statements or
schedules are required to be included in or incorporated by reference into
the Registration Statement that have not been so included or incorporated.
n. Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), (i)
neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations, indirect, direct or contingent, or entered into
any transaction which is not in the ordinary course of business or which
could result in a material reduction in the future earnings of the Company;
(ii) neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business or properties from fire,
flood, hurricane, earthquake, windstorm, accident or other calamity,
whether or not covered by insurance; (iii) neither the Company nor any of
its subsidiaries has paid or declared any dividends or other distributions
with respect to its capital stock and the Company is not in default under
the terms of any class of capital stock of the Company or any outstanding
debt obligations; (iv) there has not been any change in the authorized or
outstanding capital stock of the Company or any material change in the
indebtedness of the Company (other than in the ordinary course of
business); and (vi) there has not been any material adverse change, or any
development having or which may reasonably be expected to have a Material
Adverse Effect.
o. Each of the Company and its subsidiaries has good and marketable
title to all property (real and personal) described in the Prospectus as
being owned by it, free and clear
10
of all liens, claims, security interests or other encumbrances except (i)
such as are described in the financial statements included or incorporated
by reference in the Prospectus or (ii) such as are not materially
burdensome and do not interfere in any material respect with the use of the
property or the conduct of the business of the Company. All property (real
and personal) held under lease by the Company and its subsidiaries is held
by it under valid, subsisting and enforceable leases with only such
exceptions as in the aggregate are not materially burdensome and do not
interfere in any material respect with the conduct of the business of the
Company or its subsidiaries.
p. The Company has not distributed and will not distribute any
offering material in connection with the offering and sale of the Shares
other than the Prepricing Prospectus, the Prospectus, or other offering
material, if any, as permitted by the Act and distributed with the prior
written approval of the Underwriters.
q. The Company has not taken, directly or indirectly, any action
which constituted, or any action designed, or which might reasonably be
expected to cause or result in or constitute, under the Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares or for any other purpose.
r. Neither the Company nor any of its subsidiaries is an "investment
company," an "affiliated person" of, or "promoter" or "principal
underwriter" for an investment company within the meaning of the Investment
Company Act of 1940, as amended.
s. Each of the Company and its subsidiaries has all permits,
licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities ("permit" or "permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus, subject to such qualifications as may be set
forth in the Prospectus, except where the failure to have obtained any such
permit has not and will not have a Material Adverse Effect; each of the
Company and its subsidiaries has fulfilled and performed in all material
respects all of its obligations with respect to each such permit and no
event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination of any such permit or result in any other
material impairment of the rights of the holder of any such permit, subject
in each case to such qualification as may be set forth in the Prospectus;
and, except as described in the Prospectus, such permits contain no
restrictions that are materially burdensome to the Company or any of its
subsidiaries.
t. Each of the Company and its subsidiaries has complied and will
comply with wage and hour determinations issued by the U.S. Department of
Labor under the Service Contract Act of 1965 and the Fair Labor Standards
Act in paying its employees' salaries, fringe benefits, and other
compensation for the performance of work or other duties in connection with
contracts with the U.S. government, except where the failure to comply has
not had and will not have a Material Adverse Effect. Each of the Company
and its subsidiaries has complied and will comply in all material respects
with the terms of all certifications and representations made to the U.S.
government in connection with the submission of any bid or proposal or any
contract. Each of the Company and its subsidiaries has complied and will
comply with the requirements of the American with Disabilities Act of 1990,
the Family and Medical Leave Act of 1993, the Employee Retirement Income
Security Act, the Civil Rights Act of 1964 (Title VII), as amended, the Age
Discrimination in Employment Act and other applicable federal and state
employment and labor laws, except where the failure to comply has not had
and will not have a Material Adverse Effect.
u. The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and
11
customary in the business in which they are engaged; and the Company has no
reason to believe that the Company and its subsidiaries will not be able to
renew their existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue their respective businesses as a comparable cost.
v. The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with 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 management's
general or specific authorizations; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
w. Neither the Company at any time, nor any of its subsidiaries
since each has been held as a subsidiary of the Company has, directly or
indirectly, (i) made any unlawful contribution to any candidate for
political office, or failed to disclose fully any contribution in violation
of law, or (ii) made any payment to any federal, state or foreign
governmental official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws
of the United States or any state, the District of Columbia, territory or
possession of the United States, or any applicable foreign jurisdictions.
x. Each of the Company and its subsidiaries has obtained all
required permits, licenses, and other authorizations, if any, which are
required under federal, state, local and foreign statutes, ordinances and
other laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, chemicals, or industrial, hazardous,
or toxic materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface, or
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, hazardous, or toxic
materials or wastes, or any regulation, rule, code, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered,
promulgated, or approved thereunder ("Environmental Laws"), except where
the failure to obtain any such permit, license or other authorization has
not resulted in and will not result in a Material Adverse Effect. Each of
the Company and its subsidiaries is in material compliance with all terms
and conditions of all required permits, licenses, and authorizations, and
are also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules,
and timetables contained in the Environmental Laws. There is no pending or,
to the knowledge of the Company after due inquiry, threatened civil or
criminal litigation, notice of violation, or administrative proceeding
relating in any way to the Environmental Laws (including but not limited to
notices, demand letters, or claims under the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
the Emergency Planning and Community Right to Know Act of 1986, as amended
("EPCRA"), the Clean Air Act, as amended ("CAA"), or the Clean Water Act,
as amended ("CWA") and similar federal, foreign, state, or local laws)
involving the Company or any of its subsidiaries. There have not been and
there are not any past, present, or foreseeable future events, conditions,
circumstances, activities, practices, incidents, actions, or plans which
may interfere with or prevent continued compliance, or which may give rise
to any common law or legal liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study, or
12
investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge, release, or threatened release into the
environment, of any pollutant, contaminant, chemical, or industrial,
hazardous, or toxic material or waste, including, without limitation, any
liability arising, or any claim, action, demand, suit, proceeding, hearing,
study, or investigation which may be brought, under RCRA, CERCLA, EPCRA,
CAA, CWA or similar federal, foreign, state or local laws.
y. Each of the Company and its subsidiaries owns and has full right,
title and interest in and to, or has valid licenses to use, each material
trade name, trademark, service xxxx under which each of the Company and its
subsidiaries conducts all or any part of its business, and the Company has
created no lien or encumbrance on, or granted any right or license with
respect to, any such trade name, trademark or service xxxx; there is no
claim pending against the Company or any of its subsidiaries with respect
to any trade name, trademark or service xxxx and neither the Company nor
any of its subsidiaries has received notice that any trade name, trademark
or service xxxx which it uses or has used in the conduct of its business
infringes upon or conflicts with the rights of any third party. Neither the
Company nor any of its subsidiaries has become aware that any material
trade name, trademark or service xxxx which it uses or has used in the
conduct of its business infringes upon or conflicts with the rights of any
third party.
z. All offers, sales, conversions and redemptions of the Company's
capital stock and other securities through the date of this Agreement were
made in compliance with the Act and all other applicable state and federal
laws or regulations.
aa. The Shares have been duly authorized for trading on Nasdaq under
the symbol "DKWD," subject to notice of issuance of the Shares being sold
by the Company, and upon consummation of the offering contemplated hereby
the Company will be in compliance with the designation and maintenance
criteria applicable to Nasdaq issuers.
bb. All federal, state, local and foreign tax returns required to be
filed by or on behalf of the Company and its subsidiaries (and their
predecessors) with respect to all periods ended prior to the date of this
Agreement have been filed (or are the subject of valid extension) with the
appropriate federal, state, local and foreign authorities and all such tax
returns, as filed, are accurate in all material respects. All federal,
state, local and foreign taxes (including estimated tax and sales tax
payments) required to be shown on all such tax returns or claimed to be due
from or with respect to the business of the Company and its subsidiaries
(and their predecessors) have been paid or reflected as a liability on the
financial statements of the Company included or incorporated by reference
in the Prospectus for appropriate periods, except for those taxes or claims
therefor which are being contested by the Company in good faith and for
which appropriate reserves are reflected in the Company's financial
statements included or incorporated by reference in the Prospectus. Except
as disclosed in the Prospectus, all deficiencies asserted as a result of
any federal, state, local or foreign tax audits have been paid or finally
settled and no issue has been raised in any such audit which, by
application of the same or similar principles, reasonably could be expected
to result in a proposed deficiency for any other period not so audited.
There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal, state, local or foreign tax
return for any period. On the Closing Date, and the Additional Closing
Date, as the case may be, all stock transfer and other taxes which are
required to be paid in connection with the sale of the shares to be sold by
the Company to the Underwriters will have been fully paid by the Company
and all laws imposing such taxes will have been complied with.
13
cc. Except as set forth in the Prospectus or incorporated by
reference in the Registration Statement, there are no transactions with
"affiliates" (as defined in Rule 405 promulgated under the Act) or any
officer, director or security holder of the Company (whether or not an
affiliate) which are required by the Act and the applicable rules and
regulations thereunder to be disclosed.
dd. The Company has procured the written agreement of each of its
executive officers and directors not to, for a period of 90 days after the
date of the Prospectus first filed pursuant to Rule 424(b) under the Act
(the "Restriction Period"), without your prior written consent, directly or
indirectly (i) sell, offer or contract to sell or otherwise dispose of or
transfer any shares of Company Securities owned or controlled by such
person now or hereafter or any rights to purchase Company Securities;
provided that the foregoing restrictions shall not apply to Shares to be
sold by such person pursuant hereto; the exercise by such person of stock
options currently outstanding or granted under the Company's stock option
plans; or shares of Common Stock transferred by such person to a trust
established by such person for the sole benefit of such person or such
person's spouse or descendants, or transferred as a gift or gifts (provided
that any donee thereof agrees to be bound by the terms of this Section
6.dd.), or (ii) exercise or seek to exercise or effectuate in any manner
any rights of any nature that such person has or may hereafter have to
require the Company to register under the Act such person's sale, transfer
or other disposition of any Company Securities or other securities of the
Company held by such person, or to otherwise participate as a selling
securityholder in any manner in any registration effected by the Company
under the Act, before the expiration of the Restriction Period, other than
the registation to which this Agreement relates.
ee. Neither the Company nor any of its subsidiaries (i) conducts
business or has affiliates which conduct business in or with Cuba, (ii)
plans to commence doing business in or with Cuba after the effective date
of the Registration Statement or (iii) is required by Florida law to report
a material change in information previously reported to the State of
Florida regarding business conducted in or with Cuba.
ff. No officer, director, nominee for director or stockholder of the
Company has a direct or indirect affiliation or association with any member
of the NASD.
7. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder, severally and not jointly, represents and warrants to each
Underwriter and the Company on the date of this Agreement, and shall be deemed
to represent and warrant to each Underwriter and the Company on the Closing
Date, that:
a. Such Selling Stockholder has full right, power and authority to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder under this Agreement; and upon delivery of such Shares under
this Agreement and payment of the purchase price as contemplated by this
Agreement, each of the Underwriters will obtain valid marketable title to
the Shares purchased by it from such Selling Stockholder, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable
interest, including any liability for estate or inheritance taxes, or any
liability to or claims of any creditor, devisee, legatee or beneficiary of
such Selling Stockholder.
b. Such Selling Stockholder has duly authorized (if applicable),
executed and delivered, in the form heretofore furnished to the
Representatives, a Power of Attorney (the "Power of Attorney") appointing
_______________ and ______________ as attorneys-in-fact (collectively, the
"Attorneys" and individually, an "Attorney") and a Letter of Transmittal
and Custody Agreement (the "Custody Agreement') with
_____________________________, as
14
custodian (the "Custodian"); each of the Power of Attorney and the Custody
Agreement constitutes a valid and binding agreement of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance
with its terms, and each of such Selling Stockholder's Attorneys, acting
alone, is authorized to execute and deliver this Agreement and the
certificate referred to in Section 10(i) of this Agreement on behalf of
such Selling Stockholder, subject to the minimum purchase price as provided
in the Power of Attorney to determine the purchase price to be paid by the
several Underwriters to such Selling Stockholder as provided in Section 2
of this Agreement, to authorize the delivery of the Shares to be sold by
the Selling Stockholders under this Agreement and to duly endorse (in blank
or otherwise) the certificate or certificates representing such Shares or a
stock power or powers with respect thereto, to accept payment therefor, and
otherwise to act on behalf of such Selling Stockholder in connection with
this Agreement. Certificates in negotiable form for all Shares to be sold
by such Selling Stockholder under this Agreement, together with a stock
power or powers duly endorsed in blank by such Selling Stockholder, have
been placed in custody with the Custodian for the purpose of effecting
delivery under this Agreement.
c. All authorizations, approvals, consents and orders necessary for
the execution and delivery by such Selling Stockholder of the Power of
Attorney and the Custody Agreement, the execution and delivery by or on
behalf of such Selling Stockholder of this Agreement and the sale and
delivery of the Shares to be sold by such Selling Stockholder under this
Agreement (other than such authorizations, approvals or consents as may be
necessary under state or other securities or Blue Sky laws) have been
obtained and are in full force and effect; such Selling Stockholder, if
other than a natural person, has been duly organized and is validly
existing and in good standing (or with active status) under the laws of the
jurisdiction of its organization as the type of entity that it purports to
be; and such Selling Stockholder has full right, power, and authority to
enter into and perform its obligations under this Agreement and such Power
of Attorney and Custody Agreement, and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder under this
Agreement.
d. For a period of 90 days after the date of the Prospectus first
filed pursuant to Rule 424(b) under the Act, without your prior written
consent, such Selling Stockholder will not directly or indirectly, (i)
sell, offer or contract to sell or otherwise dispose of or transfer any
Company Securities, or any rights to purchase or acquire, Company
Securities; provided that the foregoing restrictions shall not apply to
Shares to be sold by such Selling Stockholder pursuant hereto; the exercise
by such Selling Stockholder of stock options currently outstanding or
granted under the Company's stock option plans; or shares of Common Stock
transferred by such Selling Stockholder to a trust established by the
Selling Stockholder for the sole benefit of such Selling Stockholder or
such Selling Stockholder's spouse or descendants, or transferred as a gift
or gifts (provided that any donee thereof agrees to be bound by the terms
of this Section 7.d.), or (ii) exercise or seek to exercise or effectuate
in any manner any rights of any nature that such Selling Stockholder has or
may hereafter have to require the Company to register under the Act such
Selling Stockholder's sale, transfer or other disposition of any Company
Securities or other securities of the Company held by such Selling
Stockholder, or to otherwise participate as a selling securityholder in any
manner in any registration effected by the Company under the Act, before
the expiration of the Restriction Period, other than the registration to
which this Agreement relates.
e. Certificates in negotiable form for all Shares to be sold by such
Selling Stockholder under this Agreement, together with a stock power or
powers duly endorsed in blank by such Selling Stockholder, have been placed
in custody with the Custodian for the purpose of effecting delivery under
this Agreement.
15
f. This Agreement has been duly authorized by such Selling
Stockholder that is not a natural person and has been duly executed and
delivered by or on behalf of such Selling Stockholder and constitutes the
valid and binding agreement of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with its terms; and the
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in a breach of or default
under any material bond, debenture, note or other evidence of indebtedness,
or any material contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder or any Selling
Stockholder Shares under this Agreement may be bound, or to such Selling
Stockholder's knowledge, result in any violation or any law, order, rule,
regulation, writ, injunction or decree of any court or governmental agency
or body or if such Selling Stockholder is other than a natural person,
result in any violation of any provisions of the charter, bylaws or other
organizational documents of such Selling Stockholder.
g. Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to, or which might reasonably be
expected to, cause or result in stabilization or manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares.
h. Such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
i. All information furnished by or on behalf of such Selling
Stockholder relating to such Selling Stockholder and the Shares to be sold
by such Selling Stockholder under this Agreement that is contained in the
representations and warranties of such Selling Stockholder in such Selling
Stockholder's Power of Attorney or set forth in the Registration Statement
and the Prospectus is true, correct and complete, and does not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make such statements not
misleading.
j. Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be
complied with or satisfied pursuant to this Agreement on or prior to the
Closing Date and will advise one of its Attorneys prior to the Closing Date
if any statement to be made on behalf of such Selling Stockholder in the
certificate contemplated by Section 10(j) would be inaccurate if made as of
the Closing Date.
k. Such Selling Stockholder does not have, or has waived prior to the
date of this Agreement, any preemptive right, co-sale right or right of
first refusal or other similar right to purchase any of the Shares that are
to be sold by the Company or any of the other Selling Stockholders to the
Underwriters pursuant to this Agreement, and such Selling Stockholder does
not own any capital stock of the Company or warrants, options or similar
rights to acquire, and does not have any right or arrangement to acquire,
any capital stock, rights, warrants, options or other securities from the
Company, other than those described in the Registration Statement and
Prospectus.
l. Such Selling Stockholder is not aware (without having conducted
any investigations or inquiry) that any of the representations and
warranties of the Company set forth in Section 6 above is untrue or
inaccurate.
8. Expenses. Whether or not the transactions contemplated hereby are
consummated or this Agreement becomes effective or is terminated, the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in
16
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof and of any Prepricing
Prospectus to the Underwriters and dealers; (ii) the printing and delivery
(including, without limitation, postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, the
Prospectus, each Prepricing Prospectus, the Incorporated Documents, the Blue Sky
memoranda, the Master Agreement Among Underwriters, this Agreement, the Selected
Dealers Agreement and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws or Blue Sky laws, including
the reasonable attorneys' fees and out-of-pocket expenses of the counsel for the
Underwriters in connection therewith; (iv) the filing fees incident to securing
any required review by the NASD of the terms of the sale of the Shares and the
reasonable fees and disbursements of the Underwriters' counsel relating thereto;
(v) the cost of preparing stock certificates; (vi) the costs and charges of any
transfer agent or registrar; (vii) the cost of the tax stamps, if any, in
connection with the issuance and delivery of the Shares to the respective
Underwriters; (viii) all other fees, costs and expenses referred to in Item 13
of the Registration Statement, (ix) the transportation, lodging, graphics and
other expenses incidental to the Company's preparation for and participation in
the "roadshow" for the offering contemplated hereby, and (x) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement which are not otherwise specifically provided for in this Section
8. Notwithstanding the foregoing, in the event that the proposed offering is
terminated for the reasons set forth in Section 5(i) of this Agreement, the
Company agrees to reimburse the Underwriters as provided in Section 5(i) of this
Agreement.
9. Indemnification and Contribution. Subject to the limitations in this
paragraph below, the Company agrees to indemnify and hold harmless you and each
other Underwriter, the directors, officers, employees and agents of each
Underwriter, and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and attorneys'
fees and expenses (collectively, "Damages") arising out of or based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Prepricing Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in any
audio or visual materials used in connection with the marketing of the Shares,
including, without limitation, slides, videos, films and tape recordings, except
to the extent that any such Damages arise out of or are based upon an untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith, or (ii) any
inaccuracy in or breach of the representations and warranties of the Company
contained in this Agreement or any failure of the Company to perform its
obligations under this Agreement or under law.
Each Selling Stockholder, severally and not jointly, agrees to indemnify
and hold harmless you and each other Underwriter and each person, if any, who
controls any underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all Damages arising out of or
based upon any breach of any representation, warranty, agreement or covenant of
such Selling Stockholder contained in this Agreement or any untrue statement or
alleged untrue statement of a material fact contained in any Prepricing
Prospectus or in the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
17
the statements therein not misleading, but only with respect to information
relating to such Selling Stockholder furnished in writing by or on behalf of
such Selling Stockholder through you expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus. This indemnification
shall be in addition to any liability that any Selling Stockholder may otherwise
have.
In addition to its other obligations under this Section 9, the Company
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
untrue statement or omission, or any inaccuracy in the representations and
warranties of the Company contained in this Agreement or failure to perform its
obligations under this Agreement, all as set forth in this Section 9, it will
reimburse each Underwriter on a quarterly basis for all reasonable legal or
other out-of-pocket expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligation of the Company to reimburse each Underwriter
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the persons from whom it was received,
together with interest compounded daily determined on the basis of the base
lending rate announced from time to time by Chase Manhattan Bank, N.A. (the
"Prime Rate"). Any such interim reimbursement payments which are not made to the
Underwriters within 30 days of a request for reimbursement shall bear interest
at the Prime Rate from the date of such request.
If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
against the Company or any Selling Stockholder, such Underwriter or such
controlling person shall promptly notify in writing the party or parties against
whom indemnification is being sought (the "indemnifying party" or "indemnifying
parties"), and such indemnifying party(s) shall assume the defense thereof,
including the employment of counsel reasonably acceptable to such Underwriter or
such controlling person and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the indemnifying party(s) has (have) agreed in
writing to pay such fees and expenses, (ii) the indemnifying party(s) has (have)
failed to assume the defense and employ counsel reasonably acceptable to the
Underwriter or such controlling person, or (iii) the named parties to any such
action (including any impleaded parties) include both such Underwriter or such
controlling person and the indemnifying party(s), and such Underwriter or such
controlling person shall have been advised by its counsel that one or more legal
defenses may be available to the Underwriter which may be available to the
indemnifying party(s), or that representation of such Underwriter or such
controlling person and the indemnifying party(s) by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party(s) shall not have the right to assume the defense of such action on behalf
of such Underwriter or such controlling person, notwithstanding its obligation
to bear the fees and expenses of such counsel. The indemnifying party(s) shall
not be liable for any settlement of any such action effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, the indemnifying party(s) agrees
to indemnify and hold harmless any Underwriter and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of such
settlement or judgment, but in the case of a judgment only to the extent stated
in the immediately preceding paragraph.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, and its officers who sign the Registration
Statement, and any person who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act,
18
and each Selling Stockholder, to the same extent as the foregoing indemnity from
the Company and each Selling Stockholder to each Underwriter, but only with
respect to information furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any action
or claim shall be brought or asserted against the Company, any of its directors,
any such officers, or any such controlling person or any Selling Stockholder
based on the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph, such
Underwriter shall have the rights and duties given to the Company and the
Selling Stockholders by the preceding paragraph (except that if the Company or
any Selling Stockholder shall have assumed the defense thereof such Underwriter
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Underwriter's expense), and the Company, its directors, any
such officers, and any such controlling persons and the Selling Stockholders
shall have the rights and duties given to the Underwriters by the immediately
preceding paragraph. This indemnification shall be in addition to any liability
the Underwriters or any Underwriter may otherwise have.
If the indemnification provided for in this Section 9 is unavailable or
insufficient for any reason whatsoever to an indemnified party under the first,
second or fifth paragraph of this Section 9 in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then an indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company or the
Selling Stockholders, as applicable, on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company or the Selling Stockholders, as
applicable, on the one hand and the Underwriters on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company or the Selling Stockholders, as
applicable, on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Shares (before deducting expenses) received by the Company or the Selling
Stockholders, as applicable, bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus; provided that, in the event that the
Underwriters shall have purchased any Additional Shares under this Agreement,
any determination of the relative benefits received by the Company or the
Underwriters from the offering of the Shares shall include the net proceeds
(before deducting expenses) received by the Company and the underwriting
discounts and commissions received by the Underwriters from the sale of such
Additional Shares. The relative fault of the Company or the Selling
Stockholders, as applicable, on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Selling Stockholders, as applicable, on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
In any event, neither the Company nor any Selling Stockholder will, without
the prior written consent of the Representatives, settle or compromise or
consent to the entry of any judgment in any proceeding or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
under this Agreement (whether or not the Representatives or any person who
controls the Representatives within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent
19
includes an unconditional release of all Underwriters and such controlling
persons from all liability arising out of such claim, action, suit or
proceeding.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 was
determined by a 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 account of the equitable considerations referred to in the sixth paragraph
of this Section 9. The amount paid or payable to an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
the sixth paragraph of this Section 9 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule I hereto (or such numbers of Firm Shares
increased as set forth in Section 11 of this Agreement) and not joint.
Notwithstanding the foregoing, any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 9 shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity, contribution and reimbursement agreements contained in
this Section 9 and the representations and warranties of the Company and the
Selling Stockholders set forth in this Agreement shall remain operative and in
full force and effect, regardless of (i) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or any person controlling the Company, or any Selling
Stockholder, (ii) acceptance of any Shares and payment therefor hereunder and
(iii) any termination of this Agreement. A successor to any Underwriter or any
person controlling any Underwriter, or to the Company or any Selling
Stockholder, its directors or officers, or any person controlling the Company,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in the third paragraph of this
Section 9, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
pursuant to the Code of Arbitration Procedure of the NASD. Any such arbitration
must be commenced by service of a written demand for arbitration or written
notice of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party responding to said
demand or notice is authorized to do so. Such an arbitration would be limited to
the operation of the interim reimbursement provisions contained in the second
paragraph of this Section 9, and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses which is created by the
provisions of the second paragraph of this Section 9.
10. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares under this Agreement are subject to
the following conditions:
a. The Registration Statement shall have become effective not later
than 12:00 noon, St. Petersburg, Florida time, on the date of this Agreement, or
at such later date and
20
time as shall be consented to in writing by you, and all filings required by
Rules 424(b), 430A and 462 under the Act shall have been timely made; and any
request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction.
b. You shall be reasonably satisfied that since the respective dates as of
which information are given in the Registration Statement and Prospectus, (i)
there shall not have been any change in the capital stock of the Company or any
material change in the indebtedness (other than in the ordinary course of
business) of the Company, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material oral or written agreement
or other transaction shall have been entered into by the Company which is not in
the ordinary course of business or which could reasonably be expected to result
in a material reduction in the future earnings of the Company, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have been
sustained which had or could reasonably be expected to have a Material Adverse
Effect, (iv) no legal or governmental action, suit or proceeding affecting the
Company or any of its properties which is material to the Company or which
affects or could reasonably be expected to affect the transactions contemplated
by this Agreement shall have been instituted or threatened, and (v) there shall
not have been any material change in the condition (financial or otherwise),
business, management, results of operations or prospects of the Company or its
subsidiaries which makes it impractical or inadvisable in your judgment to
proceed with the public offering or purchase the Shares as contemplated hereby.
c. You shall have received on the Closing Date an opinion of Xxxxxxxxx
Xxxxxxxx LLP, counsel to the Company, dated the Closing Date (and the Additional
Closing Date, if any), satisfactory to you and your counsel, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing under the laws of the State of Delaware, with full corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and
the Prospectus (and any amendment or supplement thereto), and is duly
registered or otherwise qualified to conduct its business as a foreign
corporation and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure
to so register or qualify does not have a Material Adverse Effect.
(ii) Each of the Company's subsidiaries is a corporation validly
existing in good standing (or with active status) under the laws of
the jurisdiction of its organization, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus
and any amendment or supplement thereto; and is duly registered and
qualified to conduct its business and is in good standing (or with
active status) in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration
or qualification, except where the failure to so register or qualify
does not have a Material Adverse Effect; and, except as otherwise
disclosed in the Prospectus, all of the outstanding shares of capital
stock of each of the subsidiaries have been duly authorized and
validly issued, and are fully paid and nonassessable, and are owned by
the Company directly, or indirectly through one of the other
subsidiaries, free and clear of any perfected security interest, or to
the knowledge of such counsel after reasonable inquiry, any other
security interest, lien, adverse claim, equity or other encumbrance.
21
(iii) The authorized and the aggregate outstanding capital stock
of the Company is as set forth in the Prospectus under the caption
"Capitalization" and the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock." Except as
set forth in the Prospectus, to the such counsel's knowledge, the
Company is not a party to or bound by any outstanding options,
warrants or similar rights to subscribe for, or contractual
obligations to issue, sell, transfer or acquire, any of its capital
stock or any securities convertible into or exchangeable for any of
such capital stock.
(iv) All shares of capital stock or other securities of the
Company outstanding prior to the issuance of the Shares to be issued
and sold by the Company pursuant to this Agreement, have been duly
authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or, to the knowledge of such counsel,
similar rights that entitle or will entitle any person to acquire any
Shares upon the issuance thereof by the Company, and no such rights
will exist as of the Closing Date.
(v) All offers and sales of the Company's securities heretofore
have been made in compliance in all material respects with the
registration requirements of the Act and other applicable state
securities laws or regulations or applicable exemptions therefrom.
(vi) The Shares to be issued and sold to the Underwriters by the
Company under this Agreement have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in
accordance with the terms of this Agreement, (A) such Shares will be
validly issued, fully paid and nonassessable and free of any
preemptive or, to the knowledge of such counsel, similar rights that
entitle or will entitle any person to acquire any Shares upon the
issuance thereof by the Company, and (B) good, valid and marketable
title to such Shares issued under this Agreement, free and clear of
any claim, encumbrance or defect in title of any nature (other than
any arising by or through the Underwriters), will pass to each
Underwriter that has purchased any portion of such Shares in good
faith and without knowledge of any such claim, encumbrance or defect.
(vii) The form of certificates for the Shares conforms in all
material respects to the requirements of the applicable corporate laws
of the State of Delaware.
(viii) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission.
(ix) The Company has all requisite corporate power and authority
to enter into this Agreement and to issue, sell and deliver the Shares
to be sold by it to the Underwriters as provided in this Agreement,
and this Agreement has been duly authorized, executed and delivered by
the Company and is a valid, legal and binding agreement of the Company
enforceable against the Company in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally or
by general equitable principles,
22
and except to the extent enforceability of the provisions relating to
indemnity and contribution for liabilities under the Act may be
limited by or under the Act.
(x) Neither the Company nor any of the subsidiaries is in
violation of its certificate of incorporation or bylaws, and, to the
knowledge of such counsel, the Company is not in default in the
performance of any obligation, agreement or condition contained in any
bond, indenture, note or other evidence of indebtedness or any other
agreement or obligation of the Company, where the default would have,
individually or in the aggregate, a Material Adverse Effect.
(xi) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, compliance by
the Company with all provisions of this Agreement nor consummation by
the Company of the transactions contemplated hereby (A) conflicts or
will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate of incorporation or bylaws of the
Company or any material agreement, indenture, lease or other
instrument known to such counsel to which the Company is a party or by
which any of its properties is bound, (B) creates or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company, or (C) violates or will result in
any violation of any existing law, statute, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree which is known to such
counsel and applicable to the Company or any of its properties.
(xii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
is required on the part of the Company (except such as have been
obtained under the Act or such as may be required under state
securities or Blue Sky laws governing the purchase and distribution of
the Shares) for the valid issuance and sale of the Shares to the
Underwriters under this Agreement.
(xiii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements
and the notes and the schedules thereto and other financial and
statistical data included therein, as to which such counsel need not
express any opinion) comply as to form in all material respects with
the requirements of the Act. Without limiting the generality of the
foregoing, any Rule 434 Prospectus conforms in all material respects
with the requirements of Rule 434 under the Act.
(xiv) To the knowledge of such counsel, (A) there are no legal
or governmental proceedings pending or threatened against the Company
or any of its subsidiaries or to which the Company or any of its
subsidiaries or any of their respective properties is subject, that
are required to be described in the Registration Statement or
Prospectus or any amendment or supplement thereto that are not
described as required therein, and (B) there are no agreements,
contracts, indentures, leases or other instruments that are required
to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to or incorporated by reference in the
Registration Statement that are not described or filed or incorporated
by reference as required, as the case may be.
(xv) The properties described in the Prospectus as held under
lease by the Company or any subsidiary are held under duly executed
leases.
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(xvi) Such counsel has reviewed all agreements, contracts,
indentures, leases or other documents or instruments described or
referred to in the Registration Statement and the Prospectus (other
than routine contracts entered into by the Company or any subsidiary
for the purchase of materials or the sale of products entered into in
the normal course of business, although such counsel has reviewed the
forms of such routine contracts), and such agreements, contracts (and
forms of contracts), indentures, leases or other documents or
instruments are fairly summarized or disclosed in all material
respects therein, and filed or incorporated by reference as exhibits
thereto as required, and such counsel does not know of any agreements,
contracts, indentures, leases or other documents or instruments
required to be so summarized or disclosed or filed or incorporated by
reference which have not been so summarized or disclosed or filed or
incorporated by reference.
(xvii) The descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings, insofar as they
purport to summarize certain of the provisions thereof, are accurate
in all material respects and fairly present the information required
to be presented by the Act and the rules and regulations thereunder.
(xviii) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(xix) To the knowledge of such counsel, the Company and its
subsidiaries have such permits, licenses, franchises, approvals,
consents and authorizations of governmental or regulatory authorities,
as are necessary for the Company and its subsidiaries to own their
properties and to conduct their business in the manner described in
the Prospectus, except where the failure to have such permits would
not individually or in the aggregate have a Material Adverse Effect.
d. You shall have received on the Closing Date an opinion of
_________________, counsel for the Selling Stockholders, dated the Closing
Date satisfactory to you and your counsel, to the effect that:
(i) Each Selling Stockholder that is not a natural person has
full right, power and authority to enter into and to perform its
obligations under the Power of Attorney and Custody Agreement to be
executed and delivered by it in connection with the transactions
contemplated in this Agreement; the Power of Attorney and Custody
Agreement of each Selling Stockholder that is not a natural person has
been duly authorized by such Selling Stockholder, has been duly
executed and delivered by or on behalf of such Selling Stockholder;
and the Power of Attorney and Custody Agreement of each Selling
Stockholder constitutes the valid and binding agreement of such
Selling Stockholder, enforceable in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles;
(ii) Each of the Selling Stockholders has full right, power and
authority to enter into and to perform its obligations under this
Agreement and to sell, transfer, assign and deliver the Shares to be
sold by such Selling Stockholder under this Agreement;
24
(iii) This Agreement has been duly authorized by each Selling
Stockholder that is not a natural person and has been duly executed
and delivered by or on behalf of each Selling Stockholder and,
assuming due authorization, execution and delivery by you, is a valid
and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except insofar as the indemnification and
contribution provisions under this Agreement may be limited by
applicable law and except as the enforcement of this Agreement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or
by general equitable principles;
(iv) Upon the delivery of and payment for the Shares as
contemplated in this Agreement, each of the Underwriters will receive
valid marketable title to the Shares purchased by it from such Selling
Stockholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest. In rendering such opinion,
such counsel may assume that the Underwriters are without notice of
any defect in the title of any of such Selling Stockholders to the
Shares being purchased from such Selling Stockholders;
In rendering such opinion, in each case where such opinion is qualified by
"the knowledge of such counsel" or "known to such counsel", such counsel may
rely as to matters of fact upon certificates of executive and other officers and
employees of the Company as you and such counsel shall deem are appropriate and
such other procedures as you and such counsel shall mutually agree; provided,
however, in each such case, such counsel shall, state that it has no knowledge
contrary to the information contained in such certificates or developed by such
procedures and knows of no reason why you should not reasonably rely upon the
information contained in such certificates or developed by such procedures. Such
counsel may state in such opinion that its knowledge is limited to the knowledge
of its attorneys and other representatives and employees that have given
attention to the Company's matters in connection with the transactions
contemplated by this Agreement.
In addition to the opinion set forth above, such counsel shall state that
during the course of their participation in the preparation of the Registration
Statement and the Prospectus as amended and supplemented as of a date of the
opinion, nothing has come to the attention of such counsel which has caused them
to believe or given them reason to believe that the Registration Statement or
the Prospectus or any amendment or supplement thereto (except for the financial
statements and other financial and statistical information contained therein or
omitted therefrom as to which no opinion need be expressed), at the date
thereof, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Registration Statement or the Prospectus or
any amendment or supplement thereto as of the date of the opinion (except as
aforesaid), contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. With respect to such
statement, counsel shall state that although such counsel did not undertake to
determine independently the accuracy, completeness and fairness of the
statements contained in the Registration Statement or in the Prospectus and
takes no responsibility therefor (except to the extent specifically set forth in
this Agreement), such counsel did participate in discussions and meetings with
officers and other representatives of the Company and discussions with the
auditor for the Company in connection with the preparation of the Registration
Statement and the Prospectus, and it is on the basis of the foregoing (relying
as to certain factual matters on the information provided to such counsel and
not on an independent investigation) that such counsel is making such statement.
e. You shall have received on the Closing Date an opinion of Holland
& Knight LLP, as counsel for the Underwriters, dated the Closing Date with
respect to the issuance and sale of the Shares, the Registration Statement
and other related matters as you may
25
reasonably request, and the Company and its counsel shall have furnished to
your counsel such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.
f. You shall have received letters addressed to you and dated the
date of this Agreement and the Closing Date from (i) the firm of Xxxxxx
Xxxxxxxx LLP, independent certified public accountants, and (ii) the Chief
Financial Officer of the Company, substantially in the forms heretofore
approved by you.
g. (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or, to the knowledge of the Company, shall be
threatened or contemplated by the Commission at or prior to the Closing
Date; (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending or, to the knowledge of the
Company, threatened or contemplated by the Commission or the authorities of
any jurisdiction; (iii) any request for additional information on the part
of the staff of the Commission or any such authorities shall have been
complied with to the satisfaction of the staff of the Commission or such
authorities; (iv) after the date of this Agreement no amendment or
supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to you and you did not
object thereto in good faith; and (v) all of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects on and as of the date of this Agreement and on and
as of the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by the
chief executive officer and the chief financial officer of the Company (or
such other officers as are acceptable to you) to the effect set forth in
this Section 10(g) and in Sections 10(b) and 10(h) of this Agreement.
h. The Company shall not have failed in any material respect at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with
by it under this Agreement at or prior to the Closing Date.
i. The Company shall have furnished or caused to have been furnished
to you such further certificates and documents as you shall have reasonably
requested.
j. You shall be satisfied that, and you shall have received a
certificate dated the Closing Date, from the Attorneys for each Selling
Stockholder to the effect that as of the Closing Date, they have not been
informed that: (i) the representations and warranties made by such Selling
Stockholder herein are not true or correct in any material respect on the
Closing Date; or (ii) such Selling Stockholder has not complied with any
obligation or satisfied any condition which is required to be performed or
satisfied on his or its part at or prior to the Closing Date.
k. The Company and the Selling Stockholders shall have furnished or
cause to have been furnished to you such further certificates and documents
as you shall have reasonably requested.
l. At or prior to the Closing Date, you shall have received the
written commitment of each of the Company's officers, directors and
stockholders set forth on Schedule III hereto, not to (i) directly or
indirectly sell, offer or contract to sell, or otherwise dispose of or
transfer any shares of Company Securities owned or controlled by such
persons now or hereafter or
26
any rights to purchase Company Securities, before the expiration of the
Restriction Period, without your prior written consent or except as
otherwise provided herein, or (ii) exercise or seek to exercise or
effectuate in any manner any rights of any nature that such persons have or
may hereafter have to require the Company to register under the Act any
such person's sale, transfer or other disposition of any Company Securities
or other securities of the Company held by any such persons, or to
otherwise participate as a selling securityholder in any manner in any
registration effected by the Company under the Act, including the
registration to which this Agreement relates, before the expiration of the
Restriction Period.
m. At or prior to the effective date of the Registration Statement,
you shall have received a letter from the Corporate Financing Department of
the NASD confirming that such Department has determined to raise no
objections with respect to the fairness or reasonableness of the
underwriting terms and arrangements of the offering contemplated hereby.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions of this Agreement only if they are reasonably
satisfactory in form and substance to you and your counsel.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction on and as of the Additional Closing
Date of the conditions set forth in this Section 10, except that, if the
Additional Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c), (e) through (i) and (k)
shall be dated as of the Additional Closing Date and the opinions called for by
paragraphs (c) and (e) shall be revised to reflect the sale of Additional
Shares.
If any of the conditions hereinabove provided for in this Section 10 shall
not have been satisfied when and as required by this Agreement, this Agreement
may be terminated by you by notifying the Company of such termination in writing
at or prior to such Closing Date, but you shall be entitled to waive any of such
conditions.
11. Effective Date of Agreement. This Agreement shall become effective
upon the later of (a) the execution and delivery of this Agreement by the
parties, and (b) release of notification of the effectiveness of the
Registration Statement by the Commission; provided, however, that the provisions
of Sections 8 and 9 shall at all times be effective.
If any one or more of the Underwriters shall fail or refuse to purchase
Firm Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Shares, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I of this Agreement bears to the
aggregate number of Firm Shares set forth opposite the names of all non-
defaulting Underwriters or in such other proportion as you may specify in the
Agreement Among Underwriters, to purchase the Firm Shares which such defaulting
Underwriter or Underwriters agreed, but failed or refused to purchase. If any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the
aggregate number of Firm Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Shares and arrangements
satisfactory to you and the Company for the purchase of such Firm Shares are not
made within 48 hours after such default, this Agreement will terminate without
liability on the party of any non-defaulting Underwriter or the Company. In any
such case which does not result in termination of this Agreement, either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be
27
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement.
12. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or the Additional Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, in your sole judgment,
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or Nasdaq, (ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or Nasdaq shall have been suspended or
materially limited, or minimum or maximum prices shall have been generally
established on such exchange, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon trading
in securities generally by any such exchange or by order of the Commission or
any court or other governmental authority (iii) a general moratorium on
commercial banking activities shall have been declared by either federal,
Florida or New York authorities (iv) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions or other material event
the effect of which on the financial markets of the United States is such as to
make it, in your judgment, impracticable or inadvisable to market the Shares or
to enforce contracts for the sale of the Shares or (v) the Company or any
subsidiary shall have, in the sole judgment of the Representatives, sustained
any loss or interference, material to the Company and its subsidiaries, taken as
a whole, with their respective businesses or properties from fire, flood,
hurricane, accident, or other calamity, whether or not covered by insurance, or
from any labor disputes or any legal or governmental proceeding, or there shall
have been any material adverse change (including, without limitation, a material
change in management or control of the Company) in the condition (financial or
otherwise), business prospects, net worth, or results of operations of the
Company and its subsidiaries, taken as a whole, except in each case as described
in, or contemplated by, the Prospectus (excluding any amendment or supplement
thereto). Notice of such cancellation shall be promptly given to the Company and
its counsel by telegraph, telecopy or telephone and shall be subsequently
confirmed by letter.
All representations, warranties, covenants and agreements of the Company
and the Selling Stockholders in this Agreement or in certificates delivered
pursuant hereto, and the indemnity and contribution agreements contained in
Section 9 of this Agreement 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, or by or on behalf of the Company or any Selling
Stockholder, or any of their officers, directors or controlling persons, and
shall survive the delivery of the Shares to the several Underwriters hereunder
or termination of this Agreement.
13. Information Furnished by the Underwriters. The Company acknowledges
that the fifth, seventh, eighth, ninth and tenth paragraphs under the caption
"Underwriting" in any Prepricing Prospectus and in the Prospectus, constitute
the only information furnished by or on behalf of the Underwriters through you
or on your behalf as such information is referred to in Sections 6(b) and 9 of
this Agreement.
14. Miscellaneous. Except as otherwise provided in Sections 5 and 12 of
this Agreement, notice given pursuant to any of the provisions of this Agreement
shall be in writing and shall be delivered (i) if to the Company to the office
of the Company at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000,
Attention: X. Xxxx Xxxxxxxxx, III (with copy to Xxxxxxxxx Xxxxxxxx LLP, Xxx
Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000-0000, Attention: Xxxx
X. Xxxxxx, Xx., Esq.), or (ii) if to you, as Representative of the Underwriters,
to Xxxxxxx Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx,
Xxxxxxx 00000, Attention: Xxxxx X. Xxxxxxx, Managing Director (with copy to
Holland & Knight LLP, 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq.); or (iii) if to one or more of the Selling
Stockholders, to
28
__________________, as Attorney for the Selling Stockholders, at
____________________________________________________.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, its directors and officers and the other controlling
persons referred to in Section 9 of this Agreement, and the Selling
Stockholders, and their respective successors and assigns, to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue or this Agreement. Neither of the terms "successor" and
"successors and assigns" as used in this Agreement shall include a purchaser
from you of any of the Shares in his status as such purchaser.
15. Applicable Law: Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without reference
to choice of law principles thereunder.
16. Jury Trial Waiver. The Company and the Underwriters each hereby
irrevocably waive any right they may have to a trial by jury in respect to any
claim based upon or arising out of this Agreement or the transactions
contemplated by this Agreement.
17. Counterparts. This Agreement may be signed in various counterparts
which together shall constitute one and the same instrument. This Agreement
shall be effective when, but only when, at least one counterpart of this
Agreement shall have been executed on behalf of each party hereto.
29
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours.
D&K HEALTHCARE RESOURCES, INC.
By:
______________________________________________
X. Xxxx Xxxxxxxxx
Chairman of the Board and
Chief Executive Officer
SELLING STOCKHOLDERS
By:
______________________________________________
Attorney-in-Fact for the Selling Stockholders
named in Schedule II hereto
CONFIRMED as of the date first above mentioned,
on behalf of the Representatives and the other several
Underwriters named in Schedule I hereto.
XXXXXXX XXXXX & ASSOCIATES, INC.
By:
_________________________________________
Xxxxx X. Xxxxxxx
Authorized Representative
30
SCHEDULE I
Number of
Name Firm Shares
--------------------------------------------------------------- -----------
Xxxxxxx Xxxxx & Associates, Inc................................
X.X. Xxxxxxx & Sons, Inc.......................................
-----------
TOTAL..........................................................
31
SCHEDULE II
SELLING SHAREHOLDERS
Name Number of Shares
---- ----------------
Xxxxxx X. Xxxxxx, XX 277,778
J. Xxxxx XxXxx 180,000
MassMutual Corporate Investors 87,500
Massachusetts Mutual Life Insurance Company 87,500
32
SCHEDULE III
LOCK-UP AGREEMENTS
Xxxx Xxxx Xxxxxxxxx
Xxxxxxx R. Xxxxxxxx
Xxxxxx X. Xxxxxx, XX
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxx
Massachusetts Mutual Life Insurance Company
Massachusetts Mutual Corporate Investors
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
33
