3,000,000 Shares(1)
PHYSICIAN SUPPORT SYSTEMS, INC.
Common Stock
UNDERWRITING AGREEMENT
February __, 1996
Xxxxx, Xxxxx & Company
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
As Representative of the Several Underwriters
Dear Sirs and Madams:
Physician Support Systems, Inc., a Delaware corporation (the "Company"
or "PSS"), proposes, subject to the terms and conditions herein contained, to
issue and sell 3,000,000 shares (the "Firm Shares") of its authorized but
unissued common stock, $.001 par value per share (the "Common Stock"). The
Company proposes to grant to the Underwriters (as defined below) an option to
purchase up to 450,000 additional shares of Common Stock (the "Optional Shares"
and, with the Firm Shares, collectively, the "Shares"). The Common Stock is more
fully described in the Registration Statement and the Prospectus hereinafter
mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the shares by the several underwriters, named in Schedule I hereto,
for whom you are acting as representative (collectively, the "Underwriters,"
which term shall also include any underwriter purchasing Shares pursuant to
Section 2(c) hereof). You represent and warrant that you have been authorized by
each of the other Underwriters to enter into this Agreement on its behalf and to
act for it in the manner herein provided.
The Shares are being issued and sold concurrently with the
acquisitions (the "Acquisitions") by the Company of (i) North Coast Health Care
Management, Inc. ("NCHC") pursuant to a Stock Purchase Agreement dated September
11, 1995 (the
___________________
(1) Plus an option to purchase from the Company up to 450,000
additional shares to cover over-allotments.
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"NCHC Agreement") among the stockholders of NCHC and PSS, (ii) North Coast
Account Systems ("NCAS") and Medical Dental Invoicing Services, Inc. ("MDIS")
pursuant to an Asset Purchase Agreement dated September 25, 1995 (the "NCAS/MDIS
Agreement" and, together with the NCHC Agreement, the "Cleveland Agreements")
among NCAS, MDIS, the stockholders of NCAS and MDIS and PSS, (iii) Medical
Management Support, Inc. ("MM Support") pursuant to an Amended and Restated
Asset Purchase Agreement (the "MM Support Agreement") dated December 7, 1995
among MM Support, the shareholders of MM Support and PSS Medical Management
Support, Inc., a Delaware corporation and a wholly-owned subsidiary of the
Company, and (iv) Data Processing Systems, Inc. ("DPS") pursuant to an Asset
Purchase Agreement dated October 16, 1995 (the "DPS Agreement") among DPS,
XxXxxxx Xxxxxxx & Xxxxxxxx Inc. ("McGriff"), PSS-Data Processing Systems, Inc.,
a Delaware corporation and wholly- owned subsidiary of the Company. The
Cleveland Agreements, the MM Support Agreement and the DPS Agreement are herein
collectively referred to as the "Acquisition Agreements." References herein to
the "Company" will refer to (i) PSS, before and after the Acquisitions, and (ii)
each of NCHC, MDIS, MM Support and DPS before and after consummation of the
Acquisitions.
Section 1. Representations and Warranties of the Company. The Company
hereby represents and warrants to the several Underwriters as of the date hereof
and as of each Closing Date (as defined below) that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 33-80731),
including the related preliminary prospectus, for the registration under
the Securities Act of 1933, as amended (the "Securities Act") of the
Shares; such registration statement, including the form of prospectus,
together with all amendments thereto, has been prepared by the Company in
all material respects in conformity with the requirements of the Act and
the rules and regulations of the Commission thereunder. Copies of such
registration statement and of each amendment thereto, if any, including the
related preliminary prospectus (meeting the requirements of Rule 430A of
the rules and regulations of the Commission) heretofore filed by the
Company with the Commission, have been delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement,
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including all exhibits and financial statements, all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Shares (a "Rule 462(b)
Registration Statement"), and, in the event of any amendment thereto after
the effective date of such registration statement (the "Effective Date"),
shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b)
Registration Statement). The term Prospectus as used in this Agreement
shall mean the prospectus relating to the Shares first filed with the
Commission pursuant to Rule 424(b) and Rule 430A (or if no such filing is
required, as included in the Registration Statement) and, in the event of
any supplement or amendment to such prospectus after the Effective Date,
shall also mean (from and after the filing with the Commission of such
supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such
registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The Company has
caused to be delivered to you copies of each Preliminary Prospectus and has
consented to the use of such copies for the purposes permitted by the
Securities Act.
(b) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus as being
conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned
or leased or the nature of the business transacted by it makes
qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, business prospects,
properties, condition
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(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole).
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed
in Exhibit 21.1 to the Registration Statement. Except as described in the
Prospectus, the Company owns all of the outstanding capital stock of its
subsidiaries free and clear of all claims, liens, charges and encumbrances,
except that such capital stock of Spring Anesthesia Group, Inc., a
subsidiary of PSS is pledged to Meridian Bank to secure the Company's
obligations due such bank. The Company and each of its subsidiaries are in
possession of and operating in compliance with all material authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses as described in the Prospectus, all
of which are valid and in full force and effect.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
materially adverse change in the business, business prospects, properties,
condition (financial or otherwise) or results of operations of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, other than as set forth in
the Registration Statement and the Prospectus, and since such dates, except
in the ordinary course of business, neither the Company nor any of its
subsidiaries has entered into any material transaction not referred to in
the Registration Statement and the Prospectus.
(e) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and any later date on which Optional
Shares are to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not and, on the
Closing Date and any later date on which Optional Shares are to be
purchased, will
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not contain any untrue statement of a material fact or omit to state any
material fact necessary in order 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 in this
subparagraph (e) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus.
(f) The Company has the authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus. The issued
and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and were not issued
in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities. All issued and outstanding shares of
capital stock of each subsidiary of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except as
disclosed in or contemplated by the Prospectus and the financial statements
of the Company and the related notes thereto included in the Prospectus,
neither the Company nor any subsidiary has outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of
the Company's stock option plan (the "Stock Option Plan") and the options
granted and exercised thereunder, set forth in the Prospectus accurately
and fairly presents the information required by the Securities Act and the
Rules and Regulations to be shown with respect to such Stock Option Plan
and options.
(g) The Shares are duly authorized and, when issued and sold to the
Underwriters in accordance with the provisions of this Agreement, will be
validly issued, fully paid and nonassessable and conform to the description
thereof in the Prospectus; the certificates for the Shares that are being
sold by the Company are in due and proper form; and the holders of such
shares will not be subject to personal liability by reason of being such
holders.
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(h) The Shares to be issued and sold by the Company will be authorized
for listing on the Nasdaq National Market upon official notice of issuance.
(i) The Shares to be sold by the Company will be sold free and clear
of any pledge, lien, security interest, encumbrance, claim or equitable
interest, and will conform to the description thereof contained in the
Prospectus. No preemptive right, co-sale right, registration right, right
of first refusal or other similar right to subscribe for or purchase
securities of the Company exists with respect to the issuance and sale of
the Shares by the Company pursuant to this Agreement. No stockholder of the
Company has any right which has not been waived, or complied with, to
require the Company to register the sale of any shares owned by such
stockholder under the Securities Act in the public offering contemplated by
this Agreement. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Shares to be sold by the Company as contemplated herein.
(j) The Company and its subsidiaries (to the extent each is a party
thereto) have full corporate power and authority to enter into this
Agreement and the Acquisition Agreements and perform the transactions
contemplated hereby and thereby. This Agreement and the Acquisition
Agreements have been duly authorized, executed and delivered by the Company
and each constitutes a valid and binding obligation of the Company and its
subsidiaries (to the extent each is party thereto) enforceable in
accordance with its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, reorganization,
moratorium laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for liabilities
arising under federal and state securities laws. The making and performance
of this Agreement and the Acquisition Agreements by the Company and its
subsidiaries (to the extent each is a party thereto) and the consummation
of the transactions contemplated hereby and thereby (i) will not violate
any provisions of the Certificate of Incorporation, Bylaws or other
organizational documents of the Company or any of its subsidiaries, and
(ii) will not conflict with, result in a material breach or violation of,
or constitute, either by itself or upon notice or the passage of time or
both, a material default under (A) any
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agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any of
their respective properties may be bound or affected, or (B) any statute or
any authorization, judgment, decree, order, rule or regulation of any court
or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its subsidiaries or any of their
respective properties. No consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other governmental
body that has not already been obtained is required for the execution and
delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Securities
Act, the Blue Sky laws applicable to the public offering of the Shares by
the several Underwriters and the clearance of such offering with the NASD.
(k) The historical consolidated financial statements and schedules of
the Company and the related notes thereto included in the Registration
Statement and the Prospectus present fairly on a consolidated basis the
financial position of the Company and its subsidiaries as of the respective
dates of such financial statements and schedules, and the results of
operations and cash flows of the Company and its subsidiaries for the
respective periods covered thereby. Such statements, schedules and related
notes have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods specified,
as certified by the independent accountants named in Section 9(f). No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the
Prospectus under the captions "Capitalization" and ["Selected Financial and
Pro Forma Financial Data"] fairly present the information set forth therein
on the basis stated in the Registration Statement.
(l) (i) The pro forma financial statements and other pro forma
financial information (including the notes thereto) included in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) (A) have been prepared
in accordance with applicable requirements of Rule 11-02
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of Regulation S-X promulgated under the Act, and (B) have been properly
computed on the bases described therein, (ii) the assumptions used in the
preparation of the pro forma financial statements and other pro forma
financial information included in the Registration Statement and the
Prospectus are, to the knowledge of the Company, reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(m) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific 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. The
representations and warranties given by the Company and its officers to its
independent public accountants for the purpose of supporting the letters
referred to in Section 9(f) are true and correct.
(n) Neither the Company nor any of its subsidiaries is (i) in
violation or default of any provision of its Certificate of Incorporation,
Bylaws or other organizational documents, or (ii) in a material breach of
or default with respect to any provision of any agreement, judgment,
decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it
or any of its properties are bound; and there does not exist any state of
facts which, with notice or lapse of time or both would constitute such a
breach or default on the part of the Company and its subsidiaries, taken as
a whole.
(o) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as required. The
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contracts so described in the Prospectus are in full force and effect on
the date hereof.
(p) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the knowledge of
the Company, threatened to which the Company or any of its subsidiaries is
or, to the knowledge of the Company, is threatened to be made a party or of
which property owned or leased by the Company or any of its subsidiaries is
or, to the knowledge of the Company, is threatened to be made the subject,
which actions, suits or proceedings could, individually or in the
aggregate, prevent or adversely affect the transactions contemplated by
this Agreement or the Acquisition Agreements or result in a material
adverse change in the business, business prospects, properties, condition
(financial or otherwise), or results of operations of the Company or its
subsidiaries; and no labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is
imminent which could materially adversely affect the business, business
prospects, properties, condition (financial or otherwise), or results of
operations of the Company or its subsidiaries. Neither the Company nor any
of its subsidiaries is a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body. Except as disclosed in
the Prospectus, there are no material legal or governmental actions, suits
or proceedings pending or, to the Company's knowledge, threatened against
any executive officers or directors of the Company.
(q) The Company and its subsidiaries have good and marketable title to
all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount to the Company
or its subsidiaries, and do not adversely affect the use made and proposed
to be made of such property by the Company or its subsidiaries. The Company
and its subsidiaries hold their leased properties under valid and binding
leases. Except as disclosed in the Prospectus, the Company and its
subsidiaries own or lease all such properties as are
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necessary to their operations as now conducted or as proposed to be
conducted.
(r) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not (A) incurred any liabilities or obligations,
indirect, direct or contingent, or (B) entered into any oral or written
agreement or other transaction which in the case of (A) or (B) is not in
the ordinary course of business; (ii) the Company and its subsidiaries have
not sustained any material loss or interference with their respective
businesses or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance; (iii) the Company has not
paid or declared any dividends or other distributions with respect to its
capital stock and the Company and its subsidiaries are not in default in
the payment of principal or interest on any outstanding debt obligations;
(iv) there has not been any change in the capital stock of the Company
(other than upon the sale of the Shares hereunder or upon the exercise of
any options or warrants disclosed in the Prospectus); (v) there has not
been any material increase in the short- or long-term debt of the Company
and its subsidiaries; and (vi) there has not been any material adverse
change or any development involving or which may reasonably be expected to
involve a prospective material adverse change, in the business, business
prospects, condition (financial or otherwise), properties, or results of
operations of the Company or its subsidiaries.
(s) The Company and its subsidiaries are conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which they are conducting business, except where the
failure to be so in compliance would not have a material adverse effect on
the business, business prospects, properties, condition
(financial or otherwise) or results of operations of the
Company or its subsidiaries.
(t) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns, and all such tax
returns are complete and correct in all material respects, and the Company
and its subsidiaries have not failed to pay any taxes which were payable
pursuant to said returns or any assessments with
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respect thereto. The Company has no knowledge of any tax deficiency which
has been or is likely to be threatened or asserted against the Company or
its subsidiaries when, if determined adversely to the Company or any of its
subsidiaries, is reasonably likely to have a material adverse effect on
business, business prospects, properties, condition (financial or
otherwise) or results of operations of the Company or its subsidiaries.
(u) The Company has not distributed, and will not distribute prior to
the later to occur of (i) completion of the distribution of the Shares, or
(ii) the expiration of any time period within which a dealer is required
under the Securities Act to deliver a prospectus relating to the Shares,
any offering material in connection with the offering and sale of the
Shares other than the Prospectus, the Registration Statement and any other
materials permitted by the Securities Act and consented to by the
Underwriters.
(v) Each of the Company and its subsidiaries maintains insurance of
the types and in the amounts generally deemed adequate for their business,
including, but not limited to, directors' and officers' insurance,
insurance covering real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied for,
and the Company and its subsidiaries have no reason to believe that they
will not be able to renew their existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its businesses at a cost that would not
materially adversely affect the business, business prospects, properties,
condition (financial or otherwise) or results of
operations of the Company or its subsidiaries.
(w) Neither the Company nor any of its subsidiaries nor any of their
employees or agents has at any time during the last five years (i) made any
unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any
payment to any foreign, federal or state governmental officer or official
or other person charged with similar
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public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
(x) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(y) The Company has caused (i) each of its executive officers and
directors as set forth in the Prospectus and (ii) each beneficial holder of
more than 1% of the outstanding Common Stock (including shares issuable
upon the exercise or conversion of any option, warrant or other security)
to furnish to the Underwriters an agreement in form and substance
satisfactory to Xxxxx, Xxxxx & Company (which consent shall not be
unreasonably withheld) pursuant to which each such party has agreed that
during the period of one hundred eighty (180) days after the date the
Registration Statement becomes effective, without the prior written consent
of Xxxxx, Xxxxx & Company, such party will not (i) offer, sell, contract to
sell, make any short sale, pledge or otherwise dispose of, directly or
indirectly, any shares of the Common Stock, options to acquire Common Stock
or securities convertible into or exchangeable for, or any other rights to
purchase or acquire, the Common Stock (including, without limitation,
Common Stock of the Company which may be deemed to be beneficially owned in
accordance with the rules and regulations of the Commission) other than the
exercise or conversion of outstanding options, warrants or convertible
securities; or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences or ownership of
Common Stock, whether any such transaction described in (i) or (ii) is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise; provided, however, that bona fide gift transactions and
transfers which will not result in any change in beneficial ownership may
be permitted if the transferee enters into a lock-up agreement in
substantially the same form covering the remainder of the lock-up period.
(z) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba.
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(aa) Except as specifically disclosed in the Pro- spectus, the Company
and its subsidiaries have sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as now conducted; the expiration of any
trademarks, trade names, patent rights, copyrights, licenses, approvals or
governmental authorizations would not have a material adverse effect on the
business, business prospects, properties, condition (financial or
otherwise) or results of operations of the Company or its subsidiaries; the
Company has no knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patent rights, copyrights,
licenses, trade secret or other similar rights of others; and no claims
have been made or, to the knowledge of the Company, are threatened against
the Company or its subsidiaries regarding trademark, trade name, patent,
copyright, license, trade secret or other infringement which, if determined
adversely to the Company or its subsidiaries, would be reasonably likely to
have a material adverse effect on the business, business prospects,
properties, condition (financial or otherwise) or results of operations or
prospects of the Company and its subsidiaries.
(ab) Except as disclosed in the Prospectus, (i) the Company and its
subsidiaries are in compliance in all material respects with all rules,
laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to their respective businesses,
(ii) neither the Company nor any of its subsidiaries has received any
notice from any governmental authority or third party of an asserted claim
under Environmental Laws, (iii) no facts currently exist that will require
the Company or any of its subsidiaries to make future material capital
expenditures to comply with Environmental Laws, and (iv) to the knowledge
of the Company, no property which is or has been owned, leased or occupied
by the Company or any of its subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. { 9601, et
seq.), or otherwise designated as a contaminated site under applicable
state or local law.
(ac) Neither the company nor any of its subsidiaries is (a) an
"investment company" or a company "controlled"
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by an investment company within the meaning of the Investment Company Act
of 1940, as amended, or (b) a "holding company" or a "subsidiary company"
of a holding company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(ad) Neither the Company nor any agent thereof acting on behalf of the
Company has taken, and none of them will take, any action that might cause
this Agreement or the issuance or sale of the Shares to violate Regulation
G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System.
Section 2. Purchase of the Shares by the Under- writers.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
3,000,000 of the Firm Shares to the several Underwriters, and each of the
Underwriters agrees to purchase from the Company the respective number of Firm
Shares set forth opposite its name in Schedule I. The price at which such Firm
Shares shall be sold by the Company and purchased by the several Underwriters
shall be $___ per share. In making this Agreement, each Underwriter is
contracting severally and not jointly; except as provided in paragraphs (b) and
(c) of this Section 2, the agreement of each Underwriter is to purchase only the
respective number of shares of the Firm Shares specified in Schedule I.
(b) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase, severally and
not jointly, up to 450,000 Optional Shares from the Company at the same price
per share as the Underwriters shall pay for the Firm Shares. Said option may be
exercised only to cover over- allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the thirtieth day after the date of this Agreement upon
written or telegraphic notice by you to the Company setting forth the aggregate
number of Optional Shares as to which the several Underwriters are exercising
the option. Delivery of certificates for the Optional Shares, and payment
therefor, shall be made as provided in Section 4 hereof. The
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number of Optional Shares to be purchased by each Underwriter shall be the same
percentage of the total number of Optional Shares to be purchased by the several
Underwriters as such Underwriter is purchasing of the Firm Shares, as adjusted
by you in such manner as you deem advisable to avoid fractional shares.
(c) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares agreed to be purchased by such Under- writer or
Underwriters, on either the First Closing Date or the Subsequent Closing Date
(as defined in Sections 4(a) and (b), respectively) the non-defaulting
Underwriters shall have the right within 24 hours to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares which such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares which each non-defaulting Underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis to absorb the remaining shares and portion which
the defaulting Underwriter or Underwriters agreed to purchase; provided,
however, that the non-defaulting Underwriters shall not be obligated to purchase
the shares and portion which the defaulting Underwriter or Underwriters agreed
to purchase if the aggregate number of such shares exceeds 10% of the total
number of shares which all Underwriters agreed to purchase hereunder. If the
total number of shares which the defaulting Underwriter or Underwriters agreed
to purchase exceeds the above percentage, the non-defaulting Underwriters and
the Company shall have the right, within 24 hours next succeeding the 24-hour
period above referred to, to make arrangements with other underwriters or
purchasers satisfactory to you for purchase of such shares and portion on the
terms herein set forth. In any such case, either you or the Company shall have
the right to postpone the Closing Date determined as provided in Section 4
hereof for not more than seven business days after the date originally fixed as
the Closing Date pursuant to Section 4 in order that any necessary changes in
the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company shall make arrangements within the 24-hour period stated above for the
-16-
purchase of all of the Shares which the defaulting Underwriter or Underwriters
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph (c), and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
Section 3. Offering by Underwriters.
(a) The terms of the initial public offering by the Underwriters of
the Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as the Underwriters may determine.
(b) The information (insofar as such information
relates to the Underwriters) set forth in the last paragraph on
the front cover page of the Prospectus relating to the Shares
and the third and sixth paragraphs under "Underwriting" in the
Registration Statement, any Preliminary Prospectus and the
Prospectus relating to the Shares constitutes the only
information furnished by the Underwriters to the Company for
inclusion in the Registration Statement, any Preliminary
Prospectus, and the Prospectus, and you on behalf of the
respective Underwriters represent and warrant to the Company
that the statements made therein are correct.
Section 4. Delivery of and Payment for the Shares.
(a) Delivery of certificates for the Firm Shares and the Optional
Shares (if the option granted by Section 2(b) hereof shall have been exercised
not later than 7:00 A.M., San Francisco time, on the date two business days
preceding the Closing Date), and payment therefor, shall be made at the office
of Xxxxxx, Xxxxx & Xxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 A.M., New York time, on the [third] full business day after the date of
this Agreement, or at such time on such other day, not later than seven full
business days after such [third] full business day, as shall be agreed upon in
writing by the Company and you. The date and hour of such delivery and payment
of the Firm Shares (which may
-17-
be postponed as provided in Section 2(c) hereof) are herein called the "First
Closing Date."
(b) If the option granted by Section 2(b) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Optional Shares, and
payment therefor, shall be made at the office of Xxxxxx, Xxxxx & Xxxxx, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., New York time,
on the third full business day after the exercise of such option (the
"Subsequent Closing Date" and, together with the First Closing Date, the
"Closing Date"). The date and hour of such delivery and payment of the Optional
Shares may be postponed as provided in Section 2(c) hereof.
(c) Payment for the shares purchased from the Company shall be made to
the Company by (i) one or more certified or official bank check or checks in
next day funds (and the Company agrees not to deposit any such check in the bank
on which drawn until the day following the date of its delivery to the Company)
or (ii) federal funds wire transfer, provided that on the Closing Date the
Company agrees to reimburse Xxxxx, Xxxxx & Company for one day of interest on
such amount at the federal funds rate plus any additional bank fees. Such
payment shall be made upon delivery of certificates for the shares to you for
the respective accounts of the several Underwriters against receipt therefor
signed by you. Certificates for the shares to be delivered to you shall be
registered in such name or names and shall be in such denominations as you may
request at least two business days before the First Closing Date or the
Subsequent Closing Date, as the case may be. Such certificates will be made
available to the Underwriters for inspection, checking and packaging at the
offices of Xxxxxx, Xxxxx & Xxxxx on the business day prior to the applicable
Closing Date.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the First Closing Date or the Subsequent Closing Date for the
account of such Underwriter. Any such payment by you shall not relieve such
Underwriter from any of its obligations hereunder.
Section 5. Covenants of the Company. The Company covenants and agrees
as follows:
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(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on Rule
430A or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) and (ii) not file
any amendment to the Registration Statement or supplement to the Prospectus
of which you shall not previously have been advised and furnished with a
copy or to which you shall have reasonably objected in writing or which is
not in compliance with the Securities Act or the rules and regulations of
the Commission.
(b) The Company will promptly notify you in the event of (i) the
request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii)
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, (iii) the institution or
notice of intended institution of any action or proceeding for that
purpose, (iv) the receipt by the Company of any notification with respect
to the suspension of the qualification of the shares for sale in any
jurisdiction, or (v) the receipt by it of notice of the initiation or
threatening of any proceeding for such purpose. The Company will make every
reasonable effort to prevent the issuance of such a stop order and, if such
an order shall at any time be issued, to obtain the withdrawal thereof at
the earliest possible moment.
(c) The Company will (i) on or before the First Closing Date, deliver
to you a signed copy of the Registration Statement as originally filed and
of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a signed
copy of each post-effective amendment, if any, to the Registration
Statement (together with, in each case, all exhibits thereto unless
previously furnished to you) and will also deliver to you, for distribution
to the Underwriters, a sufficient number of additional conformed copies of
each of the foregoing (but without exhibits) so that one copy of each may
be distributed to each Underwriter, (ii) as promptly as possible deliver to
you and send to the several Underwriters, at such office or offices as you
may designate, as many copies of the Prospectus as you may reasonably
request, and
-19-
(iii) thereafter from time to time during the period in which a prospectus
is required by law to be delivered by an Underwriter or dealer, likewise
send to the Underwriters as many additional copies of the Prospectus and as
many copies of any supplement to the Prospectus and of any amended
prospectus, filed by the Company with the Commission, as you may reasonably
request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement
or amend the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser of the Shares, the Company will notify you and will forthwith
prepare and file with the Commission a supplement to the Prospectus or an
amended prospectus so that the Prospectus as so supplemented or amended
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time such Prospectus is
delivered to such purchaser, not misleading. If, after the initial public
offering of the Shares by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason
of changes in general market conditions or otherwise, you will advise the
Company in writing of the proposed variation, and, if in the opinion either
of counsel for the Company or of counsel for the Underwriters such proposed
variation requires that the Prospectus be supplemented or amended, the
Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus setting forth such variation. The
Company authorizes the Underwriters and all dealers to whom any of the
shares may be sold by the several Underwriters to use the Prospectus, as
from time to time amended or supplemented, in connection with the sale of
the Shares in accordance with the applicable provisions of the Securities
Act and the applicable rules and regulations thereunder for such period.
-20-
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Shares for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period
in which a prospectus is required by law to be delivered by an Underwriter
or dealer, in keeping such qualifications in good standing under said
securities or blue sky laws; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to
continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the shares.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports
filed with the Commission (including the Report on Form SR required by Rule
463 of the Commission under the Securities Act).
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date,
the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act
and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs
and expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc.
("NASD") of the Registration Statement, any Preliminary Prospectus and the
Prospectus, (ii) the furnishing to the Underwriters of copies of any
Preliminary Prospectus
-21-
and of the several documents required by paragraph (c) of this Section 5 to
be so furnished, (iii) the printing of this Agreement and related documents
delivered to the Underwriters, (iv) the preparation, printing and filing of
all supplements and amendments to the Prospectus referred to in paragraph
(d) of this Section 5, (v) the furnishing to you and the Underwriters of
the reports and information referred to in paragraph (g) of this Section 5,
(vi) the printing and issuance of stock certificates, including the
transfer agent's fees, and (vii) the fees and disbursements of the counsel,
the accountants and any other experts or advisors retained by the Company
or its subsidiaries.
(j) The Company agrees to reimburse you, for the account of the
several Underwriters, for blue sky fees and related disbursements
(including fees and disbursements of Xxxxxx Xxxxxx & Xxxxxxx, counsel for
the Underwriters, relating thereto, and cost of printing memoranda for the
Underwriters) paid by or for the account of the Underwriters or their
counsel in qualifying the shares under state securities or blue sky laws
and in the review of the offering by the NASD.
(k) The provisions of paragraphs (i) and (j) of this Section are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Company hereby agrees to pay.
(l) The Company hereby agrees that, without the prior written consent
of Xxxxx, Xxxxx & Company, the Company will not, for a period of 180 days
following the Effective Date, (i) offer, sell, contract to sell, make any
short sale, pledge, or otherwise dispose of, directly or indirectly, any
shares of Common Stock or any options to acquire shares of Common Stock or
securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire Common Stock (including without limitation,
Common Stock of the Company which may be deemed to be beneficially owned in
accordance with the rules and regulations of the Commission) other than the
exercise or conversion of outstanding options, warrants or convertible
securities or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences or ownership of
Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or
-22-
such other securities, in cash or otherwise; provided, however, that bona
fide gift transactions and transfers which will not result in any change in
beneficial ownership may be permitted if the transferee enters into a
lock-up agreement in substantially the same form covering the remainder of
the lock-up period. The foregoing sentence shall not apply to (A) the
shares to be sold to the Underwriters pursuant to this Agreement, (B)
shares of Common Stock issued by the Company upon the exercise of options
granted under the option plans of the Company (the "Option Plans"), as
described in footnote (4) to the table under the caption "Capitalization"
in the Preliminary Prospectus, and (C) options to purchase Common Stock
granted under the Option Plans.
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the shares has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication
or event.
(n) The Company is familiar with the Investment Company Act of 1940,
as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was
not and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(o) The Company will use its best effort to maintain the inclusion of
the Common Stock on the Nasdaq National Market (or on a national securities
exchange) for a period of three years after the effective date of the
Registration Statement.
6 -23-
Section 6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages or liabilities, joint or several, to
which such indemnified parties or any of them may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the common law or otherwise, and the Company agrees to reimburse each
such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), 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 (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreement of the Company
contained in this paragraph (a) shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any Underwriter
for use in any Preliminary Prospectus or the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto, and (2) the
indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the shares which is the subject thereof (or to the
-24-
benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 5 hereof. The indemnity agreement of
the Company contained in this paragraph (a) and the representations and
warranties of the Company contained in Section 1 hereof shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the delivery of and payment
for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his
own behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) 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 (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
-25-
the circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of such indemnifying Underwriter for use in the Registration
Statement or the Prospectus or any such amendment thereof or supplement thereto.
The indemnity agreement of each Underwriter contained in this paragraph (b)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Shares.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 6 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (the "Notice") of such service
or notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if and to the extent the party
to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was materially prejudiced by the failure to give the Notice, but the omission so
to notify such indemnifying party or parties of any such service or notification
shall not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party for contribution or otherwise than on
account of such indemnity agreement. Any indemnifying party shall be entitled at
its own expense to participate in the defense of any action, suit or proceeding
against, or investigation or inquiry of, an indemnified party. Any indemnifying
party shall be entitled, if it so elects within a reasonable time after receipt
of the Notice by giving written notice (the "Notice of Defense") to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that
-26-
there may be a conflict between the positions of the indemnifying party or
parties and of the indemnified party or parties in conducting the defense of
such action, suit, investigation, inquiry or proceeding or that there may be
legal defenses available to such indemnified party or parties different from or
in addition to those available to the indemnifying party or parties, then
counsel for the indemnified party or parties (which counsel shall be reasonably
satisfactory to the indemnifying party or parties) shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interests of the indemnified party or parties and (ii) in any
event, the indemnified party or parties shall be entitled to have counsel chosen
by such indemnified party or parties participate in, but not conduct, the
defense. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for all such indemnified parties, and (B) the
indemnifying party or parties shall bear such other expenses as it or they have
authorized to be incurred by the indemnified party or parties. If, within a
reasonable time after receipt of the Notice, no Notice of Defense has been
given, the indemnifying party or parties shall be responsible for reasonable
legal or other reasonable expenses incurred by the indemnified party or parties
in connection with the defense of the action, suit, investigation, inquiry or
proceeding. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed).
-27-
Notwithstanding the immediately preceding sentence, if in any case where the
fees and expenses of counsel are at the expense of the indemnifying party and an
indemnified party shall have requested the indemnifying party to reimburse the
indemnified party for such fees and expenses of counsel as incurred, such
indemnifying party agrees that it shall be liable for any settlement of any
action effected without its written consent if (i) such settlement is entered
into more than ten business days after the receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall have failed to
reimburse the indemnified party in accordance with such request for
reimbursement prior to the date of such settlement.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 6, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the shares received by the Company and the total underwriting discount
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the shares. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to
-28-
be determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to in the first sentence
of the foregoing paragraph. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities, or actions in respect thereof,
referred to in the foregoing paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 6).
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
-29-
Section 7. Reimbursement of Certain Expenses. In addition to their
other obligations under Section 6 of this Agreement, the Company hereby agrees
to reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 6 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 7 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
Section 8. Termination. This Agreement may be terminated by you at any
time prior to the First Closing Date by giving written notice to the Company in
accordance with Section 9, or if after the date of this Agreement trading in the
Common Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof if the effect of such engagement, escalation or
declaration would, in the Underwriters' reasonable judgment, make the offering
or the delivery of the Shares impracticable, (ii) any outbreak of hostilities or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, calamity, crisis or change
in economic or political conditions in the financial markets of the United
States would, in the Underwriters' reasonable judgment, make the offering or
delivery of the shares impracticable, (iii) suspension of trading in securities
generally or a material adverse decline in value of securities generally on the
New York Stock Exchange, the American Stock Exchange, or The Nasdaq Stock
Market, or limitations on prices (other than limitations on hours or numbers of
days of trading) for securities on either such exchange or system, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of, or commencement of any proceeding or
investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable judgment materially and
adversely affects or will materially or adversely affect the
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business or operations of the Company, (v) declaration of a banking moratorium
by either federal or New York State authorities, (vi) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in the Underwriters' reasonable judgment has a material
adverse effect on the securities markets in the United States or (vii) (A) the
Company or its subsidiaries shall have sustained any loss or interference with
respect to its businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or any legal or governmental proceeding,
which loss or interference has had or has a material adverse effect, or (B)
there shall have been any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a material adverse effect
(including without limitation a change in control of the Company), except in
each case as described in the Prospectus (exclusive of any amendment or
supplement thereto), which, in either case described in (A) or (B), in the
Underwriters' reasonable judgment, would make the offering or delivery of the
Shares impracticable. If this Agreement shall be terminated pursuant to this
Section 8, there shall be no liability of the Company to the Underwriters and no
liability of the Underwriters to the Company; provided, however, that in the
event of any such termination the Company agrees to indemnify and hold harmless
the Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 5 hereof.
Section 9. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Shares shall be subject to
the performance by the Company of all its obligations to be performed hereunder
at or prior to the First Closing Date or the Subsequent Closing Date, as the
case may be, and to the following further conditions:
(a) The Registration Statement or any amendment thereto shall have
become effective; and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings therefor have been instituted, or
shall be pending or threatened by the Commission; and to the best knowledge
of the respective signers, no proceedings for that purpose are contemplated
under the Securities Act.
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(b) The legality and sufficiency of the sale of the shares hereunder
and the validity and form of the certificates representing the shares, all
corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except as
to the financial statements contained therein), shall have been approved at
or prior to the Closing Date by Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
Underwriters.
(c) You shall have received from Xxxxxx, Xxxxx & Xxxxx, counsel for
the Company, and from Powell, Goldstein, Xxxxxx & Xxxxxx, healthcare
counsel for the Company, opinions, addressed to the Underwriters and dated
the First Closing Date and subsequent Closing Date, as the case may be,
covering the matters set forth in Annex A and Annex B hereto, respectively,
and if Optional Shares are purchased at any date after the Closing Date,
additional opinions from each such counsel, addressed to the Underwriters
and dated such later date, confirming that the statements expressed as of
the Closing Date in such opinions remain valid as of such later date.
(d) (i) As of the Effective Date, the statements made in the
Registration Statement and the Prospectus shall be true and correct, and
neither the Registration Statement nor the Prospectus shall omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event shall have occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment, (iii) since the respective dates
as of which information is given in the Registration Statement in the form
in which it originally became effective and the Prospectus contained
therein, there shall not have been any material adverse change or any
development involving a prospective material adverse change in or affecting
the business, properties, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, and, since such
dates, except in the ordinary course of business, neither the Company nor
any of its subsidiaries shall have entered into any material transaction
not referred to in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, (iv)
neither the Company nor
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any of its subsidiaries shall have any material contingent obligations
which shall not be disclosed in the Registration Statement and the
Prospectus, (v) there shall not be any pending or known threatened legal
proceedings to which the Company or any of its subsidiaries is a party or
of which property of the Company or any of its subsidiaries is the subject
which is material and which is not disclosed in the Registration Statement
and the Prospectus, (vi) there shall not be any franchises, contracts,
leases or other documents which are required to be filed as exhibits to the
Registration Statement which have not been filed as required, and (vii) the
representations and warranties of the Company herein shall be true and
correct in all material respects as of the First Closing Date or the
Subsequent Closing Date, as the case may be, and (viii) there has not been
any material change in the market for securities in general or in
political, financial or economic conditions from those reasonably
foreseeable as to render it impracticable in your reasonable judgment to
make a public offering of the shares, or a material adverse change in
market levels for securities in general (or those of companies in
particular) or financial or economic conditions which render it inadvisable
to proceed.
(e) You shall have received on the First Closing Date and the
Subsequent Closing Date a certificate, dated the First Closing Date or the
Subsequent Closing Date, as the case may be, and signed by the Chief
Executive Officer and the Chief Operating and Financial Officer of the
Company, stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein and any
supplements or amendments thereto, and that the statements included in
clauses (i) through (viii) of paragraph (d) of this Section 9 are true and
correct.
(f) You shall have received from Deloitte & Touche LLP, a letter or
letters, addressed to the Underwriters and dated the First Closing Date and
the Subsequent Closing Date, confirming that they are independent public
accountants with respect to the Company within the meaning of the
Securities Act and the applicable published rules and regulations
thereunder and based upon the procedures described in their letter
delivered to you concurrently with the execution of this Agreement (the
"Original Letter"), but carried out to a date not more than three
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business days prior to the First Closing Date or the Subsequent Closing
Date (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the First
Closing Date or the Subsequent Closing Date, as the case may be, and (ii)
setting forth any revisions and additions to the statements and conclusions
set forth in the Original Letter which are necessary to reflect any changes
in the facts described in the Original Letter since the date of the
Original Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any change,
or any development involving a prospective change, in or affecting the
business or properties of the Company or any of its subsidiaries which, in
your sole judgment, makes it impractical or inadvisable to proceed with the
public offering of the shares or the purchase of the Optional Shares as
contemplated by the Prospectus.
(g) You shall have received from Deloitte & Touche LLP a letter
stating that their review of the Company's and its subsidiaries' systems of
internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's and its
subsidiaries' financial statements as of September 30, 1995, did not
disclose any weakness in internal controls that they considered to be
material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 5 hereof.
(i) Prior to the Closing Date, the shares to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq National
Market upon official notice of issuance.
(j) On or prior to the First Closing Date, you shall have received
from all directors, officers, and beneficial holders of more than 1% of the
outstanding Common Stock agreements, in form reasonably satisfactory to
Xxxxx, Xxxxx & Company, stating that without the prior written consent of
Xxxxx, Xxxxx & Company, such person or entity will not, for a period of 180
days following the Effective Date (i) offer, sell, contract to sell, make
any short
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sale, pledge, or otherwise dispose of, directly or indirectly, any shares
of Common Stock or any options to acquire shares of Common Stock or
securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire Common Stock (including without limitation,
Common Stock of the Company which may be deemed to be beneficially owned in
accordance with the rules and regulations of the Commission) other than the
exercise or conversion of outstanding options, warrants or convertible
securities or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences or ownership of
Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise; provided, however, that bona fide gift
transactions and transfers which will not result in any change in
beneficial ownership may be permitted if the transferee enters into a
lock-up agreement in substantially the same form covering the remainder of
the lock-up period.
(k) The Acquisitions and all other transactions contemplated by the
Acquisition Agreements shall be consummated simultaneously with or prior to
the Closing Date.
(l) On or prior to the First Closing Date, the Underwriter and counsel
for the Underwriter shall have reviewed such further opinions,
certificates, documents or all other information as they may have
reasonably requested from the Company.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if counsel for the Underwriters shall be satisfied that
they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraphs (i)
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and (j) of Section 5 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein, to fulfill any of the conditions herein, or to
comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will promptly reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Underwriter) that
shall have been incurred by them in connection with the transactions
contemplated hereby.
Section 10. Conditions of the Obligation of the Company. The
obligation of the Company to deliver the shares shall be subject to the
conditions that (a) the Registration Statement shall have become effective and
(b) no stop order suspending the effectiveness thereof shall be in effect and no
proceedings therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall be without liability of the Company to
the Underwriters and without liability of the Underwriters to the Company;
provided, however, that in the event of any such termination the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company under this
Agreement, including all costs and expenses referred to in paragraphs (i) and
(j) of Section 5 hereof.
Section 11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 6 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 6, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the shares from any of the several Underwriters.
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Section 12. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Xxxxx, Xxxxx &
Company, Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if
to the Company, shall be mailed, telegraphed or delivered to it at its office,
Xxxxx 000 xxx Xxx Xxxxxxx Xxxx, Xx. Xxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxxx
X. Xxxxxx III, with a copy to Xxxxxx, Xxxxx & Xxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxx, Esq. All notices
given by telegraph shall be promptly confirmed by letter.
Section 13. Miscellaneous. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or its directors or officers, and (c) delivery and payment
for the Shares under this Agreement; provided, however, that if this Agreement
is terminated prior to the First Closing Date, the provisions of Section 5
hereof shall be of no further force or effect, except the provisions of
paragraphs (i), (j) and (k), which shall remain in full force and effect.
Section 14. Applicable Law. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
Section 15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company and the several Underwriters,
including you, all in accordance with its terms.
Very truly yours,
Physician Support Systems, Inc.
By:
------------------------------
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted by us in San
Francisco, California as of
the date first above written.
Xxxxx, Xxxxx & Company
Acting for ourselves and as
Representative of the several
Underwriters named in the
attached Schedule A
By:
----------------------------
Partner
Schedule I
UNDERWRITERS
Number of
Shares
to Be
Underwriters Purchased
------------ ---------
Xxxxx, Xxxxx & Company
Total: ......................... 3,000,000
