1,075,000 SHARES
DIVERSIFIED CORPORATE RESOURCES, INC.
Common Stock
UNDERWRITING AGREEMENT
September ___, 1997
CRUTTENDEN XXXX INCORPORATED
As Representative of the several Underwriters
c/o Cruttenden Xxxx Incorporated
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
DIVERSIFIED CORPORATE RESOURCES, INC., a Texas corporation (the
"Company"), Imperial Bank (the "Bank") and USFG-DHRG L.P. No 2, Inc. ("Xxxxx")
(the Bank and Xxxxx are herein collectively called the "Selling Shareholders")
address you as the Representative of each of the persons, firms and corporations
listed in Schedule B hereto (herein collectively called the "Underwriters") and
hereby confirm its agreement with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
750,000 shares of its authorized and unissued Common Stock, par value $0.10
per share, and the Selling Shareholders proposes to sell an aggregate of
325,000 shares of the Company's Common Stock (such 1,075,000 shares being
referred to herein as the "Firm Shares") to the several Underwriters. The
Company also proposes to grant to the Underwriters an option to purchase up
to 112,500 additional shares of the Company's Common Stock, par value $0.10
per share (the "Option Shares"), as provided in Section 7 hereof. As used in
this Agreement, the term "Shares" shall include the Firm Shares and the
Option Shares. All shares of Common Stock, par value $0.10 per share, of the
Company to be outstanding after giving effect to the sales contemplated
hereby, including the Shares, are hereinafter referred to as "Common Stock."
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2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND XXXXX.
(a) Each of the Company and Xxxxx hereby represents and warrants
to and agrees severally with each Underwriter that:
(i) A registration statement on Form S-1 (File No. 333-31825)
with respect to the Shares, including a prospectus, has been prepared by the
Company in conformity in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the applicable rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Act and has been filed with the
Commission; such amendments to such registration statement, such amended
prospectuses and such abbreviated registration statements pursuant to Rule
462(b) of the Rules and Regulations as may have been required prior to the
date hereof have been similarly prepared and filed with the Commission; and
the Company will file such additional amendments to such registration
statement, such amended prospectuses and such abbreviated registration
statements as may hereafter be required. Copies of such registration
statement and amendments together with each exhibit filed therewith, of each
related prospectus (the "Preliminary Prospectuses") and of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations
have been delivered to you.
If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare
and promptly file with the Commission the information omitted from the
registration statement pursuant to Rule 430A(a) or, if Cruttenden Xxxx
Incorporated, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information
required to be included in any term sheet filed pursuant to Rule 434(b) or
(c), as applicable, of the Rules and Regulations pursuant to subparagraph
(1), (4) or (7) of Rule 424(b) of the Rules and Regulations or as part of a
post-effective amendment to the registration statement (including a final
form of prospectus). If the registration statement relating to the Shares has
not been declared effective under the Act by the Commission, the Company will
prepare and promptly file an amendment to the registration statement,
including a final form of prospectus, or, if Cruttenden Xxxx Incorporated, on
behalf of the several Underwriters, shall agree to the utilization of Rule
434 of the Rules and Regulations, the information required to be included in
any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the
Rules and Regulations. The term "Registration Statement" as used in this
Agreement shall mean such registration statement, including financial
statements, schedules and exhibits (including exhibits incorporated by
reference), in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the
registration statement pursuant to Rule 430A(a) or files a term sheet
pursuant to Rule 434 of the Rules and Regulations, the information deemed to
be a part of the registration statement at the time it became effective
pursuant to
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Rule 430A(b) or Rule 434(d) of the Rules and Regulations) and, in the event
of any amendment thereto or the filing of any abbreviated registration
statement pursuant to Rule 462(b) of the Rules and Regulations relating
thereto after the effective date of such registration statement, shall also
mean (from and after the effectiveness of such amendment or the filing of
such abbreviated registration statement) such registration statement as so
amended, together with any such abbreviated registration statement. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to
the Shares as included in such Registration Statement at the time it becomes
effective (including, if the Company omitted information from the
Registration Statement pursuant to Rule 430A(a) of the Rules and Regulations,
the information deemed to be a part of the Registration Statement at the time
it became effective pursuant to Rule 430A(b) of the Rules and Regulations);
PROVIDED, HOWEVER, that if in reliance on Rule 434 of the Rules and
Regulations and with the consent of Cruttenden Xxxx Incorporated, on behalf
of the several Underwriters, the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable,
prior to the time that a confirmation is sent or given for purposes of
Section 2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus
subject to completion" (as defined in Rule 434(g) of the Rules and
Regulations) last provided to the Underwriters by the Company and circulated
by the Underwriters to all prospective purchasers of the Shares (including
the information deemed to be a part of the Registration Statement at the time
it became effective pursuant to Rule 434(d) of the Rules and Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of
the Shares that differs from the prospectus referred to in the immediately
preceding sentence (whether or not such revised prospectus is required to be
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations), the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to the Underwriters for such
use. If in reliance on Rule 434 of the Rules and Regulations and with the
consent of Cruttenden Xxxx Incorporated, on behalf of the several
Underwriters, the Company shall have provided to the Underwriters a term
sheet pursuant to Rule 434(b) or (c), as applicable, prior to the time that a
confirmation is sent or given for purposes of Section 2(10)(a) of the Act,
the Prospectus and the term sheet, together, will not be materially different
from the prospectus in the Registration Statement.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings
for that purpose, and each such 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 became or
becomes, as the case may be, effective and at all times subsequent thereto up
to and on the Closing Date (hereinafter defined) and on any later date on
which Option Shares are to be purchased, (i) the Registration Statement and
the Prospectus, and any amendments or supplements thereto, contained and will
contain all material information
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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, (ii) the Registration Statement, and any amendments or
supplements thereto, did not and will not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (iii) the
Prospectus, and any amendments or supplements thereto, did not and will not
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that none of the representations and warranties contained in this
subparagraph (b) shall apply to information contained in or omitted from the
Registration Statement or Prospectus, or any amendment or supplement thereto,
in reliance upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by such Underwriter specifically for use
in the preparation thereof.
(iii) Each of the Company and its subsidiaries is duly
incorporated and validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation with full power and authority
(corporate and other) to own, lease and operate its properties and conduct
its business as described in the Prospectus; each of the Company and its
subsidiaries is duly qualified to do business as a foreign corporation and in
good standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries, taken as a whole; 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; each of the Company and
its subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from
state, federal and other regulatory authorities that are material to the
conduct of its business, all of which are valid and in full force and effect;
none of the Company or its subsidiaries is in violation of its charter or
bylaws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness, or in any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which its properties may be bound; and none of
the Company or its subsidiaries is in material violation of any law, order,
rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company, its subsidiaries or over each of their
respective properties. Notwithstanding the generality of the foregoing, the
following subsidiaries are not in good standing and the failure to be in good
standing does not and will not have a material adverse effect on the
condition (financial and otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries, taken as whole:
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DHRG Northeast, Inc., a Texas corporation;
DHRG of California, Inc., a Texas corporation;
EMSR, Inc., a Texas corporation;
Healthcare Resources, Inc., a Texas corporation;
Power Industry Personnel, Inc., a Connecticut corporation;
Power & Electronics Personnel, Inc., a Delaware corporation;
Power Services, Inc., a South Carolina corporation;
Pacific Power Services, Inc., a Washington corporation;
Western Power Services, a Washington corporation;
Northeast Power & Electronics, a New York corporation;
Mid-Atlantic Power Services, a Virginia corporation;
Technical Careers of Pennsylvania, a Pennsylvania corporation;
Western Technical Careers, Inc., an Arizona corporation;
TNI, Inc., a Texas corporation;
The Company owns all of the outstanding capital stock of each of its
subsidiaries free and clear of all claims, liens, charges and encumbrances,
except for an option to purchase shares of EMSR, Inc., a subsidiary of the
Company (the "EMSR Option") and the possible grant of an option to purchase
shares of a subsidiary formed to conduct the Company's Train International
program (the "Train International Option"). The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the following, each of which is a wholly owned subsidiary of the
Company:
DHRG Northeast, Inc., a Texas corporation;
DHRG of California, Inc., a Texas corporation;
EMSR, Inc., a Texas corporation;
Healthcare Resources, Inc., a Texas corporation;
Power Industry Personnel, Inc., a Connecticut corporation;
Power & Electronics Personnel, Inc., a Delaware corporation;
Power Services, Inc., a South Carolina corporation;
Pacific Power Services, Inc., a Washington corporation;
Western Power Services, a Washington corporation;
Northeast Power & Electronics, a New York corporation;
Mid-Atlantic Power Services, a Virginia corporation;
Technical Careers of Pennsylvania, a Pennsylvania corporation;
Western Technical Careers, Inc., an Arizona corporation;
TNI, Inc., a Texas corporation;
Management Alliance Corporation, a Texas corporation;
Information Systems Consulting Corp., a Texas corporation;
Preferred Funding Corporation, a Texas corporation; and
Management Alliance Group of Independent Companies, Inc.,
a Texas corporation.
(iv) 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 agreement on the part of the
Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; the making
and performance of this Agreement by the Company and the consummation of the
transactions herein contemplated will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute either by
itself or upon notice or the passage of time or both, a default under, (i)
any bond, debenture, note or other
5
evidence of indebtedness, or under any lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which any of
its respective properties may be bound, (ii) the articles of incorporation or
bylaws of the Company or any of its subsidiaries or (iii) any law, order,
rule, regulation, writ, injunction, judgment or decree of any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties. No consent, approval,
authorization or order of or qualification with any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties
is required for the execution and delivery of this Agreement and the
consummation by the Company of the transactions herein contemplated, except
such as may be required under the Act, by the National Association of
Securities Dealers, Inc. (the "NASD"), the rules of the Nasdaq National
Market, or under state or other securities or Blue Sky laws, all of which
requirements have been satisfied in all material respects.
(v) There is not any pending or, to the Company's knowledge,
threatened, action (legal or governmental), suit, claim or proceeding against
the Company or any of its subsidiaries, any of each of the Company's or its
subsidiaries' officers, any of the respective properties (owned or leased),
assets or rights of the Company or its subsidiaries before any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company, its
subsidiaries, each of the Company's or its subsidiaries' officers or
properties (owned or leased) or otherwise which (i) except as accurately
described in all material respects in the Registration Statement and the
Prospectus (A) might, individually or in the aggregate, result in any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and any of its
subsidiaries, taken as a whole, or might materially and adversely affect the
properties, assets or rights of the Company and any of its subsidiaries,
taken as a whole, or (B) might prevent consummation of the transactions
contemplated hereby or (ii) is required to be disclosed in the Registration
Statement or Prospectus and is not so disclosed; and there are no agreements,
contracts, leases or documents of the Company or any of its subsidiaries of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement by the Act or the Rules and Regulations which have not been
accurately described in all material respects in the Registration Statement
or Prospectus or filed as exhibits to the Registration Statement. None of the
Company or its subsidiaries is a party or subject to the provisions of any
injunction, judgment, decree or order of any court, regulatory body,
administrative agency, government or governmental agency or body domestic or
foreign, that could be expected to result in a material adverse change in the
condition (financial or other), earnings, operations, business or business
prospects of the Company and its subsidiaries, taken as a whole.
6
(vi) All outstanding shares of capital stock of the Company
and all issued and outstanding shares of capital stock of the subsidiaries of
the Company have been duly authorized and validly issued and are fully paid
and nonassessable, 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 the
authorized and outstanding capital stock of the Company is as set forth in
the Prospectus under the caption "Capitalization" and conforms in all
material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly
state the substance of the instruments defining the capitalization of the
Company); the Shares have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement, and, when issued and delivered by
the Company against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued and fully paid and nonassessable,
and will be sold free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest; and no preemptive right, co-sale
right, registration right, right of first refusal or other similar right of
shareholder exists with respect to any of the Shares or the issuance and sale
thereof. No shareholder of the Company or any of its subsidiaries has any
right to require the Company to register the sale of any shares owned by such
shareholder under the Act in the public offering contemplated by this
Agreement. No further approval or authorization of any shareholder, the
Board of Directors of the Company or others is required for the issuance and
sale or transfer of the Shares except as may be required under the Act or
under state or other securities or Blue Sky laws. Except as disclosed in the
Registration Statement, Prospectus and the financial statements of the
Company, and the related notes thereto included in the Prospectus, the
Company has no outstanding 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. Except as disclosed in the Registration Statement and the
Prospectus, the Company has not granted any option or other right to
purchase, or issued any security or obligation convertible into, or entered
into any contract or commitment to sell, shares of any of the Company's
subsidiaries. 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 fairly and accurately
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(vii) Coopers & Xxxxxxx L.L.P., independent auditors, which
have audited the consolidated financial statements of the Company, together
with the related schedules and notes, as of December 31, 1996 and for the
year ended December 31, 1996 and Xxxxxx and Xxxxxxx L.L.P., independent
auditors, which have audited the consolidated financial statements of the
Company, together with the related
7
schedules and notes, as of December 31, 1994 and 1995 and for each of the
years in the two (2) years then ended, all filed with the Commission as a
part of the Registration Statement, which are included in the Prospectus, are
independent accountants within the meaning of the Act and the Rules and
Regulations; the audited consolidated financial statements of the Company,
together with the related schedules and notes, and the unaudited financial
information, forming part of the Registration Statement and Prospectus,
fairly present the financial position and the results of operations of the
Company and its subsidiaries at the respective dates and for the respective
periods to which they apply; and all consolidated audited financial
statements of the Company and its subsidiaries, together with the related
schedules and notes, and the unaudited financial information, filed with the
Commission as part of the Registration Statement, have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved except as may be otherwise stated therein.
The selected and summary financial and statistical data included in the
Registration Statement, which are included in the Prospectus, present fairly
the information shown therein and have been compiled on a basis consistent
with the audited consolidated financial statements presented therein. No
other financial statements or schedules are required to be included in the
Registration Statement pursuant to the Rules and Regulations, except for the
selected financial data for the years ended December 31, 1992 and 1993, the
absence of which for the reasons stated in the Registration Statement and the
Prospectus are not material to the disclosures contained therein.
(viii) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, except as
set forth in the Registration Statement and Prospectus, there has not been
(i) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company or any of
its subsidiaries, taken as a whole, (ii) any transaction that is material to
the Company or any of its subsidiaries, (iii) any obligation, direct or
contingent, that is material to the Company or any of its subsidiaries,
incurred by the Company or any of its subsidiaries, except obligations
incurred in the ordinary course of business, (iv) any change in the capital
stock or outstanding indebtedness of the Company or any of its subsidiaries,
(v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, (vi) any default in the payment of principal of
or interest on any outstanding material debt obligations of the Company or
any of its subsidiaries, or (vii) any loss or damage (whether or not insured)
to the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained which has a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company or any of its subsidiaries, taken as a
whole.
(ix) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiaries has good and
marketable title to all properties and assets described in the Registration
Statement and Prospectus as owned by them, free and clear of any pledge,
lien, security interest, encumbrance,
8
claim or equitable interest, other than such as would not have a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or any of its
subsidiaries, taken as a whole, (ii) the agreements to which the Company and
any of its subsidiaries is a party described in, or filed as exhibits to, the
Registration Statement and Prospectus are valid agreements, enforceable by
the Company or its subsidiaries, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, the other contracting party or parties
thereto are not in material breach or material default under any of such
agreements, and (iii) the Company and its subsidiaries have valid and
enforceable leases for all properties described in the Registration Statement
and Prospectus as leased by any of them, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles. Except as set forth in the
Registration Statement and Prospectus, the Company and its subsidiaries own
or lease all such properties as are necessary to their operations as now
conducted or as proposed to be conducted.
(x) The Company and its subsidiaries have timely filed all
necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown thereon as due (except in any case in which the
failure to do so would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries, taken as a whole, and there is
no tax deficiency that has been or might be asserted against the Company (or
any of its subsidiaries) that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries, taken as a whole; and
all tax liabilities are adequately provided for on the books of the Company.
(xi) Each of the Company and its subsidiaries maintains
insurance with insurers of recognized financial responsibility of the types
and in the amounts generally deemed prudent for its business and consistent
with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering the Company
against general liability and errors and omission for contract and temporary
placements, and real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction, acts of vandalism,
products liability, errors and omissions, workers' compensation claims and
all other risks customarily insured against, all of which insurance is in
full force and effect; none of the Company or its subsidiaries has been
refused any insurance coverage sought or applied for; and none of the Company
or its subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries, taken as a whole.
9
(xii) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or is imminent that might be expected to result
in a material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and any of
its subsidiaries, taken as a whole. No collective bargaining agreement exists
with any of the employees of the Company or any of its subsidiaries and, to
the knowledge of the Company and its subsidiaries, no such agreement is
imminent.
(xiii) Each of the Company and its subsidiaries owns or
possesses exclusive rights to use all patents, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names, copyrights
and other intellectual property which are necessary in all material respects
to conduct its business as now conducted and as described in the Registration
Statement and Prospectus; except as set forth in the Registration Statement
and the Prospectus, the expiration of any patents, patent rights, trade
secrets, trademarks, service marks, trade names, copyrights or other
intellectual property would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries, taken as a whole; none of the
Company or its subsidiaries has received any notice of, and has knowledge of,
any infringement of or conflict with asserted rights of the Company or its
subsidiaries by others with respect to any patent, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names, copyrights or
other similar intellectual property rights; and none of the Company or its
subsidiaries has received any notice of, or has any knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names, copyrights or other similar rights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and any of its subsidiaries, taken as a whole.
(xiv) The Common Stock is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and is approved for quotation on the Nasdaq National Market, and the Company
has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the NASD is contemplating termination of
such registration or listing.
(xv) There are no arrangements, contracts, agreements or
other documents (verbal or written) 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 arrangements, contracts, agreements and
documents so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company nor any of the subsidiaries nor any
other party is in breach of or default
10
under any of such arrangements, contracts, agreements and documents, except
as to breaches or defaults which individually or in the aggregate would not
have a material adverse effect on the Company, or to the best of their
knowledge is aware of any imminent termination thereof.
(xvi) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it is not
and will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(xvii) Each of the Company and its subsidiaries has not
distributed and will not distribute prior to the later of (i) the Closing
Date, or any date on which Option Shares are to be purchased, as the case may
be, and (ii) completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
(xviii) The Company (nor any of its subsidiaries) has not at
any time during the last five (5) 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 or any jurisdiction thereof.
(xix) The Company (nor any of its subsidiaries) has not taken
and will not take, directly or indirectly, any action designed to or that
might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(xx) Except for Xxxxxx X. Xxxxx, Xx. and Xxxx X. Xxxxxx,
each officer and director of the Company, and each shareholder that holds five
percent (5%) or more of the Company's Common Stock has executed a Lock-Up
Letter (the "Lock-Up Agreement") in a form approved by Cruttenden Xxxx
Incorporated pursuant to which such persons have agreed not to, except as
described therein, for a period of 365 days from the date of the final
Prospectus (the "Lock-Up Period"), sell, offer to sell, solicit an offer to
buy, contract to sell, loan, pledge, grant any option to purchase, or
otherwise transfer or dispose of (collectively, a "Disposition"), any shares
of Common Stock, or any securities convertible into or exercisable or
exchangeable for Common Stock (collectively, "Securities"), now owned or
hereafter acquired by such person or with respect to which such person has or
hereafter acquires the power of disposition. The Company has provided to
counsel for the Underwriters a complete and accurate list of all
securityholders of the Company as of August __, 1997 and the number and type
of securities held by each securityholder. The Company hereby agrees not to
take any action which would release any of its officers, directors or other
shareholders from
11
any Lock-Up Agreements currently existing or hereafter effected without the
prior written consent of Cruttenden Xxxx Incorporated.
(xxi) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxii) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company or any of its subsidiaries to or for
the benefit of any of the officers or directors of the Company or its
subsidiaries, or any of the members of the families of any of them, except as
disclosed in the Registration Statement and the Prospectus.
(xxiii) Other than Cruttenden Xxxx Incorporated, on behalf of
the several Underwriters, and except as disclosed in writing to Cruttenden
Xxxx Incorporated, no person is or will be owed any finders fee or commission
or similar payment in connection with the transactions contemplated by this
Agreement.
(xxiv) Except for employee benefit plans disclosed in the
Prospectus, the Company does not maintain any employee benefit plan subject to
Title IV of the Employee Retirement Income Security Act of 1974, as amended.
(b) Each of the Selling Shareholders, severally and not jointly,
represents and warrants, with respect to himself, herself, or itself to the
several Underwriters and the Company as follows:
(i) Such Selling Shareholder now has, and/or on the Closing
Date will have, good and marketable title to all of the Shares to be sold by
him, her or it hereunder, free and clear of all liens, encumbrances, equities,
security interests and claims whatsoever, with full right and authority to
deliver the same hereunder, subject to the rights of _____________________, as
custodian (herein called the "Custodian"), and that upon the delivery of
payment for such Shares hereunder, the several Underwriters will receive good
and marketable title thereto, free and clear of all liens, encumbrances,
equities, security interests and claims whatsoever.
(ii) Certificates in negotiable form for the Shares to be
sold by such Selling Shareholder have been placed in custody under a Custody
Agreement (herein called the "Custody Agreement") for delivery under this
Agreement by the Custodian; such Selling Shareholder specifically agrees that
the Shares represented by
12
the certificates so held in custody for such Selling Shareholder are subject
to the interest of the several Underwriters, the Company and the other Selling
Shareholders hereunder, that the arrangements made by such Selling Shareholder
for such custody, including the power of attorney (herein called the "Power of
Attorney") provided for in such Custody Agreement, are to that extent
irrevocable, and that the obligations of the Selling Shareholder shall not be
terminated by any act of such Selling Shareholder or by operation of law,
whether by the death, incapacity or dissolution of such Selling Shareholder or
the occurrence of any other event; if any such death, incapacity, dissolution
or other such event should occur before the delivery of the Shares hereunder,
certificates for the Shares shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death, incapacity,
dissolution or other event had not occurred regardless of whether the
Custodian shall have received notice of such death, incapacity, dissolution or
other event.
(iii) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Shareholder of this
Agreement, the Power of Attorney and the Custody Agreement, and for the sale
and delivery of the Shares to be sold by such Selling Shareholder hereunder,
have been obtained; and (assuming all filings required under Rule 430A are
made) such Selling Shareholder has full right, power and authority to enter
into this Agreement, the Power of Attorney and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder; this Agreement, the Power of Attorney and the Custody
Agreement constitute valid and binding obligations and agreements of such
Selling Shareholder in accordance with their respective terms.
(iv) The execution and delivery by such Selling Shareholder
of, and the performance by such Selling Shareholder of this Agreement, the
Power of Attorney and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any material statute, indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which such Selling Shareholder is a party or
by which such Selling Shareholder is bound, or any order, rule or regulation
of any court or (assuming due qualification of the Shares for public offering
under state and foreign securities laws and assuming all filings required
under Rule 430A are made) governmental agency or body having jurisdiction over
such Selling Shareholder or the property of the Selling Shareholder.
(v) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action which has constituted, or which is designed
to or might reasonably be expected to cause or result in, stabilization or
manipulation of the price of sale or resale of the Shares.
(vii) The information pertaining to such Selling Shareholder
under the caption "Principal and Selling Shareholders" in the Registration
Statement and the Prospectus is complete and accurate, and neither the
Registration Statement nor
13
of any amendment thereto, nor of the Prospectus nor of any supplement thereto,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell 750,000
Shares of the Firm Shares to the Underwriters, the Selling Shareholders agree
to sell to each of the Underwriters the number of Firm Shares set forth in
SCHEDULE A, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Shareholders, at a purchase price
of $_____ per share, the respective number of Firm Shares which is set forth
opposite the name of such Underwriter in SCHEDULE A hereto (subject to
adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 from the Company and
the Selling Shareholders shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in next-day funds, payable to the order of the Company and to
the order of Custodian, for the account of the Selling Shareholders (and the
Company and the Selling Shareholders agree not to deposit any such checks in
the bank on which it is drawn, and not to take any other action with the
purpose or effect of receiving immediately available funds, until the
business day following the date of delivery to the Company and the Custodian
and, in the event of any breach of the foregoing, the Company and the Selling
Shareholders shall reimburse the Underwriters for the interest lost and any
other expenses borne by the Underwriters by reason of such breach), at the
offices of Cruttenden Xxxx Incorporated, 00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx (or at such other place as may be agreed upon between Cruttenden
Xxxx Incorporated, the Selling Shareholders and the Company, at 7:00 A.M.
Pacific daylight savings time, (a) on the third (3rd) full business day
following the first day that Firm Shares are traded, (b) if this Agreement is
executed and delivered after 1:30 P.M. Pacific daylight savings time, the
fourth (4th) full business day following the day that this Agreement is
executed and delivered or (c) at such other time and date not later than
seven (7) full business days following the first day that Firm Shares are
traded as Cruttenden Xxxx Incorporated, the Selling Shareholders and the
Company may determine (or at such time and date to which payment and delivery
shall have been postponed pursuant to Section 10 hereof), such time and date
of payment and delivery being herein called the "Closing Date"; PROVIDED,
HOWEVER, that if the Company has not made available to the Representative
copies of the Prospectus within the time provided in Section 4(d) hereof,
Cruttenden Xxxx Incorporated may, in its sole discretion, postpone the
Closing Date until no later than two (2) full business days following
delivery of copies of the Prospectus to Cruttenden Xxxx Incorporated. The
certificates for the Firm Shares to be so delivered will be made available to
you at such office or such other location including, without limitation, in
New York City, as you may reasonably request for checking at least one (1)
full business day prior to the Closing Date and will be in such names and
14
denominations as you may request, such request to be made at least two (2)
full business days prior to the Closing Date. If Cruttenden Xxxx Incorporated
so elects, delivery of the Firm Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by
Cruttenden Xxxx Incorporated.
It is understood that you, individually, and not as the
Representative of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior
to the Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters intend to make a public offering (as such term is described in
Section 11 hereof) of the Firm Shares at a public offering price of $_____ per
share. After the public offering, the several Underwriters may, in their
discretion, vary the public offering price.
The information set forth on the front cover page (insofar as such
information relates to the Underwriters) concerning stabilization,
over-allotment and passive market making by the Underwriters, and under the
caption "Underwriting" in any Preliminary Prospectus and in the Prospectus
constitutes the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus, the Prospectus or the
Registration Statement, and you, on behalf of the respective Underwriters,
represent and warrant to the Company and the Selling Shareholders that the
statements made therein do not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
Each of the Company and the Selling Shareholders, as the case may be and as
specifically indicated below, agrees with the several Underwriters 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 as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the
Registration Statement is declared effective to become effective as promptly
as possible; the Company will notify you, promptly after it shall receive
notice thereof, of the time when the Registration Statement, any subsequent
amendment to the Registration Statement or any abbreviated registration
15
statement has become effective or any supplement to the Prospectus has been
filed; if the Company or any Selling Shareholder omitted information from the
Registration Statement at the time it was originally declared effective in
reliance upon Rule 430A(a) of the Rules and Regulations, the Company and/or
such Selling Shareholder will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time
period prescribed, with the Commission pursuant to subparagraph (1) or (4) of
Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to such Registration Statement as originally declared effective
which is declared effective by the Commission; if the Company files a term
sheet pursuant to Rule 434 of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus and term sheet
meeting the requirements of Rule 434(b) or (c), as applicable, of the Rules
and Regulations have been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (7) of Rule 424(b) of the Rules and
Regulations; if for any reason the filing of the final form of Prospectus is
required under Rule 424(b)(3) of the Rules and Regulations, it will provide
evidence satisfactory to you that the Prospectus contains such information
and has been filed with the Commission within the time period prescribed; it
will notify you promptly of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare and file
with the Commission any amendments or supplements to the Registration
Statement or Prospectus which, in the opinion of counsel for the several
Underwriters ("Underwriters' Counsel"), may be necessary or advisable in
connection with the distribution of the Shares by the Underwriters; it will
promptly prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if,
at any time when a prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a result of which
the Prospectus or any other prospectus relating to the Shares as then in
effect would include any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale
of the Shares, it will prepare promptly upon request, but at the expense of
such Underwriter, 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; and it will file no
amendment or supplement to the Registration Statement or Prospectus which
shall not previously have been submitted to you a reasonable time prior to
the proposed filing thereof or to which you shall reasonably object in
writing, subject, however, to compliance with the Act and the Rules and
Regulations and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat
16
of any proceeding for that purpose; and it will promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued.
(c) The Company will use its best efforts (including by providing
full cooperation with your counsel, whose services in this matter are required
and which you and the Company will seek to expedite) to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such qualifications in effect for so long as may be
required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition
thereof to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction in which it is not otherwise required
to be so qualified or to so execute a general consent to service of process.
In each jurisdiction in which the Shares shall have been qualified as above
provided, the Company will make and file such statements and reports in each
year as are or may be required by the laws of such jurisdiction for such
purpose.
(d) The Company will furnish to you, as soon as available, and, in
the case of the Prospectus and any term sheet or abbreviated term sheet under
Rule 434, in no event later than the first full business day following the
first day that Shares are traded, copies of the Registration Statement (two of
which will be signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such
documents, including any prospectus prepared to permit compliance with Section
10(a)(3) of the Act, all in such quantities as you may from time to time
reasonably request. Notwithstanding the foregoing, if Cruttenden Xxxx
Incorporated, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the Company shall
provide to you copies of a Preliminary Prospectus updated in all respects
through the date specified by you in such quantities as you may from time to
time reasonably request.
(e) The Company will make generally available to its
shareholders as soon as practicable, but in any event not later than the
forty-fifth (45th) day following the end of the fiscal quarter first occurring
after the first anniversary of the effective date of the Registration
Statement, an earnings statement (which will be in reasonable detail but need
not be audited) complying with the provisions of Section 11(a) of the Act and
covering a twelve (12) month period beginning after the effective date of the
Registration Statement.
(f) During a period of five (5) years after the date hereof, the
Company will furnish to its shareholders as soon as practicable after the end
of each respective period, annual reports (including financial statements
audited by independent certified public accountants) and, upon request by a
shareholder, unaudited quarterly reports of operations for each of the first
three quarters of the fiscal year, and will furnish to you and the other
several Underwriters hereunder, upon request (i) concurrently with furnishing
such reports to its shareholders, statements of
17
operations of the Company for each of the first three (3) quarters in the form
furnished to the Company's shareholders, (ii) concurrently with furnishing to
its shareholders, a balance sheet of the Company as of the end of such fiscal
year, together with statements of operations, of shareholders' equity, and of
cash flows of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent certified public accountants,
(iii) as soon as they are available, copies of all reports (financial or
other) mailed to shareholders, (iv) as soon as they are available, copies of
all reports and financial statements furnished to or filed with the
Commission, any securities exchange or the NASD, (v) every material press
release and every material news item or article in respect of the Company or
its affairs which was generally released to shareholders or prepared by the
Company, and (vi) any additional information of a public nature concerning the
Company, or its business which you may reasonably request. During such five
(5) year period, the foregoing financial statements shall be on a consolidated
basis to the extent that the accounts of the Company and its subsidiaries are
consolidated, and shall be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(i) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, or if the Company shall
terminate this Agreement pursuant to Section 11(a) hereof, or if the
Underwriters shall terminate this Agreement pursuant to Section 11(a) or
11(b), then the provisions of Section 11 of that certain letter agreement
dated December 20, 1996 between you and the Company (the "Letter Agreement")
shall govern payment and reimbursement obligations of the parties
notwithstanding that the Letter Agreement shall have ceased to be of full
force or effect for any other purpose.
(j) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company or its subsidiaries shall occur as a
result of which in your opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of and disseminate a press release or other public
18
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(k) During the Lock-Up Period, the Company will not, without the
prior written consent of Cruttenden Xxxx Incorporated, effect the Disposition
of, directly or indirectly, any Securities other than the sale of the Firm
Shares and the Option Shares hereunder, the Company's issuance of options or
Common Stock or capital stock of its subsidiaries under the Company's
presently authorized stock option and stock purchase plans described in the
Registration Statement and the Prospectus, the EMSR Option, the Train
International Option, the shares of Common Stock pursuant to the exercise of
the warrant described in Paragraph 6(i) below, and the sale of Securities in
connection with acquisitions undertaken by the Company.
(l) The terms of paragraph 9 of the Letter Agreement are hereby
incorporated by reference and made obligations of the Company and Cruttenden
Xxxx Incorporated as part of this Agreement notwithstanding that the Letter
Agreement shall have ceased to be of full force or effect for any other purpose.
(m) The Company shall reimburse and pay to Cruttenden Xxxx
Incorporated a nonaccountable expense allowance equal to two percent (2.0%) of
the total Price to Public shown on the front cover of the Prospectus, including,
if exercised, with respect to the over-allotment option. Cruttenden Xxxx
Incorporated acknowledges that $30,000 of the amount payable pursuant to this
paragraph has already been paid.
5. EXPENSES.
(a) The Company and the Selling Shareholders, as the case may be
and as specifically indicated below, agrees severally with each Underwriter
that:
(i) The Company will pay and bear all costs and expenses
incident to the performance of the obligations of the Company and the Selling
Shareholders in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and
exhibits), Preliminary Prospectuses and the Prospectus and any amendments or
supplements thereto; the printing of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Custody Agreement, the Power
of Attorney, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and Power of Attorney, and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer taxes, if
any, the cost of all certificates representing the Shares and transfer agents'
and registrars' fees; the fees and disbursements of counsel for the Company;
all fees and other charges of the Company's independent certified public
accountants and legal counsel; the cost, including the cost of printing, of
furnishing to the several Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus,
and any amendments or supplements to any
19
of the foregoing; the Company's road show costs and expenses; the cost of
preparing bound volumes of the documents for the public offering pursuant to
the Registration Statement; NASD filing fees and all other related fees and
the fees, expenses, and the cost, not to exceed $30,000, of qualifying the
Shares under the laws of such jurisdictions as you may designate (including
filing fees and fees and disbursements of Underwriters' Counsel in connection
with such NASD filings and Blue Sky qualifications, which shall not exceed
$30,000); and all other expenses directly incurred by the Company in
connection with the performance of its obligations hereunder. The provisions
of this Section 5(a)(i) are intended to relieve the Underwriters from the
payment of the expenses and costs which the Company hereby agrees to pay.
(ii) In addition to its other obligations under Section
8(a) hereof, the Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding described in
Section 8(a) hereof, it will reimburse the Underwriters on a monthly 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 obligation to reimburse the Underwriters 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 Underwriters
shall promptly return such payment 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) listed from time to
time in THE WALL STREET JOURNAL which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to the Underwriters within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request.
(a) In addition to their other obligations under Section 8(b)
hereof, the Underwriters severally and not jointly agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 8(b) hereof, they will reimburse the
Company on a monthly 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 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 Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments
20
which are not made to the Company within thirty (30) days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
(b) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 5(a)(ii) and
5(b) hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts
shall be apportioned among the reimbursing parties, 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 a written notice
of intention to arbitrate, therein electing the arbitration tribunal. In the
event the party demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party responding to
said demand or notice is authorized to do so. Any such arbitration will be
limited to the operation of the interim reimbursement provisions contained in
Sections 5(a)(ii) and 5(b) hereof and will not resolve the ultimate propriety
or enforceability of the obligation to indemnify for expenses which is
created by the provisions of Sections 8(a) and 8(b) hereof or the obligation
to contribute to expenses which is created by the provisions of Section 8(d)
hereof.
(c) Each Selling Shareholder will pay any transfer taxes incident
to the transfer to the Underwriters of the Shares being sold by such Selling
Shareholder.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein
shall be subject to the accuracy, as of the date hereof and the Closing Date
and any later date on which Option Shares are to be purchased, as the case
may be, of the representations and warranties of the Company and the Selling
Shareholders herein, to the performance by the Company and the Selling
Shareholders of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 2:00 P.M., Pacific daylight savings time, on the date following the date
of this Agreement, or such later date and time as shall be consented to in
writing 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 424(b) of the Rules and Regulations; and no stop order suspending
the effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the Company or any
Underwriter, threatened by the Commission, and any request of the Commission
for additional information (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel.
21
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus,
and the registration, authorization, issue, sale and delivery of the Shares,
shall have been reasonably satisfactory to Underwriters' Counsel, and such
counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters
referred to in this Section.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, or any later date on which Option Shares are to be
purchased, as the case may be, there shall not have been any change in the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company or any of its subsidiaries from that set
forth in the Registration Statement or Prospectus, which, in your sole
judgment, is material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, the
opinion of Jenkens & Xxxxxxxxx, a Professional Corporation, counsel for the
Company and the Selling Shareholders dated the Closing Date or such later
date on which Option Shares are to be purchased addressed to the Underwriters
and with reproduced copies or signed counterparts thereof for each of the
Underwriters, substantially in the following form:
(i) Each of the Company and its subsidiaries has
been duly incorporated and is validly existing as corporations in good
standing under the laws of the jurisdiction of their incorporation.
(ii) The Company and its subsidiaries have the
corporate power and authority to own, lease and operate their properties and
to conduct their business as described in the Prospectus.
(iii) Each of the Company and its subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction, if any, in which the Company has certified to such counsel
that it owns, leases or licenses properties or conducts its business, except
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations or business of the Company and its subsidiaries, taken as a whole.
To counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or entity other than the following:
DHRG Northeast, Inc., a Texas corporation;
DHRG of California, Inc., a Texas corporation;
Healthcare Resources, Inc., a Texas corporation;
Power Industry Personnel, Inc., a Connecticut corporation;
Power & Electronics Personnel, Inc., a California corporation;
22
Power Services, Inc., a South Carolina corporation;
Pacific Power Services, Inc., a Washington corporation;
Western Power Services, a Washington corporation;
Northeast Power & Electronics, a New York corporation;
Mid-Atlantic Power Services, a Virginia corporation;
Technical Careers of Pennsylvania, a Pennsylvania corporation;
Western Technical Careers, Inc., an Arizona corporation;
TNI, Inc., a Texas corporation;
Management Alliance Corporation, a Texas corporation;
Information Systems Consulting Corp., a Texas corporation;
Preferred Funding Corporation, a Texas corporation; and
Management Alliance Group of Independent Consultants, Inc.,
a Texas corporation.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under the
caption "Capitalization" as of the dates stated therein; to such counsel's
knowledge all necessary and proper corporate proceedings have been taken into
order to validly authorize the issuance of all issued and outstanding shares
of Common Stock; all issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and, to counsel's
knowledge, are fully paid and nonassessable, and will not have been issued in
violation of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right.
(v) The Firm Shares or the Option Shares, as the
case may be, to be issued by the Company pursuant to the terms of this
Agreement have been duly authorized and, upon issuance and delivery against
payment therefor in accordance with the terms hereof, will be duly and
validly issued and fully paid and nonassessable and will not have been issued
in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right contained
in the Company's articles of incorporation or bylaws or in any other
agreement or contract to which the Company or any of its subsidiaries is a
party; and the forms of certificates evidencing the Common Stock comply with
Texas 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 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 right or other rights to subscribe for or
purchase securities and will conform in all respects to the description
thereof contained in the Prospectus.
(vi) The Company has the requisite corporate power
and authority to enter into this Agreement and to issue, sell and deliver to
the Underwriters the Shares to be issued and sold by it hereunder.
23
(vii) All of the issued and outstanding shares of
each of the subsidiaries of the Company have been duly authorized and validly
issued, are fully paid and nonassessable and are owned of record by the
Company free and clear of all liens, encumbrances, equities, claims, security
interests, voting trusts or other defects of title whatsoever, except as set
forth in the Registration Statement and Prospectus.
(viii) Except as disclosed in or specifically
contemplated by the Prospectus, there are no outstanding options, warrants or
other rights calling for the issuance of, and no commitments, or agreements
to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company.
(ix) The Company and each of the Selling Shareholders
has full right, power and authority to enter into this Agreement and to sell
and deliver the Shares to be sold by it to the several Underwriters; this
Agreement has been duly authorized by all necessary corporate action on the
part of the Company and the Selling Shareholders, if applicable, and has been
duly executed and delivered by the Company and each of the Selling
Shareholders and, assuming due authorization, execution and delivery by you,
is a valid and binding agreement of the Company and each of the Selling
Shareholders, enforceable in accordance with its terms, except insofar as
indemnification provisions may be limited by applicable law or public policy
and except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(x) The Registration Statement has become effective
under the Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act; 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).
(xi) The Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than the financial statements
(including supporting schedules), financial data derived therefrom and other
financial and statistical information included therein as to which such
counsel need express no opinion), complied as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations.
(xii) The information in the Prospectus under the
captions "Management," "Shares Eligible For Future Sale," "Description of
Capital Stock," and Items 14 and 15 of Part II of the Registration Statement
to the extent that it constitutes matters of law or legal conclusions, has
been reviewed by such counsel and is a fair summary of such matters and
conclusions.
24
(xiii) The description in the Registration Statement
and the Prospectus of the articles of incorporation and bylaws of the Company
and of Texas statutes are accurate and fairly present the information
required to be presented by the Act and the applicable Rules and Regulations.
(xiv) There are no agreements, contracts, leases or
documents to which the Company or any of its subsidiaries is a party of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement which are not described or referred to therein or filed as required.
(xv) The execution and performance of this Agreement
and the consummation of the transactions herein contemplated will not (a)
result in any violation of the articles of incorporation or bylaws of the
Company or any of its subsidiaries or (b) result in a material breach or
violation of any of the terms and provisions of, or constitute, either by
itself or upon notice or the passage of time or both, a default under, any
material bond, debenture, note or other evidence of indebtedness, or any
material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which their properties are bound, or any
applicable statute, rule or regulation or any order, writ or decree of any
court, government or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or operations;
PROVIDED, HOWEVER, that such counsel need not express any opinion or belief
with respect to state securities or Blue Sky laws.
(xvi) No consent, approval, registration, filing,
license, permit, authorization or order of or qualification with any court,
government or governmental agency or body having jurisdiction over the
Selling Shareholders, the Company or any of its subsidiaries or any of their
properties or operations is necessary in connection with the consummation by
the Company and the Selling Shareholders of the transactions herein
contemplated, except such as have been obtained under the Act or such as may
be required by NASD or under state or other securities or Blue Sky laws in
connection with the purchase and the distribution of the Shares by the
Underwriters (as to which such counsel need express no opinion).
(xvii) There are no legal or governmental proceedings
pending or threatened against the Company or any of its subsidiaries of a
character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations, other than those
described therein.
(xviii) Neither the Company nor any of its
subsidiaries is in violation of its respective charter or bylaws.
(xix) Except as set forth in the Registration
Statement and Prospectus, no holders of Common Stock or other securities of
the Company have
25
registration rights with respect to securities of the Company and, except as
set forth in the Registration Statement and Prospectus, all holders of
securities of the Company having rights to registration of such shares of
Common Stock or other securities, because of the filing of the Registration
Statement by the Company have, with respect to the offering contemplated
thereby, waived such rights or such rights have expired by reason of lapse of
time following notification of the Company's intent to file the Registration
Statement.
(xx) Except as set forth in the Registration
Statement and the Prospectus, there are no actual or, to such counsel's
knowledge, threatened action, suit, claim or proceeding relating to patents,
patent rights or licenses, trademarks or trademark rights, copyrights,
collaborative research, licenses or royalty arrangements or agreements or
trade secrets, know-how or proprietary techniques or technology, including,
processes and substances, owned by or affecting the business operations of
the Company or any of its subsidiaries which are pending or threatened
against the Company or any of its subsidiaries and which action, suit, claim
or proceeding would, with respect to any of the foregoing, have a material
adverse effect on the condition (financial or other), earnings, operations,
business or business prospects of the Company and its subsidiaries, taken as
a whole.
(xxi) This Agreement and the several Custody
Agreements between the several Selling Shareholders and _____________ as
Custodian, and the Power of Attorney referred to in such Custody Agreements
have each been duly executed and delivered by or on behalf of each of the
Selling Shareholders and are valid and binding agreements of the Selling
Shareholders, enforceable in accordance with the terms thereof except as the
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally or by general equitable principals and except insofar as
indemnification relating to or affecting provisions may be limited by
applicable law or public policy, and except that provisions as to the
irrevocability of the Custody Agreement may be limited by applicable law upon
the death or incapacity of a Selling Shareholder.
(xxii) The performance of this Agreement, the Power
of Attorney and the Custody Agreements and the consummation of the
transactions therein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default
under any material bond, indenture, mortgage, deed or trust, or other
agreement or instrument certified to such counsel, by such Selling
Shareholder or an officer or representative thereof, to which any Selling
Shareholder is a party or by which any Selling Shareholder is bound, or any
applicable law or regulation or, so far as is known to such counsel, any
order, writ, injunction, or decree of any jurisdiction, court or governmental
instrumentality.
(xxiii) Each Selling Shareholder is the record owner
of the Shares to be sold by such Selling Shareholder under the Agreement and
possesses full
26
right, power and authority to sell, assign, transfer and deliver the Shares
to be sold by such Selling Shareholder hereunder. To such counsel's
knowledge, each Selling Shareholder has good and indefeasible title to the
Shares sold by such Selling Shareholder under this Agreement, free and clear
of all liens, encumbrances, restrictions, equities, security interests and
claims, and upon the delivery of and payment for the Shares to be sold by
such Selling Shareholder, each Selling Shareholder shall transfer all rights
of the Selling Shareholder in the Shares to the Underwriters who have
severally purchased such Shares under this Agreement, free and clear of all
liens, encumbrances, equities, security interests and claims.
(xxiv) The Company is not an "investment company" as
defined in the 1940 Act.
In addition, such counsel shall state that such
counsel has acted as outside corporate legal counsel to the Company and
participated in conferences with officials and other representatives of the
Company, Cruttenden Xxxx Incorporated, Underwriters' Counsel and the
independent certified public accountants of the Company, at which such
conferences the contents of the Registration Statement and Prospectus and
related matters were discussed, and although such counsel is not passing upon
and does not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, and have not made any independent check or
verification thereof, on the basis of the foregoing (relying as to
materiality to a large extent upon the facts provided by officers and
representatives of the Company), no facts have come to the attention of such
counsel that lead such counsel to believe that either the Registration
Statement at the time it became effective (including the information deemed
to be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), or any amendment thereof made prior
to the Closing Date as of the date of such amendment, does not comply as to
form in all material respects with the Act and the Rules and Regulations, or
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or
any amendment thereof or supplement thereto made prior to the Closing Date as
of the date of such amendment or supplement) and as of the Closing Dated
contained or contains an untrue statement of a material fact or omitted or
omits to state any 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 (it being understood that such counsel need
express no belief or opinion with respect to the exhibits and the financial
statements and other financial and statistical data included therein).
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and
27
substance reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of
the Company and its subsidiaries, provided that copies of any such statements
or certificates shall be delivered to Underwriters' Counsel. The opinion of
such counsel for the Company shall state that the opinion of any such other
counsel is in form satisfactory to such counsel and, in their opinion, you
and they are justified in relying thereon.
(e) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may
be, an opinion of Xxxxxx & Xxxxx LLP, in form and substance reasonably
satisfactory to you, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the
Company shall have furnished to such counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may
be, a letter from Coopers & Xxxxxxx L.L.P. and Xxxxxx and Xxxxxxx L.L.P.,
Independent Auditors (the "Accountants"), addressed to the Underwriters,
dated the Closing Date or such later date on which Option Shares are to be
purchased, as the case may be (in each case, the "Bring Down Letter"),
confirming that they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable
published Rules and Regulations and based upon the procedures described in a
letter delivered to you concurrently with the execution of this Agreement
(herein called the "Original Letter"), but carried out to a date not more
than five (5) business days prior to the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, (i) confirming,
to the extent true, that the statements and conclusions set forth in the
Original Letter are accurate as of the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, and (ii) setting
forth any revisions and additions to the statements and conclusions set forth
in the Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since its date, or to reflect the
availability of more recent financial statements, data or information. The
Bring Down Letter shall not disclose any change in the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company or any of its subsidiaries from that set forth in the Registration
Statement or Prospectus, which, in your sole judgment, is material and
adverse and that makes it, in your sole judgment, impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. The
28
Original Letter from the Accountants shall be addressed to or for the use of
the Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that they are independent certified
public accountants with respect to the Company within the meaning of the Act
and the applicable published Rules and Regulations, (ii) set forth their
opinions with respect to their audits of the balance sheet of the Company as
of December 31, 1996, 1995 and 1994 and related statements of operations,
shareholders' equity and cash flows for the twelve (12) months ended December
31, 1996, 1995 and 1994 and state that they have completed the procedures
specified by the American Institute of Certified Public Accountants for a
review of interim financial information as described in SAS No. 71, INTERIM
FINANCIAL INFORMATION, on the unaudited consolidated balance sheet as of
March 31, 1997 and as of June 30, 1997 and the unaudited consolidated
statements of operations and cash flows for the three month and six month
periods ended March 31, 1997 and June 30, 1997, respectively, (iii) state
that nothing came to their attention that caused them to believe that the
financial statements included in the Registration Statement and Prospectus do
not comply as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and that any adjustments thereto
have not been properly applied to the historical amounts in the compilation
of such statements, and (iv) address other matters agreed upon the
Accountants and you. In addition, you shall have received from Coopers &
Xxxxxxx L.L.P. a letter addressed to the Company and made available to you
for the use of the Underwriters stating that their review of the Company's
system of internal accounting controls, to the extent they deemed necessary
in establishing the scope of their audit of the Company's financial
statements as of December 31, 1996, did not disclose any weaknesses in
internal controls that they considered to be material weaknesses.
(g) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may
be, a certificate of the Company, dated the Closing Date or such later date
on which Option Shares are to be purchased, as the case may be, signed by the
Chief Executive Officer and Chief Financial Officer of the Company, to the
effect that, and you shall be satisfied that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on and as of the
Closing Date or any later date on which Option Shares are to be purchased, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date or any later date on which Option Shares are to be
purchased, as the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued under the Act; no order preventing
or suspending the use of the Prospectus or any Preliminary Prospectus filed
as a part of the Registration Statement, or any amendment thereto, has been
issued; and no proceedings for that purpose have been instituted or are
pending, threatened or contemplated under the Act;
29
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus, and any amendments
or supplements thereto, contained all material information required to be
included therein by the Act and the Rules and Regulations, and in all material
respects conformed to the requirements of the Act and the Rules and Regulations,
the Registration Statement, and any amendment or supplement thereto, did not and
does not include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, the Prospectus, and any amendment or supplement thereto,
did not and does not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been so set forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries, taken as a whole, (b) any transaction that is material to the
Company or any of its subsidiaries, except transactions entered into in the
ordinary course of business, (c) any obligation, direct or contingent, that is
material to the Company or any of its subsidiaries, incurred by the Company or
any of its subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding indebtedness of the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or is out of the ordinary course of business of
the Company or any of its subsidiaries, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any of its
subsidiaries (f) any legal or governmental action, suit or proceeding pending or
threatened against the Company or any of its subsidiaries which is material to
the Company and its subsidiaries, taken as a whole, (g) any verbal or written
agreement or other transaction entered into by either the Company or any of its
subsidiaries which is not in the ordinary course of business of the Company or
any of its subsidiaries as the case may be or (h) any loss or damage (whether or
not insured) to the property of the Company or any of its subsidiaries which has
been sustained or will have been sustained which has a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries, taken as a whole.
(h) The Company shall have obtained and delivered to you the
Lock-Up Agreements.
(i) The Company shall have furnished you a warrant for the
purchase of up to 75,000 shares of Common Stock at an exercise price per
share equal to one hundred and twenty percent (120%) of the offering price
per share of the Shares, in the form attached hereto as Exhibit A.
30
(j) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company herein, as to the performance
by the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
(k) The Shares shall have been duly accepted for quotation,
subject to notice of issuance, through the Nasdaq National Market.
All such opinions, certificates, letters and documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory to Underwriters' Counsel. The Company will furnish you with
such number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request.
7. OPTION SHARES.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants to the several Underwriters, for the
purpose of covering over-allotments in connection with the distribution and
sale of the Firm Shares only, a nontransferable option to purchase up to
112,500 Option Shares at the purchase price per share for the Firm Shares set
forth in Section 3 hereof. Such notice shall set forth the number of Option
Shares as to which the option is being exercised and the date and time as
reasonably determined by you when such Option Shares are to be delivered.
Such option may be exercised by Cruttenden Xxxx Incorporated, on behalf of
the several Underwriters, on one (1) or more occasions in whole or in part
during the period of forty-five (45) days after the date on which the Firm
Shares are initially offered to the public by giving written notice (the
"Option Notice") to the Company. The number of Option Shares to be purchased
by each Underwriter upon the exercise of such option shall be the same
proportion of the total number of Option Shares to be purchased by the
several Underwriters pursuant to the exercise of such option as the number of
Firm Shares purchased by such Underwriter (set forth in Schedule A hereto)
bears to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by Cruttenden Xxxx
Incorporated in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares
to be purchased by the several Underwriters pursuant to the exercise of the
option granted by this Section 7 shall be made against payment of the
purchase price therefor by the several Underwriters by certified or official
bank check or checks drawn in next-day funds, payable to the order of the
Company (and the Company agrees not to deposit any such check in the bank on
which it is drawn, and not to take any other action with
31
the purpose or effect of receiving immediately available funds, until the
business day following the date of its delivery to the payee). In the event
of any breach of the foregoing, the Company shall reimburse the Underwriters
for the interest lost and any other expenses borne by them by reason of such
breach. Such delivery and payment shall take place at the offices of
Cruttenden Xxxx Incorporated, 00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx
or at such other place as may be agreed upon between Cruttenden Xxxx
Incorporated and the Company (i) on the Closing Date, if written notice of
the exercise of such option is received by the Company at least two (2) full
business days prior to the Closing Date, or (ii) on a date which shall not be
later than the third (3rd) full business day following the date the Company
receives written notice of the exercise of such option, if such notice is
received by the Company after the date two (2) full business days prior to
the Closing Date.
The certificates for the Option Shares to be so delivered
will be made available to you at such office or such other location
including, without limitation, in New York City, as you may reasonably
request for checking at least one (1) full business day prior to the date of
payment and delivery and will be in such names and denominations as you may
request, such request to be made at least two (2) full business days prior to
such date of payment and delivery. If Cruttenden Xxxx Incorporated so
elects, delivery of the Option Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representative.
It is understood that you, individually, and not as the
Representative of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior
to the date of payment and delivery for the Option Shares to be purchased by
such Underwriter or Underwriters. Any such payment by you shall not relieve
any such Underwriter or Underwriters of any of its or their obligations
hereunder.
(b) Upon exercise of any option provided for in Section 7(a)
hereof, the obligations of the several Underwriters to purchase such Option
Shares will be subject (as of the date hereof and as of the date of payment
and delivery for such Option Shares) to the accuracy of and compliance with
the representations, warranties and agreements of the Company herein, to the
accuracy of the statements of the Company and officers of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, to the conditions set forth in Section 6 hereof, and
to the condition that all proceedings taken at or prior to the payment date
in connection with the sale and transfer of such Option Shares shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and
you shall have been furnished with all such documents, certificates and
opinions as you may request in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants or
32
agreements of the Company or the satisfaction of any of the conditions herein
contained.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including, without
limitation, in its capacity as an Underwriter or as a "qualified independent
underwriter" within the meaning of Schedule E of the Bylaws of the NASD), under
the Act, the Exchange Act or otherwise, specifically including, but not limited
to, losses, claims, damages or liabilities (or actions in respect thereof)
arising out of or based upon (i) any breach or facts that would constitute a
breach of any representation, warranty, agreement or covenant of the Company
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment or
supplement thereto, or 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, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof and, PROVIDED FURTHER, that the indemnity agreement provided in this
Section 8(a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any losses, claims,
damages, liabilities or actions based upon any untrue statement or alleged
untrue statement of material fact or omission or alleged omission to state
therein a material fact purchased Shares, if a copy of the Prospectus in which
such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Act and the Rules and Regulations, unless such failure is the
result of noncompliance by the Company with Section 4(d) hereof.
Each Selling Shareholder severally and not jointly agrees
to indemnify and hold harmless each Underwriter and each person (including
each partner thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act, to the same extent as the foregoing
indemnity from the Company to
33
each Underwriter, but only with respect to losses, claims, damages or
liabilities which arise out of or are based upon (i) any breach or facts that
would constitute a breach of any representation, warranty or covenant of such
Selling Shareholder contained in this Agreement or (ii) information relating
to such Selling Shareholder furnished in writing by or on behalf of such
Selling Shareholder expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto; PROVIDED, HOWEVER, that the Company shall remain jointly and
severally obligated to indemnify each Underwriter pursuant to this Section
8(a). This indemnity agreement shall be in addition to any liabilities which
the Selling Shareholders may otherwise have. The liabilities of the Bank
hereunder shall be limited to an amount equal to the public offering price of
the Option Shares sold by the Bank to the Underwriters.
The indemnity agreement in this Section 8(a) shall extend
upon the same terms and conditions to, and shall inure to the benefit of,
each person, if any, who controls any Underwriter within the meaning of the
Act or the Exchange Act. This indemnity agreement shall be in addition to
any liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and each Selling Shareholder against any
losses, claims, damages or liabilities, joint or several, to which the Company
and each Selling Shareholder may become subject under the Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of such
Underwriter herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment or supplement thereto, or 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, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in the case of subparagraphs (ii) and (iii) of this
Section 8(b) to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof, and agrees to reimburse the Company and the Selling Shareholders for
any legal or other expenses reasonably incurred by the Company and the Selling
Shareholders in connection with investigating or defending any such loss, claim,
damage, liability or action.
The indemnity agreement in this Section 8(b) shall extend
upon the same terms and conditions to, and shall inure to the benefit of,
each officer of the Company who signed the Registration Statement and each
director of the Company,
34
and each person, if any, who controls the Company or a Selling Shareholder
within the meaning of the Act or the Exchange Act. This indemnity agreement
shall be in addition to any liabilities which each Underwriter may otherwise
have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 8, 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 otherwise than under this Section 8 except to the extent that it has
been prejudiced by such omission. In case any such action is brought against
any indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that 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 legal defenses available to it 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 the
indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel (together with
appropriate local counsel) approved by the indemnifying party representing
all the indemnified parties under Section 8(a) or 8(b) hereof who are parties
to such action), (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 or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. In no event
shall any indemnifying party be liable in respect of any amounts paid in
settlement of any action unless the indemnifying party shall have approved
the terms of such settlement; PROVIDED that such consent shall not be
unreasonably withheld. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnification could have been sought
hereunder by such indemnified party, unless
35
such settlement includes an unconditional release of such indemnified party
from all liability on all claims that are the subject matter of such
proceeding.
(d) In order to provide for just and equitable contribution
in any action in which a claim for indemnification is made pursuant to this
Section 8 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this Section 8
provides for indemnification in such case, all the parties hereto shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so
that the Underwriters severally and not jointly are responsible pro rata for
the portion represented by the percentage that the underwriting discount
bears to the public offering price, and the Company and the Selling
Shareholders are responsible for the remaining portion, PROVIDED, HOWEVER,
that (i) no Underwriter shall be required to contribute any amount in excess
of the amount by which the underwriting discount applicable to the Shares
purchased by such Underwriter exceeds the amount of damages which such
Underwriter has otherwise been required to pay and (ii) no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The contribution agreement in this Section
8(d) shall extend upon the same terms and conditions to, and shall inure to
the benefit of, each person, if any, who controls any Underwriter or the
Company within the meaning of the Act or the Exchange Act and each officer of
the Company who signed the Registration Statement and each director of the
Company.
(e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 8, and are fully informed
regarding said provisions. They further acknowledge that the provisions of
this Section 8 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Act and the Exchange Act.
36
9. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties, covenants and agreements
of the Company, the Selling Shareholders and the Underwriters herein or in
certificates delivered pursuant hereto, and the indemnity and contribution
agreements contained in Section 8 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter within the meaning of
the Act or the Exchange Act, or any Selling Shareholder or by or on behalf of
the Company, or any of its officers, directors or controlling persons within
the meaning of the Act or the Exchange Act, and any Selling Shareholder shall
survive the delivery of the Shares to the several Underwriters hereunder or
termination of this Agreement.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares
agreed by such Underwriter or Underwriters to be purchased hereunder upon
tender of such Firm Shares in accordance with the terms hereof, and if the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters so agreed but failed to purchase does not exceed ten percent
(10%) of the Firm Shares, the remaining Underwriters shall be obligated,
severally in proportion to their respective commitments hereunder, to take up
and pay for the Firm Shares of such defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed to take up and pay for exceeds ten percent
(10%) of the Firm Shares, the remaining Underwriters shall have the right,
but shall not be obligated, to take up and pay for (in such proportions as
may be agreed upon among them) the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase. If such
remaining Underwriters do not, at the Closing Date, take up and pay for the
Firm Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase, the Closing Date shall be postponed for twenty-four (24)
hours to allow the several Underwriters the privilege of substituting within
twenty-four (24) hours (including non-business hours) another underwriter or
underwriters (which may include any nondefaulting Underwriter) satisfactory
to the Company. If no such underwriter or underwriters shall have been
substituted as aforesaid by such postponed Closing Date, the Closing Date
may, at the option of the Company, be postponed for a further twenty-four
(24) hours, if necessary, to allow the Company the privilege of finding
another underwriter or underwriters, satisfactory to you, to purchase the
Firm Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase. If it shall be arranged for the remaining Underwriters
or substituted underwriter or underwriters to take up the Firm Shares of the
defaulting Underwriter or Underwriters as provided in this Section 10, (i)
the Company shall have the right to postpone the time of delivery for a
period of not more than seven (7) full business days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement
or the Prospectus, or in any other documents or arrangements, and the Company
agrees promptly to file any amendments to the Registration Statement,
supplements to the
37
Prospectus or other such documents which may thereby be made necessary, and
(ii) the respective number of Firm Shares to be purchased by the remaining
Underwriters and substituted underwriter or underwriters shall be taken as
the basis of their underwriting obligation. If the remaining Underwriters
shall not take up and pay for all such Firm Shares so agreed to be purchased
by the defaulting Underwriter or Underwriters or substitute another
underwriter or underwriters as aforesaid and the Company shall not find or
shall not elect to seek another underwriter or underwriters for such Firm
Shares as aforesaid, then this Agreement shall terminate.
In the event of any termination of this Agreement
pursuant to the preceding paragraph of this Section 10, then the Company
shall not be liable to any Underwriter (except as provided in Sections 5 and
8 hereof) nor shall any Underwriter (other than an Underwriter who shall have
failed, otherwise than for some reason permitted under this Agreement, to
purchase the number of Firm Shares agreed by such Underwriter to be purchased
hereunder, which Underwriter shall remain liable to the Company, the Selling
Shareholders and the other Underwriters for damages, if any, resulting from
such default) be liable to the Company or the Selling Shareholders (except to
the extent provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include
any person substituted for an Underwriter under this Section 10.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the earlier
of (i) 6:30 A.M., Pacific daylight savings time, on the first full business
day following the effective date of the Registration Statement, or (ii) the
time of the public offering of any of the Shares by the Underwriters after
the Registration Statement becomes effective. The time of the public
offering shall mean the time of the release by you, for publication, of the
first newspaper advertisement relating to the Shares, or the time at which
the Shares are first generally offered by the Underwriters to the public by
letter, telephone, telegram or telecopy, whichever shall first occur. By
giving notice as set forth in Section 12 before the time this Agreement
becomes effective, you, as Representative of the several Underwriters, or the
Company, may prevent this Agreement from becoming effective without liability
of any party to any other party, except as provided in Sections 4(i) and 8
hereof.
(b) You, as Representative of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time on or prior to the Closing Date or on or
prior to any later date on which Option Shares are to be purchased, as the
case may be, (i) if the Company shall have failed in any material respect,
refused or been unable to perform any agreement on its part to be performed,
or because any other condition of the Underwriters' obligations hereunder
required to be fulfilled is not fulfilled, including, without limitation, any
change in the condition (financial or otherwise), earnings, operations,
business or business prospects
38
of the Company or its Subsidiaries from that set forth in the Registration
Statement or Prospectus, which, in your sole judgment, is material and
adverse, or (ii) if additional 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 if a banking moratorium shall have been declared by federal,
New York or California authorities, or (iii) if the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other
calamity of such character as to interfere materially with the conduct of the
business and operations of the Company or its Subsidiaries regardless of
whether or not such loss shall have been insured, or (iv) if there shall have
been a material adverse change in the general political or economic
conditions or financial markets as in your judgment makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Shares,
or (v) if there shall have been an outbreak or escalation of hostilities or
of any other insurrection or armed conflict or the declaration by the United
States of a national emergency which, in the opinion of Cruttenden Xxxx
Incorporated, makes it impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. In the
event of termination pursuant to subparagraph (i) above, the Company shall
remain obligated to pay costs and expenses pursuant to Sections 4(i), 5 and 8
hereof. Any termination pursuant to any of subparagraphs (ii) through (v)
above shall be without liability of any party to any other party except as
provided in Sections 4(i) and 8 hereof.
If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11, you
shall promptly notify the Company by telephone, telecopy or telegram, in each
case confirmed by letter. If the Company shall elect to prevent this
Agreement from becoming effective, the Company shall promptly notify you by
telephone, telecopy or telegram, in each case, confirmed by letter.
12. NOTICES. All notices or communications hereunder, except
as herein otherwise specifically provided, shall be in writing and if sent to
you shall be mailed, delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to you c/o Cruttenden Xxxx Incorporated,
00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, telecopier number
(000) 000-0000, Attention: General Counsel; if sent to the Company, such
notice shall be mailed, delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to 00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx
000, Xxxxxx, Xxxxx, telecopier number (000) 000-0000, Attention: Xx. Xxx
Xxxxxxx
13. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the several Underwriters, the Company and the Selling
Shareholders and their respective executors, administrators, successors and
assigns. Nothing expressed or
39
mentioned in this Agreement is intended or shall be construed to give any
person or entity, other than the parties hereto and their respective
executors, administrators, successors and assigns, and the controlling
persons within the meaning of the Act or the Exchange Act, officers and
directors referred to in Section 8 hereof, any legal or equitable right,
remedy or claim in respect of this Agreement or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective executors, administrators, successors and assigns
and said controlling persons and said officers and directors, and for the
benefit of no other person or entity. No purchaser of any of the Shares from
any Underwriter shall be construed a successor or assign by reason merely of
such purchase.
In all dealings with the Company under this Agreement,
you shall act on behalf of each of the several Underwriters, and the Company
shall be entitled to act and rely upon any statement, request, notice or
agreement made or given by you.
14. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
40
If the foregoing correctly sets forth the understanding among
the Company, the Selling Shareholders and the several Underwriters, please
so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between the Company, the Selling
Shareholders and the several Underwriters.
Very truly yours,
DIVERSIFIED CORPORATE
RESOURCES, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
SELLING SHAREHOLDERS:
USFG-DHRG L.P. No. 2, Inc.
----------------------------------
By:
------------------------------
Name:
----------------------------
Attorney-In-Fact
Imperial Bank
----------------------------------
By:
------------------------------
Name:
----------------------------
Attorney-In-Fact
Accepted as of the date first above written:
CRUTTENDEN XXXX INCORPORATED
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
By CRUTTENDEN XXXX INCORPORATED
By
-----------------------------
Authorized Signatory
41
SCHEDULE A
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Number of Firm
Number of Firm Shares To Be Number of
Shares To Be Purchased from Firm Shares To Be
Underwriters Purchased from the USFG-DHRG Purchased from
Company L.P. No. 2, Inc. Imperial Bank
---------------------------------------------------------------------------------------------------------
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Total
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