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EXHIBIT 1.1
2,000,000 SHARES
PMR CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
_________________, 1997
EQUITABLE SECURITIES CORPORATION
XXXXXX BROTHERS INC.
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
c/o Equitable Securities Corporation
As Representatives of the several
Underwriters
000 Xxxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Ladies and Gentlemen:
The undersigned, PMR Corporation, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), and the
Selling Stockholders (as hereinafter defined) hereby confirm their respective
agreements with you (the "Representatives") and the other underwriters named in
Schedule 1 hereto (you and the other underwriters being herein collectively
called the "Underwriters") as follows:
1. Introductory. The Company proposes, subject to the terms and
conditions stated herein, to issue and sell to the Underwriters 1,490,000 shares
of Common Stock, par value $.01 per share (the "Common Stock"), of the Company.
Certain stockholders of the Company named in Schedule 2 hereto (each, a "Selling
Stockholder" and together, the "Selling Stockholders") propose, subject to the
terms and conditions stated herein, to sell to the Underwriters an aggregate of
510,000 shares of Common Stock, with each Selling Stockholder selling the number
of shares of Common Stock set forth opposite such Selling Stockholder's name on
Schedule 2 hereto. The shares to be sold by the Company and the shares to be
sold by the Selling Stockholders are referred to herein as the "Shares." In
addition, solely for the purpose of covering over-allotments, the Company
proposes to issue and sell to the Underwriters, at the option of the
Underwriters, up to an additional 300,000 shares of Common Stock (the
"Additional Shares"). The Common Stock is more fully described in the Prospectus
referred to below.
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2. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees
with, the several Underwriters that:
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-2 and, as necessary to cause such registration statement to
become effective, has filed one or more amendments thereto
(Registration No. 333-____) for the registration of the Shares and
the Additional Shares under the Securities Act of 1933, as amended
(the "Act"). Such registration statement, including all documents
incorporated by reference therein, the prospectus, financial
statements and schedules, exhibits and all other documents filed as a
part thereof, as amended at the time of effectiveness of the
registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A or Rule 434 of the rules and regulations of the Commission
under the Act (the "Regulations"), and any additional registration
statement filed pursuant to Rule 462(b) of the Regulations with
respect to the Shares ("Rule 462(b) Registration Statement"), is
herein called the "Registration Statement," and the prospectus
(including any prospectus subject to completion meeting the
requirements of Rule 434(b) of the Regulations provided by the
Company together with any term sheet meeting the requirements of such
Rule 434(b) as the prospectus provided to meet the requirements of
Section 10(a) of the Act), including all documents incorporated by
reference therein, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations or filed as part of the
Registration Statement at the time of effectiveness if no such Rule
424(b) or Rule 434 filing is required, is herein called the
"Prospectus." The term "Preliminary Prospectus" as used herein each
prospectus subject to completion filed with the Registration
Statement or any amendment thereto (including the prospectus subject
to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective). Any
reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12
of Form S-2 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the effective
date of the Registration Statement, the date of such Preliminary
Prospectus or the date of the Prospectus, as the case may be.
(ii) At the time of the effectiveness of the
Registration Statement and at all times subsequent thereto until and
including the Closing Date (as defined in Section 3) and each
Additional Closing Date (as defined in Section 3), if any, and during
such longer period as the Prospectus may be required to be delivered
in connection with sales by the Underwriters or a dealer, and during
such longer period until any post-effective amendment thereto shall
become effective, the Registration Statement and the Prospectus and
any amendments thereof and supplements thereto contained or will
contain all statements which are required to be stated therein in
accordance with the Act and the Regulations, complied or will comply
with the Act and the Regulations and the Exchange
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Act and the rules and regulations thereunder, and does not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and no event will have
occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has
not then been set forth in such an amendment or supplement; each
Preliminary Prospectus, as of the date filed with the Commission, did
not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading; except that no representation
or warranty is made in this Section 2(a)(ii) with respect to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company expressly for inclusion
in any Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, as stated in
Section 8(b) with respect to any Underwriter by or on behalf of such
Underwriter through the Representatives. Any term sheet and
prospectus subject to completion provided by the Company to the
Underwriters for use in connection with the offering and sale of the
Shares pursuant to Rule 434 of the Regulations together are not
materially different from the last preliminary prospectus included in
the Registration Statement at the time of its effectiveness
(exclusive of any information deemed to be a part thereof by virtue
of Rule 434(d) of the Regulations).
(iii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or
hereafter are filed (or, if any amendment with respect to any such
document was filed, when such amendment was filed) with the
Commission, complied and will comply in all material respects with
the requirements of the Exchange Act and the rules and regulations of
the Commission thereunder, and, when read together with the other
information in the Prospectus, at the time the Registration Statement
and any amendments thereto became effective and at the Closing Date
and each Additional Closing Date, if any, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(iv) Neither the Commission nor, to the knowledge
of the Company, the "blue sky" or securities authority of any
jurisdiction has issued an order suspending the effectiveness of the
Registration Statement (a "Stop Order"), preventing or suspending the
use of any Preliminary Prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit
the effectiveness of the Registration Statement, or suspending the
registration or qualification of the Shares or the Additional Shares,
nor, to the knowledge of the Company, has any of such authority
instituted or threatened to institute any proceedings with respect to
a Stop Order.
(v) Any contract, agreement, instrument, lease,
license or other document required to be described in the
Registration Statement or the Prospectus has been properly described
therein. Any contract, agreement, instrument, lease, license or other
document required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to the
Registration Statement.
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(vi) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation, with
full corporate power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates and permits
of and from, and declarations and filings with, all federal, state,
local and other governmental authorities and all courts and other
tribunals, to own, lease, license and use its respective properties
and assets and to carry on its respective businesses in the manner
described in the Prospectus, including such consents, authorizations,
approvals, orders, licenses, certificates, permits, declarations and
filings as are required under such federal and state health care
laws, statutes and regulations as are applicable to the Company and
its subsidiaries (except for such consents, authorizations,
approvals, orders, licenses, certificates, permits, declarations and
filings which the failure to have obtained, individually or in the
aggregate, does not and will not have a material adverse effect upon
the results of operations, business, condition (financial or
otherwise) prospects, properties or assets of the Company and its
subsidiaries, taken as a whole), and neither the Company nor its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such consent, authorization,
approval, order, license, certificate, permit, declaration or filing,
nor, to the best knowledge of the Company and its subsidiaries, is
there any basis therefor; no such consent, authorization, approval,
order, license, certificate, permit, declaration or filing contains a
materially burdensome restriction to the Company and its subsidiaries
not adequately disclosed in the Registration Statement and the
Prospectus; the Company and each of its subsidiaries has fulfilled
and performed in all material respects all of their respective
obligations with respect to each such consent, authorization,
approval, order, license, certificate, permit, declaration or filing,
and no event has occurred which allows (or which, with notice or
lapse of time or both, would allow) revocation or termination thereof
or results in any material impairment of the rights of the holder of
any such consent, authorization, approval, order, license,
certificate, permit, declaration or filing. Each of the Company and
its subsidiaries is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership, leasing,
licensing or use of property and assets or the conduct of its
business makes such qualification necessary, except where the failure
to be so qualified or in good standing, individually or in the
aggregate, does not and will not have a material adverse effect upon
the results of operations, business, condition (financial or
otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole.
(vii) The Company had, at July 31, 1997, an
authorized and outstanding capitalization as set forth in the
Prospectus under the caption "Capitalization." Each outstanding share
of Common Stock (including the Shares being sold by the Selling
Stockholders) are duly and validly authorized and issued, fully paid
and nonassessable and were not issued and are not now in violation of
or subject to any preemptive or similar rights. The Shares and
Additional Shares being sold by the Company hereunder are duly and
validly authorized and, when issued, delivered and sold in accordance
with this Agreement, will be duly and validly issued and outstanding,
fully paid and
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nonassessable, and will not have been issued in violation of or be
subject to any preemptive or similar rights and the Underwriters will
receive good title to the Shares and Additional Shares purchased by
them from the Company, free and clear of all liens, security
interests, pledges, charges, claims, encumbrances, restrictions on
transfer, stockholder agreements, voting trust, voting rights or
other defect of title whatsoever. The securities of the Company
conform to the descriptions thereof contained in the Registration
Statement or the Prospectus. There is no commitment, plan or
arrangement to issue, and no outstanding option, warrant or
other right calling for the issuance of, any share of capital stock
of the Company or any security or other instrument which by its terms
is convertible into, exercisable for, or exchangeable for capital
stock of the Company, except as properly described in the Prospectus.
Except for the Shares being sold by the Selling Stockholders, no
holder of securities of the Company has any rights to the
registration of securities of the Company because of the filing of
the Registration Statement or otherwise in connection with the sale
of the Shares and Additional Shares contemplated hereby (other than
any such registration rights that have been waived in writing). All
of the issued and outstanding shares of capital stock of each
subsidiary of the Company has been duly and validly authorized and
issued, fully paid and nonassessable and were not issued in violation
of preemptive or similar rights. The Company owns, directly or
indirectly, all of the outstanding shares of capital stock of each of
its subsidiaries free and clear of all liens, security interests,
pledges, charges, claims, encumbrances, restrictions on transfer,
stockholder agreements, voting trust, voting rights or other defect
of title whatsoever.
(viii) The consolidated financial statements, any
supplementary financial information and any related schedules of the
Company and its subsidiaries included in or incorporated by reference
into the Registration Statement and the Prospectus fairly present, in
all material respects, with respect to the Company and its
subsidiaries, the financial position, the results of operations and
the other information purported to be shown therein at the respective
dates and for the respective periods to which they apply. Such
financial statements, supplementary financial information and related
schedules have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently
applied throughout the periods involved, are correct and complete,
and are in accordance with the books and records of the Company and
its subsidiaries in all material respects. The financial data set
forth in the Prospectus under the captions "Summary Consolidated
Financial Data," "Capitalization," "Selected Consolidated Financial
Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" fairly present, on the basis
stated in the Prospectus, the information set forth therein and have
been compiled on a basis consistent with that of the financial
statements included in or incorporated by reference into the
Registration Statement and the Prospectus. Ernst & Young LLP, who
have certified the financial statements and supporting schedules
thereto included in the Registration Statement and the Prospectus,
and whose report is filed with the Commission as part of the
Registration Statement and the Prospectus, are, and during the
periods covered by the report included in the Registration Statement
and the Prospectus were, independent public accountants with respect
to the Company and its subsidiaries as required by the Act and the
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Regulations. No other financial statements are required by Form S-2
or otherwise to be included in the Registration Statement or the
Prospectus. There has been no material adverse change in the results
of operations, business, condition (financial or otherwise),
properties, or assets of the Company or any of its subsidiaries from
the latest information set forth in the Registration Statement or the
Prospectus, except as properly described in the Prospectus; and there
is no fact known to the Company which could reasonably be expected to
have a material adverse effect on the future prospects of the Company
or any of its subsidiaries (other than political or economic matter
of general applicability or as properly described in the Prospectus).
(ix) There is no action, suit, arbitration, claim,
governmental or other proceeding or investigation (domestic or
foreign, formal or informal) pending or, to the knowledge of the
Company, threatened in writing, or in prospect (or any basis therefor
known to the Company) with respect to the Company or its subsidiaries
or any of their respective operations, businesses, properties or
assets except as properly described in the Prospectus or such as,
individually or in the aggregate, do not now have and are not
reasonably expected in the future to have a material adverse effect
upon the results of operations, business, condition (financial or
otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole. Neither the Company nor any of its
subsidiaries is in violation of, or in default with respect to, any
law, rule, regulation, order, judgment or decree (domestic or
foreign), except as properly described in the Prospectus or such as
in the aggregate do not now have and are not reasonably expected in
the future to have, individually or in the aggregate, a material
adverse effect upon the results of operations, business, condition
(financial or otherwise), prospects, properties or assets of the
Company and its subsidiaries, taken as a whole, nor is the Company or
any of its subsidiaries required to take any action in order to avoid
any such violation or default.
(x) Each of the Company and its subsidiaries has
fee simple title which is good and marketable (or which is good and
indefeasible or other local variation thereof) to all real property
and good and marketable title to all personal property owned by each
of them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects
(except as properly described in the Prospectus). The real property
and buildings which the Prospectus indicates are held under lease by
the Company and any of its subsidiaries are held by them under legal,
valid, binding, subsisting and enforceable leases free of exceptions
(except as properly described in the Prospectus). No real property
leased, or to the knowledge of the Company licensed or used, by the
Company or any of its subsidiaries lies in an area which is or, to
the knowledge of the Company, will be, subject to zoning, use or
building code restrictions which would prohibit, and no state of
facts relating to the actions or inaction of another person or entity
or his, her or its ownership, leasing, licensing or use of any real
or personal property exists or, to the knowledge of the Company, will
exist, which would prevent the continued effective leasing, licensing
or use of such real property in the respective businesses of the
Company and its subsidiaries as presently conducted or as the
Prospectus indicates they contemplate conducting (except as properly
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described in the Prospectus or such as do not now have and will not
in the future have, individually or in the aggregate, a material
adverse effect upon the results of operations, business, condition
(financial or otherwise), prospects, properties or assets of the
Company and its subsidiaries, taken as a whole).
(xi) Each of the Company and its subsidiaries
possesses such authority, licenses, approvals, franchises,
certificates and permits issued by the appropriate local, state,
federal or foreign regulatory agencies or bodies necessary to conduct
the businesses now operated by them, except for such authority,
licenses, approvals, franchises, certificates and permits the absence
of which, individually or in the aggregate, would not have a material
adverse effect on the results of operations, business, condition
(financial or otherwise), prospects, properties or assets of the
Company and its subsidiaries, taken as a whole; and neither the
Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
authority, license, approval, franchise, certificate or permit which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling, or finding, would have a material adverse effect
upon the results of operations, business, condition (financial or
otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole.
(xii) None of the Company, its subsidiaries nor, to
the knowledge of the Company, any other party is now or is expected
by the Company to be in violation or breach of, or in default with
respect to any contract, agreement, instrument, lease, license,
arrangement or understanding to which the Company or any of its
subsidiaries is a party, or to which any of their respective
properties or assets are subject, and each such contract, agreement,
instrument, lease, license, arrangement and understanding is in full
force and effect and is the legal, valid and binding obligation of
the Company or one of its subsidiaries and, to the knowledge of the
Company, the other parties thereto and is enforceable against the
Company or one of its subsidiaries and, to the knowledge of the
Company, against the other parties thereto in accordance with its
terms. Each of the Company and its subsidiaries enjoys peaceful and
undisturbed possession under all such leases and licenses under which
it is operating. Neither the Company nor its subsidiaries is a party
to or bound by any contract, agreement, instrument, lease, license,
arrangement or understanding, or subject to any charter or other
restriction, which has had or is reasonably expected in the future to
have, individually or in the aggregate, a material adverse effect on
the results of operations, business, condition (financial or
otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole, except as properly disclosed in the
Prospectus. Neither the Company nor its subsidiaries is in violation
or breach of, or in default with respect to, any term of its
respective certificate or articles of incorporation or bylaws.
(xiii) All patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights,
franchises and other intangible properties and assets (all of the
foregoing being herein called "Intangibles") that the Company or any
of its subsidiaries owns or has pending, or under which they are
licensed, are in good standing and uncontested, except as properly
described in the Prospectus or such as in the
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aggregate do not now have and will not in the future have,
individually or in the aggregate, a material adverse effect upon the
results of operations, business, condition (financial or otherwise),
prospects, properties or assets of the Company and its subsidiaries,
taken as a whole. There is no right under any Intangible necessary to
the respective businesses of the Company and its subsidiaries as
presently conducted or as the Prospectus indicates they contemplate
conducting, except as properly described in the Prospectus. Neither
the Company nor any of its subsidiaries has infringed, is infringing,
or has received notice of infringement with respect to asserted
Intangibles of others, except for such infringement or alleged
infringement that has not had, or cannot reasonably be expected to
have, individually or in the aggregate, a material adverse effect on
the results of operations, business, condition (financial or
otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole. To the knowledge of the Company,
there is no infringement by others of Intangibles of the Company or
its subsidiaries, except as properly described in the Prospectus. To
the knowledge of the Company, there is no Intangible of others which
has had or may reasonably be expected to in the future have,
individually or in the aggregate, a material adverse effect on the
results of operations, business, condition (financial or otherwise),
prospects, properties or assets of the Company and its subsidiaries,
taken as a whole.
(xiv) None of the Company, its subsidiaries or any
person associated with or acting on behalf of the Company or its
subsidiaries including, without limitation, any director, officer,
agent or employee of the Company or its subsidiaries has, directly or
indirectly, while acting on behalf of the Company or its
subsidiaries, to the knowledge of the Company (A) used any corporate
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (B) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds; (C) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (D) made any other
unlawful payment.
(xv) There are no material Medicare, Medicaid or
other managed care recoupment or recoupments of any third-party payor
being sought, requested, claimed or, to the knowledge of the Company,
threatened against the Company, any of its subsidiaries or any of the
providers with which the Company is affiliated through management
agreements or management and affiliation agreements or otherwise (the
"Providers").
(xvi) None of the Company, any of its subsidiaries
or any of the Providers is in violation of any health care law,
ordinance, administrative or governmental rule or regulation
applicable to the Company, any of its subsidiaries or the Providers,
including, without limitation, those relating to reimbursement by
government agencies and fraudulent or wrongful xxxxxxxx, the
violation of which would have, either individually or in the
aggregate, a material adverse effect on the results of operations,
business, condition (financial or otherwise), prospects, properties
or assets of the Company and its subsidiaries, taken as a whole.
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(xvii) None of the Company, any of its subsidiaries
or any of the Providers nor any employee or agent of the Company, any
of its subsidiaries or any of the Providers has made any payment of
funds or received or retained any funds in violation of any health
care law, rule or regulation, the violation of which would have,
either individually or in the aggregate, a material adverse effect on
the results of operations, business, condition (financial or
otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole.
(xviii) The businesses of the Company, its
subsidiaries or the Providers do not violate any health care statute,
administrative or governmental rule or regulation of the United
States applicable to the Company or any of its subsidiaries,
including, but not limited to, 42 U.S.C. Section1320a-7b, or any
health care judgment, injunction, order or decree of any court or
governmental entity or instrumentality of the United States having
jurisdiction over the Company, any of its subsidiaries or any of the
Providers, except for violations that would not have, either
individually or in the aggregate, a material adverse effect on the
results of operations, business, condition (financial or otherwise),
prospects, properties or assets of the Company and its subsidiaries,
taken as a whole.
(xix) The statements in the Registration Statement
and the Prospectus under the captions "Risk Factors--Impact of Health
Care Reform and the Balanced Budget Act of 1997," "--Government
Regulation" and "Business--Government Regulation," insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present, in all material
respects, the information called for with respect to such legal
matters, documents and proceedings and fairly summarize, in all
material respects, the matters referred to therein.
(xx) The Company has full power (corporate and
other) to execute and deliver this Agreement and to carry out all the
terms and provisions hereof to be carried out by it. All necessary
corporate proceedings of the Company have been duly taken to
authorize the execution, delivery and performance of this Agreement
by the Company. This Agreement has been duly authorized, executed and
delivered by the Company, and (assuming this Agreement is a binding
agreement of the Underwriters) is the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, fraudulent
conveyance and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law). No consent, authorization, approval, order,
license, certificate or permit of or from, or declaration or filing
with, any federal, state, local or other governmental authority or
any court or other tribunal (domestic or foreign) is required by the
Company for the execution, delivery or performance of this Agreement
by the Company (except filings under the Act which have been or will
be made before the Closing Date and such consents consisting only of
consents under "blue sky" or securities laws which have been obtained
at or prior to the date of this Agreement). No consent of any party
to any
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contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company or any of its subsidiaries is a
party, or to which any of their respective properties or assets are
subject, is required for the execution, delivery or performance of
this Agreement; and the execution, delivery and performance of this
Agreement will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries
pursuant to any such contract, agreement, instrument, lease, license,
arrangement or understanding, or violate or result in a breach of any
term of the certificate or articles of incorporation or bylaws of the
Company or any of its subsidiaries, or violate, result in a breach
of, or conflict with any law, rule, regulation (except for such law,
rule or regulation the violation of which would not have,
individually or in the aggregate, a material adverse effect on the
results of operations, business, condition (financial or otherwise),
prospects, properties or assets of the Company and its subsidiaries,
taken as a whole), order, judgment or decree binding on the Company
or its subsidiaries or to which any of their respective operations,
businesses, properties or assets are subject.
(xxi) Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus and except as otherwise properly described in the
Prospectus, neither the Company nor its subsidiaries has (A) issued
any securities (other than upon the exercise of options and warrants
properly described in the Registration Statement) or incurred any
liability or obligation, primary or contingent, for borrowed money;
(B) entered into any material transaction not in the ordinary course
of business; or (C) declared or paid any dividend on its capital
stock.
(xxii) Neither the Company nor to the knowledge of
the Company, any of its officers, directors or affiliates (as defined
in the Regulations) has taken or will take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated
by this Agreement, any action designed to stabilize or manipulate the
price of any security of the Company or which has caused or resulted
in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Common Stock.
(xxiii) The Company and its subsidiaries have filed
all necessary federal, state, local and foreign income and franchise
tax returns and have paid all taxes shown as due thereon; and there
is no tax deficiency that has been, or, to the knowledge of the
Company, might be, asserted or threatened against the Company or any
of its subsidiaries or any of their respective properties or assets
that would have, individually or in the aggregate, a material adverse
effect upon the results of operations, business, condition (financial
or otherwise), prospects, properties or assets of the Company and its
subsidiaries, taken as a whole.
(xxiv) There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course
of business) or guarantees of indebtedness
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by the Company or its Subsidiaries to or for the benefit of any of
their respective officers or directors or any of the members of the
families of any of them, except as properly disclosed in the
Prospectus.
(xxv) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general
or specific authorizations; (B) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxvi) The Company, each of its subsidiaries and
each of the Providers is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds
insuring the Company, any of its subsidiaries, any of the Providers
and their respective businesses, assets, employees, officers and
directors are in full force and effect; the Company, its subsidiaries
and the Providers are in compliance with the terms of such policies
and instruments in all material respects; and there are no claims by
the Company, any of its Subsidiaries or any of the Providers under
any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause.
The Company, each of its subsidiaries and each of the Providers
maintains insurance of the types and in amounts generally deemed
adequate for its business and consistent with insurance coverage
maintained by similar companies and businesses, all of which
insurance is in full force and effect. None of the Company, its
subsidiaries or the Providers has been refused any insurance coverage
sought or applied for; and none of the Company, its subsidiaries or
the Providers has 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
adversely affect the results of operations, business, condition
(financial or otherwise), prospects, properties or assets of the
Company and its subsidiaries, taken as a whole.
(xxvii) The business, operations and properties of
the Company and its subsidiaries have been and are being conducted in
compliance in all material respects with all applicable laws,
ordinances, rules, regulations, licenses, permits, approvals, plans,
authorizations or requirements relating to occupational safety and
health, or pollution, or protection of health or the environment
(including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes
into ambient air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical
12
substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in
nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or
political subdivision thereof, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, and neither the Company nor any of its
subsidiaries has received any notice from any governmental
instrumentality or any third party alleging any violation thereof or
liability thereunder (including, without limitation, liability for
costs of investigating or remediating sites containing hazardous
substances and/or damages to natural resources).
(xxviii) The Company has filed an application to
list the Shares and the Additional Shares on the Nasdaq National
Market and has received notification that the listing has been
approved, subject to official notice of issuance.
(xxix) The Company is not, and upon consummation of
the transactions contemplated hereby will not be, subject to
registration as an "investment company" under the Investment Company
Act of 1940, as amended (the "Investment Company Act").
(xxx) The Company meets all conditions for use of a
Form S-2 registration statement pursuant to the Act and the
Regulations.
(b) Each Selling Stockholder represents and warrants to,
and agrees with, each of the several Underwriters that:
(i) Such Selling Stockholder has full power
(corporate and other) to enter into this Agreement and to sell,
assign, transfer and deliver to the Underwriters the Shares to be
sold by such Selling Stockholder hereunder in accordance with the
terms of this Agreement; the execution and delivery of this Agreement
have been duly authorized by all necessary corporate action of such
Selling Stockholder (if a corporation); and this Agreement has been
duly executed and delivered by such Selling Stockholder.
(ii) Such Selling Stockholder has duly executed
and delivered a power of attorney and custody agreement (with respect
to such Selling Stockholder, the "Power-of-Attorney" and the "Custody
Agreement", respectively), each in the form heretofore delivered to
the Representatives, appointing Xxxxx Xxxxxx, Xxxx X. Xxxxxx and Xxxx
X. Xxxxx, and each of them, as such Selling Stockholder's
attorney-in-fact (the "Attorney-in-Fact") with authority to execute,
deliver and perform this Agreement on behalf of such Selling
Stockholder and appointing StockTrans, Inc., as custodian thereunder
(the "Custodian"). Certificates in negotiable form, endorsed in blank
or accompanied by blank stock powers duly executed, with signatures
appropriately guaranteed, representing the Shares to be sold by such
Selling Stockholder have been deposited with the Custodian pursuant
to the Custody Agreement for the purpose of delivery under this
Agreement. Such Selling Stockholder specifically agrees that each of
the Shares represented by the certificates on deposit with the
Custodian is subject to the
13
interests of the Underwriters hereunder, that the arrangements made
for such custody, the appointment of the Attorney-in-Fact and the
right, power and authority of the Attorney-in-Fact to execute and
deliver this Agreement, to agree on the price at which the Shares
(including such Selling Stockholder's Shares) are to be sold to the
Underwriters, and to carry out the terms of this Agreement, are to
that extent irrevocable and that the obligations of such Selling
Stockholder hereunder shall not be terminated, except as provided in
this Agreement or the Custody Agreement, by any act of such Selling
Stockholder, by operation of law or otherwise, whether in the case of
any individual Selling Stockholder by the death or incapacity of such
Selling Stockholder, in the case of a trust or estate by the death of
the trustee or trustees or the executor or executors or the
termination of such trust or estate, or in the case of a corporate or
partnership Selling Stockholder by its liquidation or dissolution or
by the occurrence of any other event. If any individual Selling
Stockholder, trustee or executor should die or become incapacitated
or any such trust should be terminated, or if any corporate or
partnership Selling Stockholder shall liquidate or dissolve, or if
any other event should occur, before the delivery of such Shares
hereunder, the certificates for such Shares deposited with the
Custodian shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death, incapacity,
termination, liquidation or dissolution or other event had not
occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.
(iii) Such Selling Stockholder is the lawful owner
of the Shares to be sold by such Selling Stockholder hereunder and
upon sale and delivery of, and payment for, such Shares, as provided
herein, such Selling Stockholder will convey and the Underwriters
will acquire good, valid and marketable title to such Shares, free
and clear of any security interests, liens, encumbrances, equities,
claims or other defects.
(iv) Such Selling Stockholder has not taken and
will not take, directly or indirectly, any action which was designed
to cause or result, or which might be reasonably expected to cause or
result, in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Common Stock.
(v) Such Selling Stockholder has not, directly or
indirectly, since the filing of the Registration Statement (A) sold,
bid for, purchased, attempted to induce any person to purchase, or
paid anyone any compensation for soliciting purchases of, the Shares
or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company
(except for the sale of Shares by the Selling Stockholders under this
Agreement).
(vi) To the extent that any statements or
omissions are made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to
the Company by such Selling Stockholder specifically for use therein,
such Preliminary Prospectus did conform, and the Registration
Statement and the Prospectus and any amendments or supplements
thereto, when they become or became effective or
14
are filed with the Commission, as the case may be, will conform, in
all material respects to the requirements of the Act and the
Regulations and did not and will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. In addition, such Selling Stockholder has reviewed the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and the Registration Statement, and
(a) the information regarding such Selling Stockholder set forth
therein under the caption "Principal and Selling Stockholders" is
complete and accurate and (b) to the best knowledge of such Selling
Stockholder, each Preliminary Prospectus did conform, and the
Registration Statement and the Prospectus and any amendments or
supplements thereto, when they become effective or are filed with the
Commission, as the case may be, will conform, in all material
respects to the requirements of the Act and the Regulations and did
not and will not contain any untrue statement of material fact or
omit to state any material fact necessary in order to make statements
therein not misleading.
(vii) The sale of Shares by such Selling
Stockholder pursuant hereto is not prompted by any adverse
information concerning the Company or any of its subsidiaries that is
not set forth in the Registration Statement or the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(viii) The sale of Shares to the Underwriters by
such Selling Stockholder pursuant to this Agreement, the compliance
by such Selling Stockholder with the other provisions of this
Agreement and the Custody Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as
may be required under state securities or blue sky laws and, if the
registration statement filed with respect to the Shares (as amended)
is not effective under the Act as of the time of execution hereof,
such as may be required (and shall be obtained as provided in this
Agreement) under the Act or the Exchange Act, or (ii) conflict with
or result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder or any of
such Selling Stockholder's properties are bound, or the charter
documents or by-laws of such Selling Stockholder or any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to such Selling
Stockholder.
(ix) There are no outstanding options, warrants,
rights or other agreements or arrangements requiring such Selling
Stockholder at any time to transfer any Shares to be sold hereunder
by it.
(x) There is not pending or threatened against
such Selling Stockholder any action, suit, arbitration, claim,
governmental or other proceeding or investigation (domestic or
foreign, formal or informal) which (A) questions the validity of this
Agreement or of any action taken or to be taken by it pursuant to or
in connection with
15
this Agreement or (B) is required to be disclosed in the Registration
Statement which is not so disclosed, and such actions, suits,
arbitrations, claims, governmental or other proceedings or
investigations as are summarized in the Registration Statement, if
any, are accurately summarized.
(xi) Such Selling Stockholder has no reason to
believe that the representations and warranties of the Company
contained in this Section 2 are not true and correct in all material
respects; provided, however, that the foregoing sentence shall not be
deemed to constitute a reiteration or guarantee of all of the
representations and warranties of the Company contained in this
Section 2.
(xii) On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid
in connection with the sale and transfer of the Shares to be sold by
such Selling Stockholder to the several Underwriters hereunder will
have been fully paid or provided for by such Selling Stockholder and
all laws imposing such taxes will have been fully complied with.
3. Purchase, Sale and Delivery of the Shares and the Additional
Shares. On the basis of the representations, warranties, covenants and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, and at a purchase price of $_______ per Share, (A)
the Company agrees to sell to the several Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from the Company the number of
Shares set opposite the respective names of the Underwriters in Column (1) of
Schedule 1 hereto and (B) each Selling Stockholder, severally and not jointly,
agrees to sell to the several Underwriters, and the Underwriters, severally and
not jointly, agree to purchase from the Selling Stockholders the total number of
Shares set opposite the respective names of the Underwriters in Column (2) of
Schedule 1 hereto multiplied by a fraction, the numerator of which is the number
of Shares set forth opposite the name of such Selling Stockholder in Schedule 2
and the denominator of which is the total number of Shares to be sold by all
Selling Stockholders, in each case subject to such adjustments to eliminate any
fractional shares as the Representatives in their sole discretion shall make.
Payment of the purchase price for, and delivery of certificates for,
the Shares shall be made at the office of Stroock & Stroock & Xxxxx LLP, New
York, New York 10038-4982, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:30 a.m., New York time, on the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange
Act)(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of this Agreement, or such other time not later than seven
business days after such date as shall be agreed upon by the Representatives,
the Company and the Selling Stockholders (such time and date of payment and
delivery being herein called the "Closing Date"). Payment shall be made to the
Company and the Custodian, as the case may be, by certified or official bank
check or checks drawn in federal funds or similar same day funds payable to the
order of the Company or the Custodian, as the case may be (or by wire transfer
to an account of the Company and an account of the Custodian with a bank in New
York City specified by each of them at least two business days prior to the
Closing Date), against delivery
16
to the Representatives for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them. Certificates for the Shares
shall be registered in such name or names and in such authorized denominations
as the Representatives may request in writing at least two full business days
prior to the Closing Date. The Company and the Custodian will permit the
Representatives to examine and package such certificates for delivery at least
one full business day prior to the Closing Date.
In addition, the Company hereby grants to the several Underwriters
the option to purchase up to 300,000 Additional Shares at the same purchase
price per share to be paid by the several Underwriters to the Company for the
Shares as provided for in this Section 3. This option may be exercised only to
cover over-allotments in the sale of shares by the several Underwriters. Any
such election to purchase Additional Shares may be exercised at any time, in
whole or in part, by written notice from the Representatives to the Company
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Additional Shares to be purchased and the
date and time when such Additional Shares are to be delivered, as reasonably
determined by the Representatives (such date and time being herein sometimes
referred to as the "Additional Closing Date"); provided, however, that the
Additional Closing Date shall not be earlier than the Closing Date or earlier
than the second business day after the date on which the option shall have been
exercised nor later than the eighth business day after the date on which the
option shall have been exercised (unless such time and date are postponed in
accordance with the provisions of Section 9 hereof). Certificates for Additional
Shares shall be registered in such name or names and in such authorized
denominations as the Representatives may request in writing at least two full
business days prior to the Additional Closing Date. The Company will permit the
Representatives to examine and package such certificates for delivery at least
one full business day prior to the Additional Closing Date.
Each Underwriter agrees, severally and not jointly, to purchase from
the Company the number of Additional Shares which bears the same relationship to
the total number of Additional Shares to be sold to the Underwriters by the
Company, as the number of Shares set forth opposite the name of such Underwriter
in Schedule 1 hereto in Column (3) (or such number of Shares increased as set
forth in Section 9 hereof) bears to the total number of Shares.
Payment for the Additional Shares shall be made by certified or
official bank check or checks, in federal funds or similar same day funds,
payable to the order of the Company (or by wire transfer to an account of the
Company with a bank in New York City specified by it at least two business days
prior to the Additional Closing Date), at the offices of Stroock & Stroock &
Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, or such other
location as may be mutually acceptable, upon delivery of the certificates for
the Additional Shares to the Representatives for the respective accounts of the
Underwriters.
4. Offering. Subject to the terms of this Agreement, the Underwriters
will make a public offering of the Shares on or as soon after the effective date
of the Registration Statement as the Representatives deem advisable. The Shares
initially is to be offered to the public at the initial public offering price
provided for in Section 3 (such price being herein called the "public
17
offering price"). After the initial public offering, the Representatives may
from time to time increase or decrease the public offering price, in their sole
discretion, by reason of changes in general market conditions or otherwise.
5. Covenants of the Company and the Selling Stockholders.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) If the Registration Statement has not yet
been declared effective the Company will use its best efforts to
cause the Registration Statement and any amendments thereto to become
effective as promptly as possible, and if Rule 430A of the
Regulations is used or the filing of the Prospectus is otherwise
required under Rule 424(b) or Rule 434 of the Regulations, the
Company will file the Prospectus (properly completed if such Rule
430A has been used) pursuant to such Rule 424(b) or Rule 434 within
the prescribed time period and will provide evidence satisfactory to
the Representatives of such timely filing. If the Company elects to
rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434.
The Company will notify the Representatives
immediately (A) when the Registration Statement and any
post-effective amendment thereto become effective, (B) of the receipt
of any comments from the Commission or the "blue sky" or securities
authority of any jurisdiction regarding the Registration Statement,
any post-effective amendment thereto, the Prospectus, or any
amendment or supplement thereto and (C) of the receipt of any
notification with respect to a Stop Order or the initiation or
threatening of any proceeding with respect to a Stop Order. The
Company will use its best efforts to prevent the issuance of any Stop
Order and, if any Stop Order is issued, to obtain the lifting thereof
as promptly a possible. The Company will not file any amendment to
the Registration Statement or any amendment of or supplement to the
Prospectus (including any prospectus required to be filed pursuant
Rule 424(b) and including the issuance or filing of any term sheet
within the meaning of Rule 434 of the Regulations) that differs from
the prospectus on file at the time of the effectiveness of the
Registration Statement before or after the effective date of the
Registration Statement, or file any document under the Exchange Act
if such document would be deemed to be incorporated by reference into
the Prospectus, to which the Representatives shall reasonably object
in writing after being timely furnished in advance a copy thereof.
(ii) During the time when a prospectus relating to
the Shares or the Additional Shares is required to be delivered
hereunder or under the Act or the Regulations, comply so far as it is
able with all requirements imposed upon it by the Act, as now
existing and as hereafter amended, and by the Regulations, as from
time to time in force, so far as necessary to permit the continuance
of sales of or dealings in the Shares and the Additional Shares in
accordance with the provisions hereof and the Prospectus. If, at any
time when a prospectus relating to the Shares or the Additional
Shares is required to be delivered hereunder or under the Act or the
Regulations, any event shall
18
have occurred as a result of which, in the judgment of the Company or
the Underwriters, the Registration Statement or the Prospectus as
then amended or supplemented contains any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, or if, in the opinion of either of such counsel, it is
necessary at any time to amend or supplement the Registration
Statement or the Prospectus to comply with the Act or the
Regulations, the Company will notify the Representatives
immediately and promptly prepare and file with the Commission an
appropriate amendment or supplement (in form and substance
satisfactory to the Representatives) which will correct such
statement or omission or which will effect such compliance and will
use its best efforts to have any such amendment declared effective as
soon as possible. If any Underwriter is required by law to deliver a
prospectus relating to the Shares or the Additional Shares nine
months or more after the effective date of the Registration
Statement, the Company, upon the request of the Representatives, will
prepare promptly such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the
Act.
(iii) The Company will promptly deliver without
charge to each of the several Underwriters such number of copies of
each Preliminary Prospectus as the Underwriters may request and, as
soon as the Registration Statement or any amendment thereto becomes
effective or a supplement is filed, deliver without charge to the
Representatives two signed copies of the Registration Statement,
including exhibits, or such amendment thereto, as the case may be,
and two copies of any supplement thereto, and deliver without charge
to each of the several Underwriters such number of copies of the
Prospectus, the Registration Statement and amendments and supplements
thereto, if any, without exhibits, as the Underwriters may request
for the purposes contemplated by the Act.
(iv) The Company will endeavor in good faith, in
cooperation with the Representatives, at or prior to the time the
Registration Statement becomes effective, to qualify the Shares and
the Additional Shares for offering and sale under the "blue sky" or
securities laws of such jurisdictions as the Representatives may
designate; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so
subject. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representatives agree in
writing that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may
be required by the laws of such jurisdiction.
(v) The Company will make generally available
(within the meaning of Section 11(a) of the Act and the Regulations)
to its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of its fiscal
quarter in which the first anniversary date of the effective date of
the Registration Statement occurs, an earnings statement (in form
complying with the provisions of Rule
19
158 of the Regulations) covering a period of at least twelve
consecutive months beginning after the effective date of the
Registration Statement.
(vi) During the period of 120 days from the date
of the Prospectus, the Company will not, without the prior written
consent of Equitable Securities Corporation, on behalf of the
Underwriters, directly or indirectly, issue, offer, sell, pledge,
offer to sell, contract to sell or grant any option to purchase, or
otherwise sell or dispose (or announce any issuance, offer, sale,
pledge, offer of sale, contract of sale or grant of an option to
purchase or other sale or disposition) of, any shares of Common Stock
or other capital stock of the Company (or any securities convertible
into, or exchangeable or exercisable for, any shares of Common Stock
or other capital stock of the Company), and the Company will use its
best efforts to obtain the undertaking of each of its officers and
directors and such of its stockholders as have been heretofore
designated by the Representatives and listed on Schedule 3 hereto not
to engage in any of the aforementioned transactions on their own
behalf, other than the Company's sale of Shares hereunder, the
issuance of stock options pursuant to the Company's existing stock
option plan as described in the Prospectus and the Company's issuance
of Common Stock issuable upon the exercise of stock options or
warrants outstanding on the date hereof which are properly described
in the Prospectus. The Company shall not amend the vesting provisions
of its existing stock option plan within 120 days from the date of
the Prospectus.
(vii) For a period of three years after the
effective date of the Registration Statement, the Company will
furnish to the Representatives without charge the following:
(A) as soon as practicable after they have been
sent to stockholders of the Company or filed with the
Commission, the Nasdaq National Market or any national
securities exchange, three copies of each annual and
interim financial and other report or communication sent by
the Company to its stockholders or filed with the
Commission, the Nasdaq National Market or national
securities exchange;
(B) as soon as practicable, a copy of every press
release and every material news item and article in respect
of the Company, its subsidiaries and their respective
affairs which were released by the Company or its
subsidiaries, which may be sent by facsimile; and
(C) such additional publicly available documents
and information with respect to the Company, its
subsidiaries and their respective affairs as the
Representatives may from time to time reasonably request.
(viii) The Company will apply the net proceeds
received by it from the offering in the manner set forth under the
caption "Use of Proceeds" in the Prospectus.
20
(ix) The Company will furnish to the
Representatives as early as practicable prior to the Closing Date and
any Additional Closing Date, as the case may be, but not less than
two full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of the Company
which have been read by the Company's independent certified public
accountants, as stated in their letter to be furnished pursuant to
Section 7(h).
(x) The Company will not file any amendment or
supplement to the Registration Statement or Prospectus at any time,
whether before or after the effective date of the Registration
Statement, unless such filing shall comply with the Act and the
Regulations and unless the Representatives previously shall have been
advised of such filing and furnished with a copy thereof, and the
Representatives and the counsel for the Underwriters shall have
approved such filing.
(xi) If the Company elects to rely on Rule 462(b)
of the Regulations, the Company shall both file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule
462(b) and pay the applicable filing fees in accordance with Rule 111
of the Regulations by the earlier of (A) 10:00 p.m., New York time,
on the date of this Agreement and (B) the time confirmations are sent
or given, as specified by Rule 462(b)(2).
(xii) The Company, during the period when the
Prospectus is required to be delivered under the Act or the Exchange
Act, will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act within the time
periods required by the Exchange Act and the rules and regulations
thereunder.
(xiii) The Company will comply with all provisions
of all undertakings contained in the Registration Statement.
(xiv) Prior to the Closing Date or any Additional
Closing Date, as the case may be, the Company shall not issue any
press release or other media communication, directly or indirectly,
or hold any press conference with respect to the Company or its
financial condition, results of operations, business, prospects,
properties, assets or this offering, without the express involvement
or prior review thereof by the Representatives.
(xv) The Company will use its best efforts to
maintain in effect the listing of the Common Stock on the Nasdaq
National Market and shall take all necessary steps to cause the
Shares and the Additional Shares to be included on the Nasdaq
National Market simultaneously with the effective date of the
Registration Statement and to maintain such inclusion for a period of
three years after the date hereof or until such earlier date as the
Common Stock shall be listed for regular trading privileges on the
New York Stock Exchange, the American Stock Exchange or another
national securities exchange approved by the Representatives.
(xvi) The Company will not invest the proceeds from
the sale of the
21
Shares and the Additional Shares in a manner to cause the Company to
become an "investment company" within the meaning of the Investment
Company Act.
(b) Each Selling Stockholder covenants and agrees with the
several Underwriters that:
(i) Such Selling Stockholder consents to the use
of the Prospectus and any amendment or supplement thereto by the
Underwriters and all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by law to be
delivered in connection therewith.
(ii) Such Selling Stockholder will not at any
time, directly or indirectly, take any action intended, or which
might reasonably be expected, to cause or result in, or which will
constitute, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of
the Shares.
(iii) Such Selling Stockholder will not at any
time, directly or indirectly (A) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of, the Shares or
(B) pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company (except for
the sale of Shares by the Selling Stockholders under this Agreement).
(iv) During the period of 120 days from the date
of the Prospectus, such Selling Stockholder will not, without the
prior written consent of Equitable Securities Corporation, on behalf
of the Underwriters, directly or indirectly, issue, offer, sell,
pledge, offer to sell, contract to sell or grant any option to
purchase, or otherwise sell or dispose (or announce any issuance,
offer, sale, pledge, offer of sale, contract of sale or grant of an
option to purchase or other sale or disposition) of, any shares of
Common Stock or other capital stock of the Company (or any securities
convertible into, or exchangeable or exercisable for, any shares of
Common Stock or other capital stock of the Company),
(v) In order to document the Underwriters'
compliance with the reporting and withholding provisions of the Tax
Equity and Fiscal Responsibility Act of 1982 with respect to the
transactions herein contemplated, such Selling Stockholder will
deliver to the Representatives prior to or at the Closing Date a
properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(vi) As soon as any Selling Stockholder is advised
thereof, such Selling Stockholder will advise the Representatives
(and immediately confirm such advice in writing), (A) of receipt by
such Selling Stockholder, or by any representative or agent of such
Selling Stockholder, of any communication from the Commission
relating to the Registration Statement, the Prospectus or any
Preliminary Prospectus, or any notice or
22
order of the Commission relating to the Company or such Selling
Stockholder in connection with the transactions contemplated by this
Agreement and (B) of the happening of any event which makes or may
make any statement made in the Registration Statement, the Prospectus
or any Preliminary Prospectus untrue or that requires the making of
any changes in the Registration Statement, the Prospectus or any
Preliminary Prospectus, as the case may be, in order to make the
statements therein not misleading.
6. Payment of Expenses. The Company hereby agrees to pay all fees and
expenses (other than fees and expenses of counsel for the Underwriters, except
for such fees and expenses of counsel for the Underwriters as provided for in
Sections 6(c) and 6(e) hereof) in connection with (a) the preparation, printing,
filing, distribution and mailing of the Registration Statement and the
Prospectus and the printing, filing, distribution and mailing of this Agreement,
the Agreement Among Underwriters, the Selected Dealer Agreement, Underwriters'
Questionnaire and related documents, including the cost of all copies thereof
and the Preliminary Prospectuses and of the Prospectus and any amendments or
supplements thereto supplied to the Underwriters and dealers in quantities as
hereinabove stated, (b) the issuance, sale, transfer and delivery of the Shares
and the Additional Shares, including any transfer or other taxes payable
thereon, if any, (c) the qualification of the Shares and the Additional Shares
under state or foreign "blue sky" or securities laws, including the costs of
printing and mailing the preliminary and final "Blue Sky Survey" and the
reasonable fees of counsel for the Underwriters and the disbursements in
connection therewith, (d) the filing fees payable to the Commission, the
National Association of Securities Dealers, Inc. (the "NASD"), and the
jurisdictions in which any "blue sky" qualification is sought, (e) the
reasonable fees of counsel for the Underwriters and the disbursements in
connection therewith relating to all filings with the NASD and (f) the listing
of the Shares and the Additional Shares on the Nasdaq National Market. If the
sale of the Shares provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 11 hereof or
because of any failure, refusal or inability on the part of the Company or the
Selling Stockholders to perform all obligations and satisfy all conditions on
their part to be performed or satisfied hereunder other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Shares.
7. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Shares and the Additional
Shares, as provided herein, shall be subject, in their discretion, to the
continuing accuracy of the representations and warranties of the Company and the
Selling Stockholders contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Representatives, as of
the date hereof and as of the Closing Date (or the Additional Closing Date, as
the case may be), to the absence from any certificates, opinions, written
statements or letters furnished to the Representatives or to Stroock & Stroock &
Xxxxx LLP, counsel to the Underwriters pursuant to this Section 7 of any
misstatement or omission, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
conditions:
23
(a) The Registration Statement shall have become effective
not later than 5:30 p.m., New York time, on the date of this
Agreement, or at such later time and date as shall have been
consented to in writing by the Representatives; if the Company shall
have elected to rely upon Rule 430A or Rule 434 of the Regulations,
the Prospectus shall have been filed with the Commission in a timely
fashion in accordance with Section 5(a) hereof; and at or prior to
the Closing Date no Stop Order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof shall
have been issued and no proceedings therefor shall have been
initiated or threatened.
(b) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there
shall not have been a material adverse change, or any development
involving a material adverse change, in the general affairs,
business, prospects, properties, assets, management, 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, in each case other
than as set forth in or contemplated by the Registration Statement
and the Prospectus and (ii) neither the Company nor any of its
subsidiaries shall have sustained any loss or interference with its
business or properties, which loss or interference is material to the
Company and its subsidiaries, taken as a whole, and which loss or
interference is not set forth in the Registration Statement and the
Prospectus, if in the judgment of the Representatives any such
development makes it impracticable or inadvisable to consummate the
sale and delivery of the Shares and the Additional Shares by the
Underwriters at the public offering price.
(c) At the Closing Date and any Additional Closing Date, as
the case may be, the Representatives shall have received the
favorable written opinion of Xxxxxx Godward LLP, counsel to the
Company, addressed to the Underwriters, in form and substance
satisfactory to the Representatives, to the effect that:
(i) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation, with full corporate power and authority to
own, lease, license, and use its properties and assets and
to conduct its business in the manner described in the
Prospectus.
(ii) Each of the Company and its subsidiaries is
duly qualified to do business and is in good standing in
every jurisdiction in which its ownership, leasing,
licensing or use of property and assets makes such
qualification necessary.
(iii) The Company had, at July 31, 1997, an
authorized and outstanding capitalization as set forth in
the Prospectus under the caption "Capitalization." Each
outstanding share of Common Stock (including the Shares
being sold by the Selling Stockholders) are duly and
validly authorized and issued, fully paid and
24
nonassessable and were not issued and are not now in
violation of or subject to any preemptive or similar
rights. The Shares and Additional Shares being sold by
the Company hereunder are duly and validly authorized,
issued and outstanding, fully paid and nonassessable, and
have not been issued in violation of or subject to any
preemptive or similar rights and, when delivered and sold
in accordance with this Agreement, the Underwriters will
receive good title to the Shares and Additional Shares
purchased by them from the Company, free and clear of all
liens, security interests, pledges, charges, claims,
encumbrances, restrictions on transfer, stockholder
agreements, voting trust, voting rights or other defect
of title whatsoever. The securities of the Company conform
to the descriptions thereof contained in the Registration
Statement or the Prospectus. To such counsel's knowledge,
there is no commitment, plan or arrangement to issue, and
no outstanding option, warrant or other right calling for
the issuance of, any share of capital stock of the Company
or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for
capital stock of the Company, except as properly described
in the Prospectus. Except for the Shares being sold by the
Selling Stockholders, to such counsel's knowledge, no
holder of securities of the Company has any rights to the
registration of securities of the Company because of the
filing of the Registration Statement or otherwise in
connection with the sale of the Shares and Additional
Shares contemplated hereby (other than any such
registration rights that have been waived in writing). All
of the issued and outstanding shares of capital stock of
each subsidiary of the Company has been duly and validly
authorized and issued, fully paid and nonassessable and
were not issued in violation of preemptive or similar
rights. The Company owns, directly or indirectly, all of
the outstanding shares of capital stock of each of its
subsidiaries free and clear of all liens, security
interests, pledges, charges, claims, encumbrances,
restrictions on transfer, stockholder agreements, voting
trust, voting rights or other defect of title whatsoever.
(iv) To such counsel's knowledge, there is no
action, suit, arbitration, claim, governmental or other
proceeding or investigation (domestic or foreign, formal or
informal) pending or threatened with respect to the Company
or its subsidiaries or any of their respective operations,
businesses, properties or assets, except as properly
described in the Prospectus or such as, individually or in
the aggregate, do not now have and are not reasonably
expected in the future to have a material adverse effect
upon the results of operations, business, condition
(financial or otherwise), properties or assets of the
Company.
(v) To such counsel's knowledge, none of the
Company, its subsidiaries or any other party is now, or
with notice or passage of time or both or upon consummation
of the transactions contemplated hereby will be, in
violation or breach of, or in default with respect to, any
provision of any contract, agreement, instrument, lease,
license, arrangement or understanding known to such counsel
to which the Company or any of its subsidiaries is a party,
or to which any of their respective properties or assets
are subject (including those filed as exhibits to the
25
Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1997 and the Company's Quarterly Report on
Form 10-Q for the quarter ended July 31, 1997), except as
properly described in the Prospectus.
(vi) Neither the Company nor any of its
subsidiaries is in violation or breach of, or in default
with respect to, any term of its respective certificate or
articles of incorporation or by-laws.
(vii) The Company has all full power (corporate and
other) to execute and deliver and to carry out all the
terms and provisions hereof to be carried out by it. All
necessary corporate proceedings of the Company have been
taken to authorize the Company's execution, delivery and
performance of this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company, is the
legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, fraudulent
conveyance and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law). No consent,
authorization, approval, order, license, certificate or
permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or
any court or other tribunal (domestic or foreign) is
required by the Company for the execution, delivery or
performance of this Agreement by the Company other than
those that have been obtained and granted as may have been
required by state securities or "blue sky" laws. Such
opinion shall state that all filings were made under the
Act. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement or understanding
known to such counsel to which the Company or any of its
subsidiaries is a party, or to which any of their
respective properties or assets are subject (including
those filed as exhibits to the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 1997 and the
Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1997) is required for the execution,
delivery or performance of this Agreement other than those
which have been received; and the execution and delivery of
this Agreement will not, and this Agreement may be
performed in a manner that does not violate, result in a
breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement or
understanding or violate or result in a breach of any term
of the certificate or articles of incorporation or by-laws
of the Company or its subsidiaries, or violate, result in a
breach of, or conflict with any law, rule, regulation
(except for such law, rule or regulation the violation of
which would not have, individually or in the aggregate, a
material adverse effect on the results of operations,
business, condition (financial or otherwise), properties or
assets of the Company and its subsidiaries, taken as a
whole), order, judgment, or decree known to such counsel
binding on the Company or any of its subsidiaries or to
which any of their respective
26
operations, businesses, properties or assets are subject.
(viii) Any contract, agreement, instrument, lease or
license known to counsel and required to be described in
the Registration Statement or the Prospectus has been
described properly therein. Any contract, agreement,
instrument, lease or license known to counsel required to
be filed as an exhibit to the Registration Statement has
been filed with the Commission as an exhibit to the
Registration Statement.
(ix) To such counsel's knowledge, each of the
Company and its subsidiaries possesses or has made
application for all material authority, material
certificates and material permits issued by the appropriate
local, state, federal and foreign regulatory agencies or
bodies necessary to conduct their respective businesses, in
the manner described in the Prospectus, and to the
knowledge of such counsel, neither the Company nor any of
its subsidiaries has received any notice of any proceeding
relating to the revocation or modification of any such
authority, material certificate or material permit which,
individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a
material adverse effect on the results of operations,
business, condition (financial or otherwise), properties or
assets of the Company and its subsidiaries, taken as a
whole, except as properly disclosed in the Prospectus.
(x) The Registration Statement and the Prospectus
and any amendments thereof or supplements thereto (other
than the financial statements and the notes thereto and
related schedules and other financial data included
therein, as to which no opinion need be expressed) comply
as to form in all material respects with the requirements
of the Act and the Regulations. The documents filed under
the Exchange Act and incorporated by reference in the
Registration Statement and the Prospectus and any amendment
thereof or supplement thereto (other than the financial
statements and the notes thereto and related schedules
included or incorporated by reference therein, as to which
no opinion need be expressed) when they became effective or
were filed with the Commission, as the case may be,
complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations thereunder; and they have no
reason to believe that any of such documents, when such
documents became effective or were so filed, as they case
may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement
of a material fact, or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or, in the case of other
documents which were filed under the Exchange Act with the
Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made when such documents were so
filed, not misleading.
(xi) The Registration Statement has become
effective under the Act and,
27
to such counsel's knowledge, no Stop Order has been issued
and no proceedings for that purpose have been instituted
or threatened.
(xii) The statements set forth in the Prospectus
under the captions "Risk Factors," "Business," "Description
of Capital Stock," "Management" and "Principal and Selling
Stockholders," insofar as such statements constitute
summaries of statutes, laws, regulations and legal or
governmental proceedings, have been reviewed by such
counsel and are accurate in all material respects (it being
understood that such counsel need express no opinion with
respect to statements set forth under the captions "Risk
Factors--Impact of Health Care Reforms," "--Government
Regulation" and "Business--Government Regulation" in the
Prospectus).
(xiii) The Company is not, and upon consummation of
the transactions contemplated hereby will not be, subject
to registration as an "investment company" under the
Investment Company Act.
In addition, such counsel shall also state that such
counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent
public accountants for the Company and the Underwriters at which the
contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon
and does not assume responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus, on the basis of the foregoing, no facts have come to
the attention of such counsel which would 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) or Rule 434 of the Regulations, if applicable), or any
amendment thereof made prior to the Closing Date as of the date of
such amendment, contained an untrue statement of a material fact or
omitted to state any 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 Date 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 the light of the circumstances
under which they were made, not misleading (it being understood that
such counsel need express no view with respect to the financial
statements and the notes thereto and related schedules and other
financial data included therein and the information as to regulatory
matters described under the captions "Risk Factors--Impact of Health
Care Reforms," "--Government Regulation" and "Business--Government
Regulation" in the Prospectus).
In rendering such opinions, counsel for the Company may
rely (A) as to matters involving the application of laws other than
the federal laws of the United States and the laws of the States of
Delaware and California, to the extent such counsel deems proper
28
and to the extent specified in such opinion, upon an opinion or
opinions, (in form and substance satisfactory to counsel for the
Underwriters) of other counsel, acceptable to counsel for the
Underwriters, familiar with applicable laws, in which case the
opinions of such counsel shall state that the opinion or opinions of
such other counsel are satisfactory in scope and form to such counsel
and that reliance thereon by such counsel and the Underwriters is
reasonable; (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and
its subsidiaries; and (C) to the extent they deem proper, upon
written statements or certificates 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 counsel for the Underwriters.
References to the Registration Statement and the Prospectus
in this paragraph (c) shall include any amendment or supplement
thereto at the date of such opinion.
(d) At the Closing Date, the Representatives shall have
received the favorable written opinion of Xxxxxx Godward LLP, counsel
to the Selling Stockholders, addressed to the Underwriters, in form
and substance satisfactory to the Representatives, to the effect
that:
(i) Each Selling Stockholder has full power
(including corporate or partnership power, if a corporation
or a partnership) to enter into this Agreement, the Custody
Agreement and the Power-of-Attorney and to sell, transfer
and deliver the Shares being sold by such Selling
Stockholder hereunder in the manner provided in this
Agreement and to perform its obligations under the Custody
Agreement; the execution and delivery of this Agreement,
the Custody Agreement and the Power-of-Attorney have been
duly authorized by all necessary corporate action of each
Selling Stockholder that is a corporation; this Agreement,
the Custody Agreement and the Power-of-Attorney have been
duly executed and delivered by each Selling Stockholder;
assuming due authorization, execution and delivery by the
Custodian, the Custody Agreement and the Power-of-Attorney
are the legal, valid and binding obligation of each Selling
Stockholder, enforceable against each Selling Stockholder
in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, conservatorship,
receivership, fraudulent conveyance and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity
or at law).
(ii) Upon the delivery by each Selling Stockholder
to the several Underwriters of certificates for the Shares
being sold hereunder by such Selling Stockholder against
payment therefor as provided herein, the several
Underwriters will own the Shares sold by the Selling
Stockholders, free and clear of any adverse claim or
restriction on transfer.
29
(iii) The sale of Shares to the Underwriters by
each Selling Stockholder pursuant to this Agreement, the
compliance by such Selling Stockholder with the other
provisions of this Agreement and the Custody Agreement and
the consummation of the other transactions herein
contemplated do not (A) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained
and such as may be required under state securities or blue
sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which
such Selling Stockholder is a party or by which such
Selling Stockholder or any of such Selling Stockholder's
properties are bound, or, in the case of a Selling
Stockholder that is a corporation, the charter documents or
bylaws of such Selling Stockholder or any statute or any
judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable
to such Selling Stockholder.
(iv) The statements in the Registration Statement
and in the Prospectus under the caption "Principal and
Selling Stockholders," insofar as such statements
constitute a summary of the matters referred to therein,
fairly present the information called for with respect to
such matters.
In rendering any such opinions, such counsel may rely, as
to matters of fact, to the extent such counsel may deem proper, upon
a certificate of the Selling Stockholders and, as to matters
involving the laws of jurisdictions in which such counsel are not
admitted to practice, to the extent satisfactory to counsel for the
Underwriters, upon the opinion of local counsel in such
jurisdictions. The foregoing opinion shall also state that the
Underwriters are justified in relying on any such opinion of such
local counsel, and copies of the opinion of such local counsel shall
be delivered to the Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus
in this paragraph (d) shall include any amendment or supplement
thereto at the date of such opinion.
(e) At the Closing Date and any Additional Closing Date, as
the case may be, the Representatives shall have received the
favorable written opinion of Xxxxxx & Xxxxxx, special regulatory
counsel to the Company, addressed to the Underwriters, in form and
substance satisfactory to the Representatives, to the effect that the
statements in the Registration Statement and Prospectus under the
captions "Risk Factors--Impact of Health Care Reform and the Balanced
Budget Act of 1997," "--Government Regulation" and
"Business--Government Regulation," insofar as such statements
constitute summaries of the legal matters or proceedings referred to
therein, are correct and accurate summaries in all material respects.
Such counsel shall also confirm that no facts have come to
the attention of such counsel that would lead such counsel to believe
that the sections of the Registration
30
Statement under the captions "Risk Factors--Impact of Health Care
Reforms," "--Government Regulation" and "Business--Government
Regulation," as of the effective date of the Registration Statement
and as of the date of such opinion, contained or contains any 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 not misleading or that the sections of the
Prospectus under the captions "Risk Factors--Impact of Health Care
Reforms," "--Government Regulation" and "Business--Government
Regulation," as of the date of the Prospectus or the date of such
opinion, contained or contains any untrue statement of a material
fact or omitted or omits 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.
References to the Registration Statement and the Prospectus
in this paragraph (e) shall include any amendment or supplement
thereto at the date of such opinion.
(f) On or prior to the Closing Date and any Additional
Closing Date, as the case may be, the Underwriters shall have been
furnished such information, documents, certificates and opinions as
they may reasonably require for the purpose of enabling them to
review the matters referred to in Section 7(b), and in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties, covenants, agreements or conditions
herein contained, or as the Representatives may reasonably request.
(g) At the Closing Date and any Additional Closing Date, as
the case may be, the Representatives shall have received a
certificate of the chief executive officer and the chief financial
officer of the Company, dated the Closing Date or such Additional
Closing Date, as the case may be, to the effect that (i) the
conditions set forth in Section 7(a) has been satisfied, (ii) as of
the date of this Agreement and as of the Closing Date or such
Additional Closing Date, as the case may be, the representations and
warranties of the Company contained herein were and are accurate,
(iii) as of the Closing Date or such Additional Closing Date, as the
case may be, the obligations to be performed by the Company hereunder
on or prior hereto have been fully performed and (iv) subsequent to
the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company and its
subsidiaries have not sustained any material loss or interference
with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or
any development involving a material adverse change, in the general
affairs, business, prospects, properties, assets, management,
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, except
in each case as described in or contemplated by the Prospectus.
(h) At the time this Agreement is executed and at the
Closing Date and any Additional Closing Date, as the case may be, the
Representatives shall have received a
31
letter, addressed to the Underwriters and in form and substance
satisfactory to the Representatives, with reproduced copies or signed
counterparts thereof for each of the Underwriters, from Ernst & Young
LLP, independent public accountants for the Company, dated the date
of delivery:
(i) confirming that they are or during the period
covered by their report included in the Registration Statement and
the Prospectus they were, independent certified public accountants
with respect to the Company and its subsidiaries within the meaning
of the Act and the Regulations and stating that the response to Item
10 of the Registration Statement is correct insofar as it relates to
them;
(ii) stating that, in their opinion, the audited
financial statements, and any related schedules of the Company and
its subsidiaries included and incorporated by reference in the
Registration Statement and the Prospectus examined by them comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the applicable
published rules and regulations of the Commission thereunder;
(iii) stating that, on the basis of (x) their
limited review in accordance with standards established by the
American Institute of Certified Public Accountants of any interim
unaudited consolidated financial statements of the Company and its
subsidiaries as indicated in their report included in the
Registration Statement and the Prospectus and (y) certain specified
procedures performed on the unaudited condensed consolidated balance
sheet as of July 31, 1997 and the unaudited consolidated statements
of operations and of cash flows for the three-month periods ended
July 31, 1997 and 1996 included in the Registration Statement and
inquiries of officers and other employees of the Company and its
subsidiaries who have responsibility for financial and accounting
matters of the Company, nothing has come to their attention that
would cause them to believe that (A) such unaudited consolidated
financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and,
if applicable, the Exchange Act and the applicable published rules
and regulations of the Commission thereunder or (B) any material
modifications should be made to such unaudited consolidated financial
statements for them to be in conformity with generally accepted
accounting principles;
(iv) stating that, on the basis of procedures (but
not an examination or review made in accordance with generally
accepted auditing standards) consisting of a reading of the latest
available unaudited interim consolidated financial statements of the
Company and its subsidiaries (with an indication of the date of the
latest available unaudited interim consolidated financial
statements), a reading of the latest available minutes of the
stockholders and boards of directors of the Company and its
subsidiaries and committees of such boards subsequent to July 31,
1997, inquiries to certain officers and other employees of the
Company and its subsidiaries responsible for financial and accounting
matters with respect to transactions and events subsequent to July
31, 1997 and other specified procedures and inquiries to a date not
more than five days prior to the date of such letter, nothing has
come to their attention that would cause them to believe that: (A)
with respect to the period subsequent to July 31, 1997 there were, as
of the date of the most recent available monthly consolidated
financial statements of the Company and its subsidiaries, if any, and
as of a specified date not more than five days prior to the
32
date of such letter, any changes in the capital stock or increases
in long-term indebtedness of the Company or any decrease in the net
current assets or stockholders' equity of the Company, in each case
as compared with the amounts shown in the most recent balance sheet
of the Company and its subsidiaries presented in the Registration
Statement and the Prospectus, except for changes or decreases which
the Registration Statement and the Prospectus disclose have occurred
or may occur or which are set forth in such letter which the
Representatives in their sole discretion shall accept; (B) that
during the period from July 31, 1997 to the date of the most recent
available monthly consolidated financial statements of the Company
and its subsidiaries, if any, and to a specified date not more than
five days prior to the date of such letter, there was any decrease,
as compared with the corresponding period in the prior fiscal year,
in total revenues, or total net income or earnings per share, except
for decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such
letter which the Representatives in their sole discretion shall
accept; and
(v) stating that they have compared specific
numerical data and financial information pertaining to the Company
and its subsidiaries set forth in the Registration Statement, each
Preliminary Prospectus, and the Prospectus, if applicable, which have
been specified by the Representatives prior to the date of this
Agreement, to the extent that such data and information may be
derived from the general accounting and financial records of the
Company and its subsidiaries, and excluding any questions requiring
an interpretation by legal counsel, with the results obtained from
the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing standards)
set forth in the letter, and found them to be in agreement.
(i) All proceedings taken in connection with the issuance,
sale, transfer and delivery of the Shares and the Additional Shares
shall be satisfactory in form and substance to the Representatives
and to counsel for the Underwriters, and the Underwriters shall have
received from such counsel for the Underwriters a favorable opinion,
dated as of the Closing Date and the Additional Closing Date, as the
case may be, with respect to such of the matters set forth under
Section 7(b), and with respect to such other related matters, as the
Representatives may reasonably request.
(j) The NASD, upon review of the terms of the public
offering of the Shares and the Additional Shares, shall not have
objected to the Underwriters' participation in such offering.
(k) The Representatives shall have received a certificate
executed by an Attorney-in-Fact on behalf of each Selling Stockholder
to the effect that the representations and warranties of such Selling
Stockholder in this Agreement are true and
33
correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date; such Selling
Stockholder 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; and the Registration Statement and the
Prospectus, as amended or supplemented as of the Closing Date,
contain all statements required to be included therein regarding such
Selling Stockholder, and the Registration Statement, as amended as of
the Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Closing Date, does not include any untrue
statement of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(l) The Representatives shall have received from each
person who is a director or officer of the Company and such
stockholders as have been heretofore designated by the
Representatives and listed on Schedule 3 hereto an agreement to the
effect that such person will not, without the prior written consent
of Equitable Securities Corporation, on behalf of the Underwriters,
directly or indirectly, issue, offer, sell, pledge, offer to sell,
contract to sell or grant any option to purchase, or otherwise sell
or dispose (or announce any issuance, offer, sale, pledge, offer of
sale, contract of sale or grant of an option to purchase or other
sale or disposition) of, any shares of Common Stock or other capital
stock of the Company (or any securities convertible into, or
exchangeable or exercisable for, any shares of Common Stock or other
capital stock of the Company) for a period of 120 days after the date
of the Prospectus.
(m) At the Closing Date and any Additional Closing Date,
the Representatives shall have received an opinion of Stroock &
Stroock & Xxxxx LLP, counsel for the Underwriters, with respect to
the issuance and sale of the Shares and Additional Shares, as
applicable, the Registration Statement, the Prospectus, and such
other related matters as the Representatives may reasonably require,
and the Company shall have furnished to counsel for the Underwriters
such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
Any certificate or other document signed by any officer of the
Company and delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. Any certificate or other
document signed by or on behalf of a Selling Stockholder and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by such Selling Stockholder hereunder to the
Underwriters as to statements made therein. The Company and the Selling
Stockholders shall furnish to the Representative or to counsel for the
Underwriters such conformed copies of such opinions, certificate, letters and
documents in such quantities as the Representatives and counsel for the
Underwriters shall reasonably request. If any condition to the Underwriters'
obligations hereunder to be fulfilled prior to or at the Closing Date or any
Additional Closing Date, as the case may be, is not so fulfilled, the
Representatives may on behalf of the several Underwriters terminate this
Agreement or, if the Representatives so elect, in writing waive any such
conditions which have not been fulfilled or extend the time for
34
their fulfillment.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or State statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on (i) any untrue statement or alleged
untrue statement made by the Company in Section 2 of this Agreement, (ii) any
untrue statement or alleged untrue statement of any material fact contained in
(A) any Preliminary Prospectus, the Registration Statement or the Prospectus or
any amendment or supplement to the Registration Statement or the Prospectus and
(B) any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares
or the Additional Shares under the securities or Blue Sky laws thereof or filed
with the Commission or any securities association or securities exchange (each,
an "Application") or (iii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or any
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares or the Additional Shares in the public
offering to any person by an Underwriter and is based solely on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives on behalf of any Underwriter
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability that the Company might otherwise have.
(b) Each Selling Stockholder, severally and not jointly, will
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person, if any, who controls each
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims, liabilities, expenses
and damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Act, the Exchange Act or other Federal or
State statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement made by such Selling
Stockholder in Section 2 of this Agreement, (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the Registration Statement or the Prospectus or any
35
amendment or supplement to the Registration Statement or the Prospectus and (B)
any Application executed by such Selling Stockholder or based upon written
information furnished by or on behalf of such Selling Stockholder or (iii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or any Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that such Selling Stockholder will not be liable
to the extent that such loss, claim, liability, expense or damage arises from
the sale of the Shares in the public offering to any person by an Underwriter
and is based solely on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus; and
provided, further, however, that such Selling Stockholder will be liable in any
such case only to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged untrue statement or omission made in the Registration
Statement or any amendment thereto or in the Prospectus or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information furnished to the Company by such Selling Stockholder. This
indemnity agreement will be in addition to any liability that such Selling
Stockholder may otherwise have. The Company and the Selling Stockholders may
agree, as among themselves and without limiting the rights of the Underwriters
under this Agreement, as to the respective amounts of such liability for which
they each shall be responsible.
(c) Each Underwriter will indemnify and hold harmless the Company,
each Selling Stockholder, each person, if any, who controls the Company or each
Selling Stockholder within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, each director of the Company and each officer of the Company
who signs the Registration Statement to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter, but
only insofar as losses, claims, liabilities, expenses or damages arise out of or
are based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives on behalf
of such Underwriter expressly for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that each Underwriter might otherwise have.
Notwithstanding the foregoing, no Underwriter shall be obligated to indemnify
any such party hereunder in an amount that exceeds the sum of the underwriting
discounts received by it pursuant to this Agreement. The Company and the Selling
Stockholders acknowledge that the statements set forth in the last paragraph of
the cover page of the Prospectus and in the _________ paragraphs under the
caption "Underwriting" in the Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus or in any
amendment thereof or supplement thereto, as the case may be.
(d) Any party that proposes to assert the right to be indemnified
under this Section 8 will, promptly after receipt of notice of commencement of
any action against such party in
36
respect of which a claim is to be made against an indemnifying party or
parties under this Section 8, notify each such indemnifying party of
the commencement of such action, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified party under the
foregoing provisions of this Section 8 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party
shall not be liable for any settlement of any action or claim effected without
its written consent (which consent shall not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any action, suit or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification is being sought hereunder (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional written release
in form and substance satisfactory to the indemnified parties of each
indemnified party from all liability arising out of such action, suit,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
37
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 8 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Selling Stockholders
or the Underwriters, the Company, the Selling Stockholders and the Underwriters
will contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company from persons other than the Underwriters, such as persons who
control the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company, who also may be liable for contribution) to which
the Company, any one or more of the Selling Stockholders and any one or more of
the Underwriters may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other. The relative
benefits received by the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bears to the total underwriting
discounts received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company and the Selling Stockholders, on the one hand, and
the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, the Selling Stockholders or the Representatives on behalf of the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 8(e) were to
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 herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 8(e) shall be deemed to include, for purpose of this Section 8(e),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts
received by it, and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(e), any person who controls a
party to this Agreement within the meaning of Section 15 of the Act or
38
Section 20 of the Exchange Act will have the same rights to contribution as that
party, and each officer of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject in each case
to the provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 8(e), will notify
any such party or parties from whom contribution may be sought, but the omission
so to notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 8(e). No
party shall be liable for contribution with respect to any action or claim
settled without its written consent (which consent shall not be unreasonably
withheld). The Underwriters' obligations to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint, and
contributions among Underwriters shall be governed by the provisions of the
Agreement Among Underwriters dated the date hereof among the Representatives and
the other Underwriters.
(f) The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company and each Selling
Stockholder contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Shares or Additional Shares and
payment therefor or (iii) any termination of this Agreement.
9. Default by an Underwriter.
(a) If any Underwriter defaults in its obligation to purchase Shares
or Additional Shares hereunder, and if the number of Shares or Additional Shares
to which the defaults of all Underwriters in the aggregate relate does not
exceed 10% of the number of Shares or Additional Shares, as the case may be,
which all Underwriters have agreed to purchase hereunder, then such Shares or
Additional Shares to which such defaults relate shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments
hereunder.
(b) If such defaults exceed in the aggregate 10% of the number of
Shares or Additional Shares, as the case may be, which all Underwriters have
agreed to purchase hereunder, the Representatives may in their discretion
arrange for themselves or for another party or parties to purchase such Shares
or Additional Shares, as the case may be, to which such defaults related on the
terms contained herein.
If the Representatives do not arrange for the purchase of such Shares
or Additional Shares, as the case may be, within one business day after the
occurrence of defaults relating to in excess of 10% of the number of Shares or
Additional Shares, as the case may be, then the Company shall be entitled to a
further period of one business day within which to procure another party or
parties satisfactory to the Representatives to purchase such Shares or
Additional Shares, as the case may be, on such terms. If the Representatives do
not or the Company does not arrange for the purchase of the Shares or Additional
Shares, as the case may be, to which such defaults related as provided in this
Section 9(b), this Agreement may be terminated by the Representatives or the
Company, without liability on the part of the Company (except that the
provisions of Sections 6, 8, 10, 11, 13, 14 and 15 shall survive such
termination) or the several
39
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters
and to the Company for any damage occasioned by its default hereunder.
(c) If the Shares or Additional Shares to which such defaults relate
are to be purchased by the non-defaulting Underwriters, or are to be purchased
by another party or parties as aforesaid, the Representatives and the Company
shall each have the right to postpone the Closing Date or the Additional Closing
Date, as the case may be, for a reasonable period, but not in any event more
than five business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements with respect to the Shares or the Additional Shares,
and the Company agrees to prepare and file promptly any amendment or supplement
to the Registration Statement or the Prospectus which in the opinion of counsel
to the Underwriters may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any party substituted under this Section 9
as if such party had originally been a party to this Agreement and had been
allocated the number of Shares and Additional Shares actually purchased by it as
a result of its original commitment to purchase Shares and Additional Shares and
its purchase of Shares or Additional Shares pursuant to this Section 9.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants and agreements of the Underwriters, the
Company and the Selling Stockholders, including the indemnity and contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any indemnified person, or by or on behalf of the Company or the Selling
Stockholders, or any person or entity which is entitled to be indemnified under
Section 8, and shall survive termination of this Agreement or the delivery of
the Shares and the Additional Shares to the several Underwriters. In addition,
the provisions of Sections 6, 8, 10, 11, 13, 14 and 15 shall survive termination
of this Agreement, whether such termination occurs before or after the Closing
Date or any Additional Closing Date.
11. Effective Date of this Agreement and Termination Thereof.
(a) This Agreement shall become effective, upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 p.m., New York time, on the fifth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company or the Underwriters
except as herein expressly provided. The Company may prevent this Agreement from
becoming effective without liability of any party to any other party, except as
noted below in this Section 11, by giving notice as provided in Section 11(c)
before the time this Agreement becomes effective.
40
(b) The Representatives shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Additional Closing Date,
as the case may be, by giving notice to the Company if any domestic or
international event, act, or occurrence has disrupted materially, or in the
opinion of the Representatives will disrupt materially in the immediate future,
the securities markets; or if there shall have been a general suspension of, or
a general limitation on prices for, trading in securities on the New York Stock
Exchange, the American Stock Exchange or in the Nasdaq National Market; or if
there shall have been an outbreak of major hostilities or other national or
international calamity; or if a banking moratorium has been declared by a state
or federal authority; or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if there shall have been a
material interruption in the mail service or other means of communication within
the United States; or if the Company shall have sustained a material or
substantial loss by fire, flood, accident, hurricane, earthquake, theft,
sabotage or other calamity or malicious act which, whether or not such loss
shall have been insured, will, in the opinion of the Representatives, make it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Shares or the Additional Shares, as the case may be; or if there shall have
been such change in the market for the Company's securities or securities in
general or in political, financial or economic conditions as in the judgment of
the Representatives makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Shares or the Additional Shares, as the case
may be, on the terms contemplated by the Prospectus.
(c) If the Representatives elect to prevent this Agreement from
becoming effective, as provided in this Section 11, or to terminate this
Agreement, the Representatives shall notify the Company promptly by telephone,
telex or telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective or to terminate this
Agreement, the Company shall notify the Representatives promptly by telephone,
telex or telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary notwithstanding
(except as specified in Section 11(e)), if this Agreement shall not become
effective by reason of an election pursuant to this Section 11 or if this
Agreement shall terminate or shall otherwise fail to be carried out within the
time specified herein by reason of any failure on the part of the Company or the
Selling Stockholders to perform any covenant or agreement or satisfy any
condition of this Agreement by them to be performed or satisfied, the sole
liability of the Company to the several Underwriters, in addition to the
obligations the Company assumed pursuant to Section 6, will be to reimburse
promptly the several Underwriters for such out-of-pocket expenses (including the
fees and expenses of their counsel) as shall have been incurred by them in
connection with this Agreement and the proposed offer, sale and delivery of the
Shares and the Additional Shares, and upon demand the Company agrees to pay
promptly the full amount thereof to the Representative for the respective
accounts of the Underwriters. Anything in this Agreement to the contrary
notwithstanding other than Section 11(e), if this Agreement shall not be carried
out within the time specified herein for any reason other than the failure on
the part of the Company or the Selling Stockholders to perform any covenant or
agreement or satisfy any condition in this Agreement by them to be performed or
satisfied, the Company shall have no liability to the several Underwriters other
than for the obligations assumed by the Company pursuant to Section 6.
41
(e) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is to be carried out otherwise, the
provisions of Sections 6, 8, 10, 11, 13, 14 and 15 shall not be affected in any
way by such election or termination or failure to carry out the terms of this
Agreement or any part hereof.
12. Notices. All communications hereunder, except as specifically may
be provided otherwise herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed, telegraphed or telecopied,
and confirmed by letter, to such Underwriter, c/o Equitable Securities
Corporation, 000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000-0000,
Attention: X. Xxxxx Sweat, Telecopy: (000) 000-0000, with a copy to Stroock &
Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Xxxxx X. Xxxxxxxxx, Esq., Telecopy: (000) 000-0000; or, if sent to the Company,
shall be mailed, delivered or telexed, telegraphed or telecopied, and confirmed
by letter, to the Company, 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attention: President, Telecopy: (000) 000-0000, with a copy to
Xxxxxx Godward LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx
00000-0000, Attention: Xxxxxx X. Xxxxxx, Esq., Telecopy: (000) 000-0000. All
notices hereunder shall be effective upon receipt by the party to which such
notice is addressed.
13. Parties. The Representatives represent that they are authorized
to act on behalf of the several Underwriters named in Schedule 1 hereto, and the
Company shall be entitled to act and rely on any request, notice, consent,
waiver or agreement purportedly given on behalf of the Underwriters when the
same shall have been given by the Representatives on such behalf. This Agreement
shall inure solely to the benefit of, and shall be binding upon, the several
Underwriters, the Company and the persons and entities referred to in Section 8
who are entitled to indemnification or contribution, and their respective
successors, legal representatives and assigns (which shall not include any
buyer, as such, of the Shares or the Additional Shares), and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provision herein
contained. Notwithstanding anything contained in this Agreement to the contrary,
all of the obligations of the Underwriters hereunder are several and not joint.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. Counterparts. This Agreement may be signed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall constitute one and the same
agreement.
42
If the foregoing correct sets forth the understanding among you, the
Company and the Selling Stockholders, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
PMR CORPORATION
By:______________________________
Name:
Title:
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE 2 HERETO
By:_______________________________
Attorney-in-Fact
Accepted as of the date first above written.
EQUITABLE SECURITIES CORPORATION
XXXXXX BROTHERS INC.
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
on behalf of themselves and
the other Underwriters
named in Schedule 1 hereto
By: EQUITABLE SECURITIES CORPORATION
By:____________________________________
Name:
Title:
43
SCHEDULE 1
(1) (2) (3)
Number of Number of Total Aggregate
Shares to be Shares to be Number
Purchased from Purchased from the of Shares to
the Company Selling Stockholders be Purchased
----------- -------------------- ------------
Underwriter
-----------
Equitable Securities Corporation
Xxxxxx Brothers Inc.
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C ______________ _________________ _______________
Total
============== ================= ===============
44
SCHEDULE 2
SELLING STOCKHOLDERS
Name Number of Shares to be Sold
---- ---------------------------
Total
45
SCHEDULE 3
LOCK-UP AGREEMENTS
Xxxxx Xxxxxx
Xxxxxx Family Trust
Xxxxxx 1996 Charitable Remainder Trust dated 11/19/96
Xxxx X. Xxxxxx
Xxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxx, III
Xxxxxxx X. XxXxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxx, III
X. Xxxxxxxxx XxXxxxx
Xxx X. Xxxxxx
Proactive Investment Managers, L.P.
Proactive Partners, L.P.
Fremont Proactive Partners, L.P.
