1
DRAFT
Exhibit 1.1
1,526,250 Shares
Insight Enterprises, Inc.
Common Stock
UNDERWRITING AGREEMENT
October __, 1996
XXXXXXXXXX SECURITIES
LAZARD FRERES & CO. LLC
XXXXX XXXXXXX INC.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Ladies and Gentlemen:
SECTION 1. Introductory. Insight Enterprises, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell 1,000,000 shares of its
authorized but unissued Common Stock, par value $.01 per share (the "Common
Stock"), and certain stockholders of the Company named in Schedule B annexed
hereto (the "Selling Stockholders") propose to sell an aggregate of 526,250
shares of the Company's issued and outstanding Common Stock to the several
underwriters named in Schedule A annexed hereto (the "Underwriters"), for whom
you are acting as Representatives. Said aggregate of 1,526,250 shares are herein
called the "Firm Common Shares." In addition, the Company and certain Selling
Stockholders propose to grant to the Underwriters an option to purchase up to
228,938 additional shares of Common Stock (the "Optional Common Shares"), as
provided in Section 5 hereof. The Firm Common Shares and, to the extent such
option is exercised, the Optional Common Shares are hereinafter collectively
referred to as the "Common Shares."
You have advised the Company and the Selling Stockholders that
the Underwriters propose to make a public offering of their respective portions
of the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
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The Company and each of the Selling Stockholders hereby
confirm(s) their respective agreements with respect to the purchase of the
Common Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company and
the Selling Stockholders. The Company and each of the Selling Stockholders
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-_______) with respect to the Common Shares has been prepared by the
Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. The
Company has prepared and has filed or proposes to file prior to the
effective date of such registration statement an amendment or
amendments to such registration statement, which amendment or
amendments have been or will be similarly prepared. There have been
delivered to you two signed copies of such registration statement and
amendments, together with two copies of each exhibit filed therewith.
Conformed copies of such registration statement and amendments (but
without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested
for each of the Underwriters. The Company will next file with the
Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form
of final prospectus, (ii) a final prospectus in accordance with Rules
430A and 424(b) of the Rules and Regulations, or (iii) a term sheet
(the "Term Sheet") as described in and in accordance with Rules 434 and
424(b) of the Rules and Regulations. As filed, the final prospectus, if
one is used, or the Term Sheet and Preliminary Prospectus (as
hereinafter defined), if a final prospectus is not used, shall include
all Rule 430A Information (as hereinafter defined) and, except to the
extent that you shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to you prior to the date
and time that this Agreement was executed and delivered by the parties
hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus (as
hereinafter defined)) as the Company shall have previously advised you
in writing would be included or made therein.
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The term "Registration Statement" as used in this
Agreement shall mean such registration statement at the time such
registration statement becomes effective and, in the event any
post-effective amendment thereto becomes effective prior to the First
Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such term
shall also include (i) all Rule 430A Information deemed to be included
in such registration statement at the time such registration statement
becomes effective as provided by Rule 430A of the Rules and Regulations
and (ii) a registration statement, if any, filed pursuant to Rule
462(b) of the Rules and Regulations relating to the Common Shares. The
term "Preliminary Prospectus" shall mean any preliminary prospectus
referred to in the preceding paragraph and any preliminary prospectus
included in the Registration Statement at the time it becomes effective
that omits Rule 430A Information. The term "Prospectus" as used in this
Agreement shall mean either (i) the prospectus relating to the Common
Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, or (ii) if a Term
Sheet is not used and no filing pursuant to Rule 424(b) of the Rules
and Regulations is required, the form of final prospectus included in
the Registration Statement at the time such registration statement
becomes effective, or (iii) if a Term Sheet is used, the Term Sheet in
the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations, together with the Preliminary
Prospectus included in the Registration Statement at the time it
becomes effective. The term "Rule 430A Information" means information
with respect to the Common Shares and the offering thereof permitted to
be omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the Rules and Regulations. Any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein
pursuant to Form S-3 under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus, and
each Preliminary Prospectus has conformed in all material respects to
the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to
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and including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements
thereto, will contain all material statements and information required
to be included therein by the Act and the Rules and Regulations and
will in all material respects conform to the requirements of the Act
and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, no representation
or warranty contained in this subsection 2(b) shall be applicable to
information contained in or omitted from any Preliminary Prospectus,
the Registration Statement, the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter, directly
or through the Representatives, specifically for use in the preparation
thereof. The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder, and none of such documents 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.
(c) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than
Insight Direct, Inc., ITA, Inc., Direct Alliance Corporation, B&M
Distributing, Inc., Insight Credit Corporation and Insight Distribution
Network International, Inc. The Company and each of its subsidiaries
have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, with full power and authority (corporate and other) to
own and lease their properties and conduct their respective businesses
as described in the Prospectus; the Company owns all of the outstanding
capital stock of its subsidiaries free and clear of all claims, liens,
charges and encumbrances; the Company and each of its subsidiaries are
in possession of and operating in all material respects in compliance
with all authorizations, licenses, permits, consents, certificates and
orders material to the conduct of their respective businesses, all of
which are valid and in full force and effect; the Company and each of
its subsidiaries are duly qualified to do business and in good standing
as foreign corporations in each jurisdiction in which the ownership or
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leasing of properties or the conduct of their respective businesses
requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect upon the
Company and its subsidiaries, taken as a whole; and no proceeding has
been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) The Company has an authorized and outstanding
capital stock as set forth under the heading "Capitalization" in the
Prospectus; the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable,
are duly listed on the Nasdaq National Market under the symbol NSIT,
have been issued in compliance with all federal and state securities
laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and
conform to the description thereof contained in the Prospectus. All
issued and outstanding shares of capital stock of each subsidiary of
the Company have been duly authorized and validly issued and are fully
paid and nonassessable. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related
notes thereto, included or incorporated in the Prospectus, neither the
Company nor any subsidiary has outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase,
any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights.
(e) The Common Shares to be sold by the Company have
been duly authorized and, when issued, delivered and paid for in the
manner set forth in this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, and will conform to the
description thereof contained in the Prospectus. No preemptive rights
or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Common Shares by the Company pursuant to this
Agreement. No stockholder of the Company has any right which has not
been waived to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering
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contemplated by this Agreement. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required
for the transfer and sale of the Common Shares to be sold by the
Selling Stockholders or the issuance and sale of the Common Shares to
be sold by the Company as contemplated herein.
(f) The Company has full legal right, power and
authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding
obligation of the Company in accordance with its terms. The making and
performance of this Agreement by the Company and the consummation of
the transactions herein contemplated will not violate any provisions of
the certificate of incorporation or bylaws, or other organizational
documents, of the Company or any of its subsidiaries, and will not
conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a
default under any material agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of its respective properties may be
bound or affected, any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the
Company or any of its subsidiaries or any of their respective
properties. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement,
except for compliance with the Act, the Blue Sky laws applicable to the
public offering of the Common Shares by the several Underwriters and
the clearance of such offering with the National Association of
Securities Dealers, Inc. (the "NASD").
(g) To the Company's knowledge, KPMG Peat Marwick
LLP, who have expressed their opinion with respect to the financial
statements and schedules filed with the Commission and incorporated by
reference as a part of the Registration Statement, are independent
accountants as required by the Act and the Rules and Regulations. The
phrase, "to the Company's knowledge," or similar statements, as used in
Section 2 hereof, shall mean the actual knowledge of the Company's
executive officers and directors who are named under the caption
"Management" in the Prospectus, and, with
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respect to a representation and warranty, such other persons within the
Company responsible for such matters.
(h) The consolidated financial statements and
schedules of the Company, and the related notes thereto, incorporated
by reference into the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the respective dates
of such financial statements and schedules, and the results of
operations and changes in financial position of the Company for the
respective periods covered thereby. Such statements, schedules and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by the
independent accountants named in subsection 2(g). No other financial
statements or schedules are required to be included in the Registration
Statement. The selected financial data set forth in the Prospectus
under the captions "Capitalization" and "Selected Consolidated
Financial and Operating Data" fairly present the information set forth
therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except
as to defaults which individually or in the aggregate would not be
material to the Company, neither the Company nor any of its
subsidiaries is in violation or default in any material respect of any
provision of its certificate of incorporation or bylaws, or other
organizational documents, or is in breach of or default with respect to
any provision of any material agreement, judgment, decree, order,
mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which it is a party or by which it or any of its
properties are bound; and, to the Company's knowledge, there does not
exist any state of facts which constitutes an event of default on the
part of the Company or any such subsidiary as defined in such documents
or which, with notice or lapse of time or both, would constitute such
an event of default.
(j) There are no contracts or other documents
required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement by the Act or by the Rules
and Regulations which have not been described or filed as required. The
contracts so described in the Prospectus are in full force and effect
on the date hereof; and neither the Company nor any of its
subsidiaries, nor to the Company's knowledge, any other party is in
breach of or default under any of such contracts.
(k) There are no legal or governmental actions, suits
or proceedings pending or, to the Company's knowledge,
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overtly threatened to which the Company or any of its subsidiaries is
or may be a party or of which property owned or leased by the Company
or any of its subsidiaries is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or
proceedings might, individually or in the aggregate, prevent or
adversely affect the transactions contemplated by this Agreement or
result in a material adverse change in the condition (financial or
otherwise), properties, business, results of operations or prospects of
the Company and its subsidiaries, taken as a whole; and no labor
disturbance by the employees of the Company or any of its subsidiaries
exists or, to the Company's knowledge, is imminent which might be
expected to materially adversely affect such condition, properties,
business, results of operations or prospects. Neither the Company nor
any of its subsidiaries is a party or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body.
(l) The Company or the applicable subsidiary has good
and marketable title to all the properties and assets reflected as
owned in the financial statements hereinabove described (or elsewhere
in the Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such
financial statements (or elsewhere in the Prospectus), or (ii) those
which are not material in amount and do not adversely affect in any
material respect the use made and proposed to be made of such property
by the Company and its subsidiaries. The Company or the applicable
subsidiary holds its leased properties under valid and binding leases,
with such exceptions as are not materially significant in relation to
the business of the Company. Except as disclosed in the Prospectus, the
Company owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted.
(m) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as described in or specifically contemplated by the Prospectus:
(i) the Company and its subsidiaries have not incurred any material
liabilities or obligations, indirect, direct or contingent, or entered
into any material verbal or written agreement or other material
transaction which is not in the ordinary course of business or other
transaction which could result in a material reduction in the future
earnings of the Company and its subsidiaries on a consolidated basis;
(ii) the Company and its subsidiaries have not sustained any material
loss or
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interference with their respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock and the Company
and its subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been
any change in the capital stock (other than upon the sale of the Common
Shares hereunder and upon the exercise of options and warrants
described in the Registration Statement) or indebtedness material to
the Company and its subsidiaries (other than in the ordinary course of
business); and (v) there has not been any material adverse change in
the condition (financial or otherwise), business, properties, results
of operations or prospects of the Company and its subsidiaries, taken
as a whole.
(n) Except as disclosed in or specifically
contemplated by the Prospectus, the Company and its subsidiaries have
sufficient trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as now conducted; the expiration of any
trademarks, trade names, patent rights, mask works, copyrights,
licenses, approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company or its
subsidiaries, taken as a whole; and the Company has no knowledge of any
material infringement by it or its subsidiaries of trademark, trade
name rights, patent rights, mask works, copyrights, licenses, trade
secret or other similar rights of others, and there is no claim being
made against the Company or its subsidiaries regarding trademark, trade
name, patent, mask work, copyright, license, trade secret or other
infringement which could have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company and its subsidiaries, taken as a whole.
(o) The Company has not been advised, and has no
knowledge that either it or any of its subsidiaries is not conducting
business in compliance with all applicable laws, rules and regulations
of the jurisdictions in which it is conducting business, including,
without limitation, all applicable local, state and federal
environmental laws and regulations, except where failure to be so in
compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects
of the Company and its subsidiaries, taken as a whole.
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(p) The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns,
or have obtained extensions of time for the filing thereof, and have
paid all taxes shown as due thereon; and the Company has no knowledge
of any tax deficiency which has been asserted or overtly threatened
against the Company or its subsidiaries which could materially and
adversely affect the business, operations or properties of the Company
and its subsidiaries, taken as a whole.
(q) The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not
distribute prior to the First Closing Date any offering material in
connection with the offering and sale of the Common Shares other than
the Prospectus, the Registration Statement and the other materials
permitted by the Act.
(s) Each of the Company and its subsidiaries
maintains insurance of the types and in the amounts generally deemed
adequate for its business, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction, acts of vandalism
and all other risks as the Company's management deems appropriate, all
of which insurance is in full force and effect.
(t) Neither the Company nor any of its subsidiaries
has at any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose
fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or 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 of any
jurisdiction thereof.
(u) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of
the Common Shares.
(v) The Common Stock has been approved for quotation
on the Nasdaq National Market upon notice of issuance.
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(w) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person or
affiliate located in Cuba in violation of Section 517.075 of the
Florida Statutes.
SECTION 3. Representations, Warranties and Covenants of the
Selling Stockholders.
(a) Each of the Selling Stockholders represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has (or with
respect to the warrants and options exercised by such Selling
Stockholder in connection with his sale of Common Stock
hereunder, has rights to acquire upon exercise thereof), and
on the First Closing Date and the Second Closing Date
hereinafter mentioned will have, good and marketable title to
the Common Shares proposed to be sold by such Selling
Stockholder hereunder on such Closing Date and full right,
power and authority to enter into this Agreement and to sell,
assign, transfer and deliver such Common Shares hereunder,
free and clear of all voting trust arrangements, liens,
encumbrances, equities, security interests, restrictions and
claims whatsoever; and upon delivery of and payment for such
Common Shares hereunder, the Underwriters will acquire good
and marketable title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever.
(ii) Such Selling Stockholder has executed
and delivered a Power of Attorney and caused to be executed
and delivered on his behalf a Custody Agreement (hereinafter
collectively referred to as the "Stockholders Agreement") and
in connection herewith such Selling Stockholder further
represents, warrants and agrees that such Selling Stockholder
has deposited in custody, under the Stockholders Agreement,
with the agent named therein (the "Agent") as custodian,
certificates in negotiable form for the Common Shares to be
sold hereunder by such Selling Stockholder or warrant or
option agreement that when exercised on the First or Second
Closing Date will be exchanged for certificates in negotiable
form for the Common Shares, for the purpose of further
delivery pursuant to this Agreement. Such Selling Stockholder
agrees that the Common Shares to be sold by such Selling
Stockholder are subject to the interests of the Company and
the
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Underwriters, that the arrangements made for custody of such
Common Shares are to that extent irrevocable, and that the
obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the
Stockholders Agreement, by any act of such Selling
Stockholder, by operation of law, by the death or incapacity
of such Selling Stockholder or by the occurrence of any other
event. If the Selling Stockholder should die or become
incapacitated, or if any other event should occur, before the
delivery of the Common Shares hereunder, the documents
evidencing Common Shares then on deposit with the Agent shall
be delivered by the Agent in accordance with the terms and
conditions of this Agreement as if such death, incapacity or
other event had not occurred, regardless of whether or not the
Agent shall have received notice thereof. This Agreement and
the Stockholders Agreement have been duly executed and
delivered by or on behalf of such Selling Stockholder and the
form of such Stockholders Agreement has been delivered to you.
(iii) The performance of this Agreement and
the Stockholders Agreement and the consummation of the
transactions contemplated hereby and by the Stockholders
Agreement will not result in a breach or violation by such
Selling Stockholder of any of the terms or provisions of, or
constitute a default by such Selling Stockholder under, any
indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other
agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any of its
properties is bound, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency
or body applicable to such Selling Stockholder or any of its
properties.
(iv) Such Selling Stockholder has not taken
and will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the
sale or resale of the Common Shares.
(v) Each Preliminary Prospectus and the
Prospectus, insofar as it has related to such Selling
Stockholder, has conformed in all material respects to the
requirements of the Act and the Rules and Regulations and has
not included any untrue statement
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of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading in
light of the circumstances under which they were made; and
neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as it relates to such Selling
Stockholder, will include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
(b) Each of the Selling Stockholders agrees with the
Company and the Underwriters not to offer to sell, sell or contract to
sell or otherwise dispose of any shares of Common Stock or securities
convertible into or exchangeable for any shares of Common Stock, for a
period of 120 days after the first date that any of the Common Shares
are released by you for sale to the public, without the prior written
consent of Xxxxxxxxxx Securities, which consent may be withheld at the
sole discretion of Xxxxxxxxxx Securities.
SECTION 4. Representations and Warranties of the Underwriters.
The Representatives, on behalf of the several Underwriters, represent and
warrant to the Company and to the Selling Stockholders that the information set
forth (i) on the cover page of the Prospectus with respect to price,
underwriting discounts and commissions and terms of offering and (ii) under
"Underwriting" in the Prospectus was furnished to the Company by and on behalf
of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all material
respects. The Representatives represent and warrant that they have been
authorized by each of the other Underwriters as the Representatives to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, (i) the Company agrees
to issue and sell to the Underwriters 1,000,000 of the Firm Common Shares, and
(ii) the Selling Stockholders agree, severally and not jointly, to sell to the
Underwriters in the respective amounts set forth in Schedule B hereto, an
aggregate of 526,250 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholders, respectively, the number of Firm Common Shares described below.
The purchase price per share to be paid by the several Underwriters to the
Company and to the Selling Stockholders, respectively, shall be $_________ per
share.
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The obligation of each Underwriter to the Company shall be to
purchase from the Company that number of full shares which (as nearly as
practicable, as determined by you) bears to 1,000,000 the same proportion as the
number of shares set forth opposite the name of such Underwriter in Schedule A
hereto bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholders shall be to purchase from the Selling
Stockholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 526,250 the same proportion as the number of shares
set forth opposite the name of such Underwriter in Schedule A hereto bears to
the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be
purchased by the Underwriters and payment therefor shall be made at the offices
of Xxxxxxxxxx Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or
such other place as may be agreed upon by the Company and the Representatives)
at such time and date, not later than the third (or, if the Firm Common Shares
are priced, as contemplated by Rule 15c6-1(c) of the Exchange Act, after 4:30
P.M. Washington D.C. Time, the fourth) full business day following the first
date that any of the Common Shares are released by you for sale to the public,
as you shall designate by at least 48 hours' prior notice to the Company (or at
such other time and date, not later than one week after such third or fourth, as
the case may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that any
of the Common Shares are released by you for sale to the public (as set forth
above) or the date that is 48 hours after the date that the Prospectus has been
so recirculated.
Delivery of certificates for the Firm Common Shares shall be
made by or on behalf of the Company and the Selling Stockholders to you, for the
respective accounts of the Underwriters with respect to the Firm Common Shares
to be sold by the Company and by the Selling Stockholders against payment by
you, for the accounts of the several Underwriters, of the purchase price
therefor by certified or official bank checks payable in next day funds to the
order of the Company and of the Agent in proportion to the number of Firm Common
Shares to be sold by the Company and the Selling Stockholders, respectively. The
certificates for the Firm Common Shares shall be registered in such names and
denominations as you shall have requested at least two full business days prior
to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First Closing Date at a location in
14.
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Xxx Xxxx, Xxx Xxxx, as may be designated by you. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company and certain Selling Stockholders identified on Schedule B
hereby grant an option to the several Underwriters to purchase, severally and
not jointly, up to an aggregate of 228,938 Optional Common Shares (168,938 of
such Optional Common Shares by the Company and 66,000 of such Optional Common
Shares by said Selling Stockholders as set forth on Schedule B) at the purchase
price per share to be paid for the Firm Common Shares, for use solely in
covering any over-allotments made by you for the account of the Underwriters in
the sale and distribution of the Firm Common Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the first date that any of the Common Shares are released by you for sale
to the public, upon written notice by you to the Company and said Selling
Stockholders, setting forth the aggregate number of Optional Common Shares as to
which the Underwriters are exercising the option, the names and denominations in
which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Company and
said Selling Stockholders pursuant to such notice of exercise by a fraction, the
numerator of which is the number of Firm Common Shares to be purchased by such
Underwriter as set forth opposite its name in Schedule A and the denominator of
which is 1,526,250 (subject to such adjustments to eliminate any fractional
share purchases as you in your discretion may make). Certificates for the
Optional Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment for and delivery of the
Optional Common Shares shall be the same as for the Firm Common Shares purchased
from the Company and said Selling Stockholders as specified in the two preceding
paragraphs. At any time before lapse of the option, you may cancel such option
by giving written notice of such cancellation to the Company and said Selling
Stockholders. Notwithstanding the foregoing, in the event that the Registration
Statement is amended or the Prospectus is supplemented between
15.
16
the date hereof and any Closing Date, the Underwriters shall have the right to
delay the Closing Date to a date which will allow the Underwriters the time
necessary to distribute the Prospectus as amended or supplemented.
You have advised the Company and the Selling Stockholders that
each Underwriter has authorized you to accept delivery of its Common Shares, to
make payment and to receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the Common
Shares as soon after the effective date of the Registration Statement as in the
judgment of the Representatives is advisable and at the public offering price
set forth on the cover page of and on the terms set forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause
the Registration Statement and any amendment thereof, if not effective
at the time and date that this Agreement is executed and delivered by
the parties hereto, to become effective. If the Registration Statement
has become or becomes effective pursuant to Rule 430A of the Rules and
Regulations, or the filing of the Prospectus is otherwise required
under Rule 424(b) of the Rules and Regulations, the Company will file
the Prospectus, properly completed, pursuant to the applicable
paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such
timely filing. The Company will promptly advise you in writing (i) of
the receipt of any comments of the Commission, (ii) of any request of
the Commission for amendment of or supplement to the Registration
Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information,
(iii) when the Registration Statement shall have become effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of
any proceedings for that purpose. If the Commission shall enter any
such stop order at any
16.
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time, the Company will use its best efforts to obtain the lifting of
such order at the earliest possible moment. The Company will not file
any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or
the Prospectus of which you have not been furnished with a copy a
reasonable time prior to such filing or to which you reasonably object
or which is not in compliance with the Act and the Rules and
Regulations.
(b) The Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements
to the Registration Statement or the Prospectus which in your judgment
may be necessary or advisable to enable the several Underwriters to
continue the distribution of the Common Shares and will use its best
efforts to cause the same to become effective as promptly as possible.
The Company will fully and completely comply with the provisions of
Rule 430A of the Rules and Regulations with respect to information
omitted from the Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period
referred to in Section 10(a)(3) of the Act during which a prospectus
relating to the Common Shares is required to be delivered under the Act
any event occurs, as a result of which the Prospectus, including any
amendments or supplements, would include an untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
if it is necessary at any time to amend the Prospectus, including any
amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission
or an amendment or supplement which will effect such compliance and
will use its best efforts to cause the same to become effective as soon
as possible; and, in case any Underwriter is required to deliver a
prospectus after such nine-month period, the Company upon request, but
at the expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45
days after the end of the first quarter ending after one year following
the "effective date of the Registration Statement" (as defined in Rule
158(c) of the Rules and
17.
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Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a
period of 12 consecutive months beginning after the effective date of
the Registration Statement which will satisfy the provisions of the
last paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by
law to be delivered in connection with sales by an Underwriter or
dealer, the Company, at its expense, but only for the nine-month period
referred to in Section 10(a)(3) of the Act, will furnish to you and the
Selling Stockholders or mail to your order copies of the Registration
Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon
as available and in such quantities as you and the Selling Stockholders
may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your
counsel in order to qualify or register the Common Shares for sale
under (or obtain exemptions from the application of) the Blue Sky laws
of such jurisdictions as you designate, will comply with such laws and
will continue such qualifications, registrations and exemptions in
effect so long as reasonably required for the distribution of the
Common Shares. The Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any such jurisdiction where it is not presently qualified or where
it would be subject to taxation as a foreign corporation. The Company
will advise you promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares
for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the
Company will furnish to the Representatives and, upon request of any
Representative, to each of the other Underwriters: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of
the close of such fiscal year and statements of income, stockholders'
equity and cash flows for the year then ended and the opinion thereon
of the Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on
18.
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Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other report filed by the Company with the Commission, the NASD or any
securities exchange; and (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of
its Common Stock.
(h) During the period of 120 days after the first
date that any of the Common Shares are released by you for sale to the
public, without the prior written consent of Xxxxxxxxxx Securities
(which consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities), the Company will not other than pursuant to outstanding
stock options and warrants disclosed in the Prospectus issue, offer,
pledge, sell, grant options to purchase or otherwise dispose of,
directly or indirectly, any of the Company's equity securities or any
other securities convertible into or exchangeable with its Common Stock
or other equity security, other than pursuant to its Employee Stock
Purchase Plan and Stock Option Plan as described in the Registration
Statement.
(i) The Company will apply the net proceeds of the
sale of the Common Shares sold by it substantially in accordance with
its statements under the caption "Use of Proceeds" in the Prospectus.
(j) 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 the
State of California (and thereby permit market making transactions and
secondary trading in the Company's Common Stock in California), 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 hereof.
(k) The Company will use its best efforts to maintain
the Common Stock as a national market system security on The Nasdaq
Stock Market.
You, on behalf of the Underwriters, may, in your sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the
transactions contemplated hereunder are consummated or this Agreement becomes
effective or is terminated, the Company and, unless otherwise paid by the
Company, the Selling Stockholders agree to pay in such proportions as they may
agree upon among
19.
20
themselves all costs, fees and expenses incurred in connection with the
performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel and the Company's independent accountants, (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws (such fees and expenses
not to exceed $15,000), (vii) the filing fee of the National Association of
Securities Dealers, Inc., and (viii) all other fees, costs and expenses referred
to in Item 14 of the Registration Statement. The Underwriters may deem the
Company to be the primary obligor with respect to all costs, fees and expenses
to be paid by the Company and by the Selling Stockholders. Except as provided in
this Section 7, Section 9 and Section 11 hereof, the Underwriters shall pay all
of their own expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption under the
Blue Sky laws and the Blue Sky memorandum referred to above). This Section 7
shall not affect any agreements relating to the payment of expenses between the
Company and the Selling Stockholders.
The Selling Stockholders will pay (directly or by
reimbursement) all fees and expenses incident to the performance of their
obligations under this Agreement which are not otherwise specifically provided
for herein, including but not limited to (i) any fees and expenses of counsel
for such Selling Stockholders, (ii) any fees and expenses of the Agent, and
(iii) all expenses and taxes incident to the sale and delivery of the Common
Shares to be sold by such Selling Stockholders to the Underwriters hereunder.
20.
21
SECTION 8. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M. (or, in the case of a registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations
relating to the Common Shares, not later than 10:00 P.M.), Washington,
D.C. Time, on the date of this Agreement, or at such later time as
shall have been consented to by you; if the filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b) of the
Rules and Regulations, the Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of the Rules
and Regulations; and prior to such Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company, the
Selling Stockholders or you, shall be contemplated by the Commission;
and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have
been complied with to your satisfaction.
(b) You shall be satisfied that since the respective
dates as of which information is given in the Registration Statement
and Prospectus, (i) there shall not have been any change in the capital
stock other than pursuant to the exercise of outstanding options and
warrants disclosed in the Prospectus of the Company or any of its
subsidiaries or any material change in the indebtedness (other than in
the ordinary course of business) of the Company or any of its
subsidiaries, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material verbal or written
agreement or other material transaction shall have been entered into by
the Company or any of its subsidiaries which is not in the ordinary
course of business or other transaction shall have been entered into by
the Company or any of its subsidiaries which could result in a material
reduction in the future
21.
22
earnings of the Company and its subsidiaries on a consolidated basis,
(iii) no loss or damage (whether or not insured) to the property of the
Company or any of its subsidiaries shall have been sustained which
materially and adversely affects the condition (financial or
otherwise), business, results of operations or prospects of the Company
and its subsidiaries, taken as a whole, (iv) no legal or governmental
action, suit or proceeding affecting the Company or any of its
subsidiaries which is material to the Company or any of its
subsidiaries, taken as a whole, or which affects or may affect the
transactions contemplated by this Agreement shall have been instituted
or overtly 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 any of its
subsidiaries which makes it impractical or inadvisable in the judgment
of the Representatives to proceed with the public offering or purchase
the Common Shares as contemplated hereby.
(c) There shall have been furnished to you, as
Representatives of the Underwriters, on each Closing Date, in form and
substance satisfactory to you, except as otherwise expressly provided
below:
(i) An opinion of Xxxxx & Xxxxxx L.L.P.,
counsel for the Company and the Selling Stockholders,
addressed to the Underwriters and dated the First Closing
Date, or the Second Closing Date, as the case may be, to the
effect that:
(1) Each of the Company and Insight
Direct, Inc., an Arizona corporation, Direct Alliance
Corporation, an Arizona corporation, and ITA, Inc.,
an Arizona corporation ("Opinion Subsidiaries") has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to
do business as a foreign corporation and is in good
standing in all other jurisdictions where the
ownership or leasing of properties or the conduct of
its business requires such qualification, except
where the failure to so qualify would not have a
material adverse effect on the Company and Opinion
Subsidiaries, taken as a whole, and has full
corporate power and authority to own its properties
and conduct its business as described in the
Registration Statement;
22.
23
(2) The authorized, issued and
outstanding capital stock of the Company is as set
forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate
proceedings have been taken in order to authorize
validly such authorized Common Stock; all outstanding
shares of Common Stock (including the Firm Common
Shares and any Optional Common Shares) have been duly
and validly issued, are fully paid and nonassessable,
have been issued in compliance with federal and state
securities laws, were not issued in violation of or
subject to any preemptive rights in the Company's
charter documents or, to such counsel's knowledge,
other rights to subscribe for or purchase any
securities and conform to the description thereof
contained in the Prospectus; without limiting the
foregoing, there are no preemptive rights in the
Company's charter documents or, to such counsel's
knowledge, other rights to subscribe for or purchase
any of the Common Shares to be sold by the Company
hereunder;
(3) All of the issued and
outstanding shares of capital stock of the Company's
Opinion Subsidiaries have been duly and validly
authorized and issued, are fully paid and
nonassessable and are owned of record and, to such
counsel's knowledge, beneficially by the Company or a
wholly-owned subsidiary of the Company free and clear
of any perfected security interest and, to such
counsel's knowledge, any other adverse claim;
(4) The certificates evidencing the
Common Shares to be delivered hereunder are in due
and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and
registrar, and delivered to you or upon your order
against payment of the agreed consideration therefor
in accordance with the provisions of this Agreement,
the Common Shares represented thereby will be duly
authorized and validly issued, fully paid and
nonassessable, will not have been issued in violation
of or subject to any preemptive rights in the
Company's charter documents or, to such counsel's
knowledge, other rights to subscribe for or purchase
securities and will conform in all respects to the
description thereof contained in the Prospectus;
23.
24
(5) Except as disclosed in or
specifically contemplated by the Prospectus and any
document incorporated by reference into the
Prospectus, to such counsel's knowledge, there are no
outstanding options, warrants or other rights calling
for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of
the Company or any security convertible into or
exchangeable for capital stock of the Company;
(6) (a) The Registration Statement
has become effective under the Act, and, to such
counsel's knowledge, no stop order proceeding
suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus has
been issued and no proceedings for that purpose have
been instituted or are pending or, to such counsel's
knowledge, overtly threatened by the Commission; any
required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules and
Regulations has been made in the manner and within
the time period required by such Rule 424(b);
(b) The Registration Statement,
the Prospectus and each amendment or supplement
thereto (except for the financial statements and
schedules and all other financial or statistical
information included therein as to which such counsel
need express no opinion) comply as to form in all
material respects with the requirements of the Act
and the Rules and Regulations;
(c) To such counsel's knowledge,
there are no franchises, leases, contracts,
agreements or documents of a character required to be
disclosed in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration
Statement which are not disclosed or filed, as
required;
(d) To such counsel's knowledge,
there are no legal or governmental actions, suits or
proceedings pending or overtly threatened against the
Company which are required to be described in the
Prospectus which are not described as required; and
(e) The documents incorporated
by reference in the Prospectus (except for any
24.
25
financial statements and schedules and all other
financial and statistical information included in
such documents as to which such counsel need express
no opinion), when they were filed with the
Commission, complied as to form in all material
respects with the requirements of the Exchange Act
and the rules and regulations of the Commission
thereunder; and although such counsel has not
undertaken, except as otherwise indicated in their
opinion, to determine independently, and does not
assume any responsibility for, the accuracy and
completeness of the statements in such documents, to
such counsel's knowledge, none of such documents
(except for any financial statements and schedules
and all other financial and statistical information
included in such documents as to which such counsel
need express no opinion), when they were so filed,
contained an untrue statement of a material fact or
omitted to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made when such
documents were so filed, not misleading;
(7) The Company has full right,
power and authority to enter into this Agreement and
to sell and deliver the Common Shares to be sold by
it to the several Underwriters; this Agreement has
been duly and validly authorized by all necessary
corporate action by the Company, has been duly and
validly executed and delivered by and on behalf of
the Company, and, assuming California law is the same
as Arizona law for this purpose, is a valid and
binding agreement of the Company in accordance with
its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and
except as to those provisions relating to indemnity
or contribution for liabilities arising under the Act
as to which no opinion need be expressed; such
counsel has no reason to believe that California law
would not govern this Agreement; and no approval,
authorization, order, consent, registration, filing,
qualification, license or permit of or with any
court, regulatory, administrative or other
governmental body or agency is required for the
execution and delivery of this Agreement by the
Company or the consummation of the transactions
contemplated by this Agreement,
25.
26
except such as have been obtained and are in full
force and effect under the Act and such as may be
required under applicable Blue Sky laws in connection
with the purchase and distribution of the Common
Shares by the Underwriters and the clearance of such
offering with the NASD;
(8) The execution and performance of
this Agreement and the consummation of the
transactions herein contemplated will not conflict
with, result in the breach of, or constitute, either
by itself or upon notice or the passage of time or
both, a default under, any agreement, mortgage, deed
of trust, lease, franchise, license, indenture,
permit or other instrument that is filed as an
exhibit to the Registration Statement or any exhibit
to any document incorporated by reference into the
Prospectus, to which the Company or any of its
subsidiaries is a party or by which the Company or
any of its subsidiaries or any of its or their
property may be bound or affected which is material
to the Company and its subsidiaries, or violate any
of the provisions of the certificate of incorporation
or bylaws, or other organizational documents, of the
Company or any of its Opinion Subsidiaries or, to
such counsel's knowledge, violate any statute,
judgment, decree, order, rule or regulation of any
court or governmental body having jurisdiction over
the Company or any of its Opinion Subsidiaries or any
of its or their property;
(9) To such counsel's knowledge,
neither the Company nor any Opinion Subsidiary is in
violation of its certificate of incorporation or
bylaws, or other organizational documents, or to such
counsel's knowledge, in default with respect to any
provision of any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other
instrument that is filed as an exhibit to the
Registration Statement or any exhibit to any document
incorporated by reference into the Prospectus to
which the Company or any of its subsidiaries is a
party or by which it or any of its properties may be
bound or affected, except where such default would
not materially adversely affect the Company and its
Opinion Subsidiaries;
(10) To such counsel's knowledge, no
holders of securities of the Company have rights
26.
27
which have not been honored or waived to the
registration of shares of Common Stock or other
securities, because of the filing of the Registration
Statement by the Company or the offering contemplated
hereby;
(11) To such counsel's knowledge,
this Agreement and the Stockholders Agreement have
been duly authorized, executed and delivered by or on
behalf of each of the Selling Stockholders; the Agent
has been duly and validly authorized to act as the
custodian of the Common Shares to be sold by each
such Selling Stockholder; and, to such counsel's
knowledge, the performance of this Agreement and the
Stockholders Agreement and the consummation of the
transactions herein contemplated by the Selling
Stockholders will not result in a material breach of,
or constitute a material default under, any material
indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument
to which any of the Selling Stockholders is a party
or by which any of the Selling Stockholders or any of
their properties may be bound, or violate in any
material respect any statute, judgment, decree,
order, rule or regulation known to such counsel of
any court or governmental body having jurisdiction
over any of the Selling Stockholders or any of their
properties; and to such counsel's knowledge, no
approval, authorization, order or consent of any
court, regulatory body, administrative agency or
other governmental body is required for the execution
and delivery of this Agreement or the Stockholders
Agreement or the consummation by the Selling
Stockholders of the transactions contemplated by this
Agreement, except such as have been obtained and are
in full force and effect under the Act and such as
may be required under the rules of the NASD and
applicable Blue Sky laws;
(12) To such counsel's knowledge,
the Selling Stockholders have full right, power and
authority to enter into this Agreement and the
Stockholders Agreement and to sell, transfer and
deliver the Common Shares to be sold on such Closing
Date by such Selling Stockholders hereunder and good
and marketable title to such Common Shares so sold,
free and clear of any perfected security interest
and, to such counsel's
27.
28
knowledge, any other adverse claim, has been
transferred to the Underwriters (whom counsel may
assume to be bona fide purchasers) who have purchased
such Common Shares hereunder; and
(13) To such counsel's knowledge,
this Agreement and the Stockholders Agreement are,
assuming California law is the same as Arizona law
for this purpose, valid and binding agreements of
each of the Selling Stockholders in accordance with
their terms except as enforceability may be limited
by general equitable principles, bankruptcy,
fraudulent conveyance, insolvency, reorganization,
moratorium or other laws affecting creditors' rights
generally and except with respect to those provisions
relating to indemnities or contributions for
liabilities under the Act, as to which no opinion
need be expressed; such counsel has no reason to
believe that California law would not govern this
Agreement.
(14) No transfer taxes are required
to be paid in connection with the sale and delivery
of the Common Shares to the Underwriters hereunder.
In rendering such opinion, such counsel may rely as
to the matters set forth in paragraphs (11), (12), (13) and (14), on
opinions of other counsel retained by the Selling Stockholders, and, as
to matters of fact, on certificates of the Selling Stockholders and of
officers of the Company and of governmental officials and, as to
matters of fact, the representations and warranties of the Company and
the Selling Stockholders in this Agreement, in which case their opinion
is to state that they are so doing and copies of said opinions or
certificates, as applicable, are to be attached to the opinion. Such
counsel shall also include a statement to the effect that (except for
financial statements and schedules and all other financial and
statistical information as to which such counsel need express no
opinion) although such counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not
assume any responsibility for, the accuracy and completeness of the
Registration Statement, nothing has come to such counsel's attention
that would lead such counsel to believe that either at the effective
date of the Registration Statement or at the applicable Closing Date
the Registration Statement or any such amendment or supplement,
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
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statements therein not misleading, and the Prospectus, as of its date,
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
Xxxxx & Xxxxxx L.L.P. may state that counsel's knowledge means in the
actual knowledge of the Xxxxx & Xxxxxx L.L.P. lawyers actively involved
in the preparation of the Registration Statement or actively involved
within the last twelve months in providing legal services to the
Company or Opinion Subsidiaries.
(ii) Such opinion or opinions of Xxxxxxx,
Phleger & Xxxxxxxx LLP, counsel for the Underwriters dated the
First Closing Date or the Second Closing Date, as the case may
be, with respect to the incorporation of the Company, the
sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Common
Shares, the Registration Statement and the Prospectus and
other related matters as you may reasonably require, and the
Company and the Selling Stockholders shall have furnished to
such counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request for the
purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the
Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the
effect that:
(1) The representations and
warranties of the Company set forth in Section 2 of
this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the
Company has complied with all the agreements
hereunder and satisfied all the conditions on its
part to be performed or satisfied on or prior to such
Closing Date;
(2) The Commission has not issued
any order preventing or suspending the use of the
Prospectus or any Preliminary Prospectus filed as
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a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness
of the Registration Statement has been issued; and to
the knowledge of the respective signers, no
proceedings for that purpose have been instituted or
are pending or contemplated under the Act;
(3) Each of the respective signers
of the certificate has carefully examined the
Registration Statement and the Prospectus; in his
opinion and to his knowledge, the Registration
Statement and the Prospectus and any amendments or
supplements thereto contain all statements required
to be stated therein regarding the Company and its
subsidiaries; and neither the Registration Statement
nor the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material
fact or omits to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading;
(4) Since the initial date on which
the Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment to
the Registration Statement or in a supplement to or
amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(5) Since the respective dates as of
which information is given in the Registration
Statement and the Prospectus, and except as disclosed
in or contemplated by the Prospectus, there has not
been any material adverse change or a development
involving a material adverse change in the condition
(financial or otherwise), business, properties,
results of operations, management or prospects of the
Company and its subsidiaries, taken as a whole; and
no legal or governmental action, suit or proceeding
is pending or, to the Company's knowledge, overtly
threatened against the Company or any of its
subsidiaries which is material to the Company and its
subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of
business, or which may adversely affect the
transactions contemplated by this Agreement; since
such dates and except as so disclosed, neither the
Company nor any of its subsidiaries has entered
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into any verbal or written agreement or other
material transaction which is not in the ordinary
course of business or other transaction which could
result in a material reduction in the future earnings
of the Company or incurred any material liability or
obligation, direct, contingent or indirect, made any
change in its capital stock, made any material change
in its short-term debt or funded debt or repurchased
or otherwise acquired any of the Company's capital
stock; and the Company has not declared or paid any
dividend, or made any other distribution, upon its
outstanding capital stock payable to stockholders of
record on a date prior to the First Closing Date or
Second Closing Date; and
(6) Since the respective dates as of
which information is given in the Registration
Statement and the Prospectus and except as disclosed
in or contemplated by the Prospectus, the Company and
its subsidiaries have not sustained a material loss
or damage by strike, fire, flood, windstorm, accident
or other calamity (whether or not insured).
(iv) On the First Closing Date or the Second
Closing Date, as the case may be, a certificate, dated such
Closing Date and addressed to you, signed by or on behalf of
each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder in
this Agreement are true and correct, as if made at and as of
the First Closing Date or the Second Closing Date, as the case
may be, and such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on his part to be
performed or satisfied prior to the First Closing Date or the
Second Closing Date, as the case may be.
(v) On the date before this Agreement is executed
and also on the First Closing Date and the Second Closing Date
a letter addressed to you, as Representatives of the
Underwriters, from KPMG Peat Marwick LLP, independent
accountants, the first one to be dated the day before the date
of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second
Closing) to be dated the Second Closing Date, in form and
substance satisfactory to you.
(vi) On or before the First Closing Date, letters
from each of the Selling Stockholders (other
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than Principal Financial Securities, Inc., Pennsylvania
Merchant Group Ltd., and Xxxxxxxx X. Xxxx), each holder of 5
percent or more of the Company's Common Stock and each
director and officer of the Company, in form and substance
satisfactory to you, confirming that for a period of 120 days
after the first date that any of the Common Shares are
released by you for sale to the public, such person will not
directly or indirectly offer to sell, pledge, sell or contract
to sell or otherwise dispose of any shares of Common Stock or
any right to acquire such shares or securities convertible
into or exchangeable for any shares of Common Stock without
the prior written consent of Xxxxxxxxxx Securities, which
consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities.
(vii) The Common Stock shall have been approved
for quotation as a national market system security on The
Nasdaq Stock Market upon notice of issuance.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are satisfactory to you
and to Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to the Representatives or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by the Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company and the Selling Stockholders without liability on
the part of any Underwriter, the Company or the Selling Stockholders (except for
the expenses to be paid or reimbursed by the Company and by the Selling
Stockholders) pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 8, or if the sale to the Underwriters of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse you and the other Underwriters upon
demand for all out-of-pocket expenses that shall have been
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33
reasonably incurred by you and them in connection with the proposed purchase and
the sale of the Common Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, telegraph
charges and telephone charges relating directly to the offering contemplated by
the Prospectus. Any such termination shall be without liability of any party to
any other party except that the provisions of this Section, Section 7 and
Section 11 shall at all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You, the
Company and the Selling Stockholders will use your, its and their best efforts
to cause the Registration Statement to become effective, to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
and, if such stop order be issued, to obtain as soon as possible the lifting
thereof.
SECTION 11. Indemnification.
(a) The Company and each of the Selling Stockholders,
jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Underwriter or
such controlling person may become subject, under the Act, the Exchange
Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of the Company),
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state in any of them a material fact required to be stated therein or
necessary to make the statements in any of them not misleading, or
arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company or the Selling
Stockholders contained herein or any failure of the Company or the
Selling Stockholders to perform their respective obligations hereunder
or under law; and will reimburse each Underwriter and each such
controlling person for any legal and other expenses as such expenses
are reasonably incurred by such Underwriter or such controlling person
in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action;
provided,
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however, that neither the Company nor the Selling Stockholders will be
liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with the information furnished to the Company pursuant to
Section 4 hereof. The Company and the Selling Stockholders may agree,
as among themselves and without limiting the rights of the Underwriters
under this Agreement, as to their respective amounts of such liability
for which they each shall be responsible. In addition to its other
obligations under this Section 11(a), the Company and the Selling
Stockholders agree that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising
out of or based upon any statement or omission, or any alleged
statement or omission, or any inaccuracy in the representations and
warranties of the Company or the Selling Stockholders herein or failure
to perform its obligations hereunder, all as described in this Section
11(a), it will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other 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 Company's
or the Selling Stockholders' obligation 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 Company
together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to time by Bank of America
NT&SA, San Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30
days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in
addition to any liability which the Company or the Selling Stockholders
may otherwise have.
(b) Each Underwriter will severally indemnify and
hold harmless the Company, each of its directors, each of its officers
who signed the Registration Statement, the Selling Stockholders and
each person, if any, who controls the Company or any Selling
Stockholder within the meaning of
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the Act, against any losses, claims, damages, liabilities or expenses
to which the Company, or any such director, officer, Selling
Stockholder or controlling person may become subject, under the Act,
the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent
of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with the information furnished to the Company
pursuant to Section 4 hereof; and will reimburse the Company, or any
such director, officer, Selling Stockholder or controlling person for
any legal and other expense reasonably incurred by the Company, or any
such director, officer, Selling Stockholder or controlling person in
connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In
addition to its other obligations under this Section 11(b), each
Underwriter severally 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 statement or omission, or
any alleged statement or omission, described in this Section 11(b)
which relates to information furnished to the Company pursuant to
Section 4 hereof, it will reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling
Stockholder) on a quarterly basis for all reasonable legal or other
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 Underwriters' obligation to
reimburse the Company (and, to the extent applicable, each officer,
director, controlling person or Selling Stockholder) 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,
the
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Company (and, to the extent applicable, each officer, director,
controlling person or Selling Stockholder) shall promptly return it to
the Underwriters together with interest, compounded daily, determined
on the basis of the Prime Rate. Any such interim reimbursement payments
which are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of
such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained
in this Section or to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there
may be a conflict between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election
so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence
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(it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by
the Representatives in the case of paragraph (a), representing the
indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(d) If the indemnification provided for in this
Section 11 is required by its terms but is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an
indemnified party under paragraphs (a), (b) or (c) in respect of any
losses, claims, damages, liabilities or expenses referred to herein,
then each applicable indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received
by the Company, the Selling Stockholders and the Underwriters from the
offering of the Common 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, the
Selling Stockholders and the Underwriters in connection with the
statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the
Company, the Selling Stockholders and the Underwriters shall be deemed
to be in the same proportion, in the case of the Company and the
Selling Stockholders, as the total price paid to the Company and to the
Selling Stockholders, respectively, for the Common Shares sold by them
to the Underwriters (net of underwriting commissions and discounts but
before deducting expenses), and in the case of the Underwriters as the
underwriting commissions and discounts received by them bears to the
total of such amounts paid to the Company and to the Selling
Stockholders and received by the Underwriters as underwriting
commissions and discounts. The relative fault of the Company, the
Selling Stockholders and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact or the inaccurate or the alleged
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inaccurate representation and/or warranty relates to information
supplied by the Company, the Selling Stockholders or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in subparagraph (c) of
this Section 11, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in subparagraph (c) of
this Section 11 with respect to notice of commencement of any action
shall apply if a claim for contribution is to be made under this
subparagraph (d); provided, however, that no additional notice shall be
required with respect to any action for which notice has been given
under subparagraph (c) for purposes of indemnification. The Company,
the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 11 were
determined solely by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in this subparagraph (d). Notwithstanding the provisions of
this Section 11, no Underwriter shall be required to contribute any
amount in excess of the amount of the total underwriting commissions
and discounts received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. 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 11 are
several in proportion to their respective underwriting commitments and
not joint.
(e) It is agreed that any controversy arising out of
the operation of the interim reimbursement arrangements set forth in
Sections 11(a) and 11(b) hereof, including the amounts of any requested
reimbursement payments and the method of determining such amounts,
shall be settled by arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New York Stock
Exchange, Inc. or 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
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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 Sections 11(a) and 11(b) hereof
and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of
such Sections 11(a) and 11(b) hereof.
SECTION 12. Default of Underwriters. It shall be a condition
to this Agreement and the obligation of the Company and the Selling Stockholders
to sell and deliver the Common Shares hereunder, and of each Underwriter to
purchase the Common Shares in the manner as described herein, that, except as
hereinafter in this paragraph provided, each of the Underwriters shall purchase
and pay for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs is more than the above percentage and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Common Shares by other persons are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders except for
the expenses to be paid by the Company and the Selling Stockholders pursuant to
Section 7 hereof and except to the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are
to be purchased by the non-defaulting Underwriters or by another party or
parties, the Representatives or the Company shall have the right to postpone the
First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
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SECTION 13. Effective Date. This Agreement shall become
effective immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other
provisions, (i) if at the time of execution of this Agreement the Registration
Statement has not become effective, at 2:00 P.M., California Time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii) if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 2:00 P.M., California Time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by notice
to the Company or by release of any of the Common Shares for sale to the public.
For the purposes of this Section 13, the Common Shares shall be deemed to have
been so released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 14. Termination. Without limiting the right to
terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company
by notice to you and the Selling Stockholders or by you by notice to
the Company and the Selling Stockholders at any time prior to the time
this Agreement shall become effective as to all its provisions, and any
such termination shall be without liability on the part of the Company
or the Selling Stockholders to any Underwriter (except for the expenses
to be paid or reimbursed by the Company and the Selling Stockholders
pursuant to Sections 7 and 9 hereof and except to the extent provided
in Section 11 hereof) or of any Underwriter to the Company or the
Selling Stockholders (except to the extent provided in Section 11
hereof).
(b) This Agreement may also be terminated by you
prior to the First Closing Date by notice to the Company (i) if
additional material governmental restrictions, not in force and effect
on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock
Exchange or in the over the counter market by the NASD, or trading in
securities generally shall have been suspended on either such Exchange
or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or
California authorities, (ii) if an outbreak of major hostilities or
other national or
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international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have
accelerated or escalated to such an extent, as, in the judgment of the
Representatives, to affect adversely the marketability of the Common
Shares, (iii) if any adverse event shall have occurred or shall exist
which makes untrue or incorrect in any material respect any statement
or information contained in the Registration Statement or Prospectus or
which is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect,
or (iv) if there shall be any action, suit or proceeding pending or
overtly threatened, or there shall have been any development or
prospective development involving particularly the business or
properties or securities of the Company or any of its subsidiaries or
the transactions contemplated by this Agreement, which, in the
reasonable judgment of the Representatives, may materially and
adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any
termination pursuant to this subsection (b) shall be without liability
on the part of any Underwriter to the Company or the Selling
Stockholders or on the part of the Company or the Selling Stockholders
to any Underwriter (except for expenses to be paid or reimbursed by the
Company and the Selling Stockholders pursuant to Sections 7 and 9
hereof and except to the extent provided in Section 11 hereof.
SECTION 15. Failure of the Selling Stockholders to Sell and
Deliver. If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Stockholders at the First Closing Date under the terms of this
Agreement, then the Underwriters may at their option, by written notice from you
to the Company and the Selling Stockholders, either (i) terminate this Agreement
without any liability on the part of any Underwriter or, except as provided in
Sections 7, 9 and 11 hereof, the Company or the Selling Stockholders, or (ii)
purchase the shares which the Company and other Selling Stockholders have agreed
to sell and deliver in accordance with the terms hereof. In the event of a
failure by one or more of the Selling Stockholders to sell and deliver as
referred to in this Section, either you or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected.
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SECTION 16. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, of the Selling
Stockholders and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, or the
Selling Stockholders, as the case may be, and will survive delivery of and
payment for the Common Shares sold hereunder and any termination of this
Agreement.
SECTION 17. Notices. All communications hereunder shall be in
writing and, if sent to the Representatives shall be mailed, delivered or
telegraphed and confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx Xxxxx, with a copy to Xxxxxxx Xxxxxx at
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx
Xxxx, XX 00000; and if sent to the Company or the Selling Stockholders shall be
mailed, delivered or telegraphed and confirmed to the Company at 0000 X. 0xx
Xxxxxx, Xxxxx, XX 00000, Attention: Xxxxxxx Xxxxxxxxx, with a copy to Xxx X.
Xxxxx at Xxxxx & Xxxxxx L.L.P., Xxx Xxxxxxx Xxxxxx, Xxxxxxx, XX 00000. The
Company, the Selling Stockholders or you may change the address for receipt of
communications hereunder by giving notice to the others.
SECTION 18. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 12 hereof, and to the benefit of the officers
and directors and controlling persons referred to in Section 11, and in each
case their respective successors, personal representatives and assigns, and no
other person will have any right or obligation hereunder. No such assignment
shall relieve any party of its obligations hereunder. The term "successors"
shall not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 19. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Xxxxxxxxxx Securities, as Representatives, will be binding upon
all the Underwriters.
SECTION 20. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be
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deemed to be made such minor changes (and only such minor changes) as are
necessary to make it valid and enforceable.
SECTION 21. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws (and not the laws
pertaining to conflicts of laws) of the State of California.
SECTION 22. General. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in
several counterparts, each one of which shall be an original, and all of which
shall constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Selling Stockholders and
you.
Any person executing and delivering this Agreement as
Attorney-in-fact for the Selling Stockholders represents by so doing that he has
been duly appointed as Attorney-in-fact by such Selling Stockholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action. Any action taken under this Agreement by
any of the Attorneys-in-fact will be binding on all the Selling Stockholders.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters including you, all in accordance with
its terms.
Very truly yours,
Insight Enterprises, Inc.
By:__________________________
President
SELLING STOCKHOLDERS
By:__________________________
(Attorney-in-fact)
By:__________________________
(Attorney-in-fact)
The foregoing Underwriting Agreement is hereby confirmed and accepted by us in
San Francisco, California as of the date first above written.
XXXXXXXXXX SECURITIES
LAZARD FRERES & CO. LLC
XXXXX XXXXXXX INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By XXXXXXXXXX SECURITIES
By:___________________________
Managing Director
44.
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SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities...................................................................
Lazard Freres & Co. LLC.................................................................
Xxxxx Xxxxxxx Inc.......................................................................
---------
TOTAL.................................................................... 1,526,250
=========
X-0
00
XXXXXXXX X
Number of Firm Number of Optional
Common Shares to Common Shares to
Name of Selling be Sold by Selling be Sold by Selling
Stockholder Stockholders Stockholders
----------- ------------ ------------
Xxxx X. Crown 200,000 30,000
Xxxxxxx X. Crown 200,000 30,000
Xxxxxxx Xxxxxxxxx 20,000 3,000
Xxxxx X. Xxxxxxxx 20,000 3,000
Principal Financial
Securities, Inc. 43,125 0
Pennsylvania Merchant
Group Ltd. 28,750 0
Xxxxxxxx X. Xxxx 14,375 0
------- -------
526,250 60,000
TOTAL ======= =======
B-1
