EXHIBIT 1.1
3,000,000 SHARES
INFORMATION MANAGEMENT RESOURCES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
July ___, 1997
Xxxxxxxxxx Securities
Alex. Xxxxx & Sons Incorporated
Xxxxxx Xxxx LLC
Xxxxxxx Xxxxx & Associates, Inc.
c/x Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introduction. Information Management Resources, Inc., a
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Florida corporation (the "Company"), proposes to issue and sell to you (the
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"Underwriters") 1,500,000 shares of its Common Stock, par value $.10 per share
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(the "Common Stock"), and certain shareholders of the Company named in Schedule
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B annexed hereto (collectively, the "Selling Shareholders") propose to sell an
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aggregate of 1,500,000 shares of the Company's Common Stock to the Underwriters.
Said aggregate of 3,000,000 shares are herein called the "Firm Common Shares."
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In addition, the Company has granted to the Underwriters an option to purchase
up to an additional 225,000 shares of Common Stock and the Selling Shareholders
have severally granted to the Underwriters an option to purchase up to an
additional 225,000 shares of Common Stock, each Selling Shareholder selling up
to the amount set forth opposite such Selling Shareholder's name in Schedule B,
all as provided in Section 5 hereof. Said aggregate of 450,000 shares are herein
called the "Optional Common Shares". The Firm Common Shares and, to the extent
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such option is exercised, the Optional Common Shares are hereinafter
collectively referred to as the "Common Shares."
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You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2. Representations and Warranties of the Company and the
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Principal Shareholder. The Company, each of the Selling Shareholders and Satish
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X. Xxxxx (the "Principal Shareholder") represent and warrant to the several
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Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-______) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
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Securities and Exchange Commission (the "Commission") thereunder, and has
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been filed with the Commission. The Company has prepared and has filed or
proposes to file prior to the effective date of such registration statement
an amendment or amendments to such registration statement, which amendment
or amendments have been or will be similarly prepared. There have been
delivered to you two signed copies of such registration statement and
amendments, together with two copies of each exhibit filed therewith.
Conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus have been delivered to
you in such reasonable quantities as you have requested for each of the
Underwriters. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus or (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulation. As filed, the final prospectus shall include all Rule 430A
Information and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to
you prior to the date and time that this Agreement was executed and
delivered by the parties hereto, or, to the extent not completed at such
date and time, shall contain only such specific additional information and
other changes (beyond that contained in the latest Preliminary Prospectus)
as the Company shall have previously advised you in writing would be
included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
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registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended; provided, however,
that such term shall also include (i) all Rule 430A Information deemed to
be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and (ii) any registration statement filed pursuant to 462(b) of
the Rules and Regulations relating to the Common Shares. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
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in the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule
430A Information. The term "Prospectus" as used in this Agreement shall
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mean (i) the prospectus relating to the Common Shares in the form in which
it is first filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations or (ii) if no filing pursuant to Rule 424(b) of the Rules
and Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such registration
statement becomes effective together with the Preliminary Prospectus
included in the Registration Statement at the time it becomes effective.
The term "Rule 430A Information" means information with respect to the
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Common Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of
the Rules and Regulations.
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(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or omitted
from any Preliminary Prospectus, the Registration Statement, the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, or
have any equity interest in, any corporation, association or other entity
other than the entities identified on Exhibit 21.1. of the Registration
Statement (each a "Subsidiary" and collectively, the "Subsidiaries"). The
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Company and each of the Subsidiaries have been duly organized and are
validly existing under the laws of their respective jurisdictions of
organization, with full power and authority (corporate and other) to own
and lease their properties and conduct their respective businesses as
described in the Prospectus. As of the date hereof, the Company
beneficially owns 559,800 equity shares of Information Management Resources
(India) Limited, an Indian limited company ("IMR-India") (representing
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approximately 98.2% of the issued and outstanding equity shares of IMR-
India). All equity shares of each Subsidiary owned of record by the
Company are owned free and clear of all claims, liens, charges and
encumbrances, equities, claims, security interests, voting trusts,
restrictions or other defects of title.
(d) The Company and its Subsidiaries are in possession of and
operating in compliance with all authorizations, licenses, permits,
consents, certificates and orders material to the conduct of their
respective businesses, all of which are valid and in full force and effect.
The Company and each its Subsidiaries are duly qualified to do business and
in good standing as foreign corporations in each jurisdiction in which the
ownership or leasing of properties or the conduct of their respective
businesses requires such qualification, except for jurisdictions in which
the failure to so qualify would not have a material adverse effect upon the
Company and the Subsidiaries, considered as a whole. No proceeding has
been instituted in any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(e) The authorized, issued and outstanding capital stock of the
Company is as set forth under the heading "Capitalization" in the
Prospectus. The issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were
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not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities, and conform to the
description thereof contained in the Prospectus. All issued and
outstanding shares of capital stock of each Subsidiary beneficially owned
by the Company have been duly authorized and validly issued and are fully
paid and nonassessable. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related
notes thereto, included in the Prospectus, neither the Company nor any
Subsidiary has outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the stock option, stock
bonus and other stock plans or arrangements maintained by the Company and
the Subsidiaries, and of the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown in respect of, such plans, arrangements,
options and rights.
(f) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Common Shares
by the Company pursuant to this Agreement. No shareholder of the Company
has any right which has not been waived to require the Company to register
the sale of any shares owned by such shareholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the shareholders or the Board of Directors of the Company will
be required for the transfer and sale of the Common Shares to be sold by
the Selling Shareholders or the issuance and sale of the Common Shares to
be sold by the Company as contemplated herein.
(g) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforceability
may be limited by general principles of equity, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights. The
execution and performance of this Agreement by the Company and the
consummation of the transactions contemplated herein (i) will not violate
any provisions of the articles of incorporation or bylaws, or other
organizational documents, of the Company or any Subsidiary, will not
conflict with, result in the breach or violation of, or constitute, either
by itself or upon notice or the passage of time or both, a default under
any material agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other United States or
foreign governmental body applicable to the Company or any Subsidiary or
any of their respective properties. No consent, approval, authorization or
other order of any United States or foreign court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions herein contemplated, except for
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compliance with the Act, the blue sky laws applicable to the public
offering of the Common Shares by the several Underwriters and the clearance
of such offering with the National Association of Securities Dealers, Inc.
(the "NASD").
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(h) Coopers & Xxxxxxx L.L.P. and Xxxxxx Xxxxxxxx & Associates, each
of whom has expressed its opinion with respect to the financial statements
and schedules filed with the Commission as a part of the Registration
Statement and included in the Prospectus and in the Registration Statement,
are independent accountants as required by the Act and the Rules and
Regulations.
(i) The consolidated financial statements and schedules of the
Company and its Subsidiaries, and the related notes thereto, included in
the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its Subsidiaries as of
the respective dates of such financial statements and schedules, and the
consolidated results of operations and changes in financial position of the
Company and its Subsidiaries for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent accountants named in
subsection 2(h). No other financial statements or schedules are required
to be included in the Registration Statement. The selected financial data
set forth in the Prospectus under the captions "Capitalization" and
"Selected Consolidated Financial Data" fairly present the information set
forth therein on the basis stated in the Registration Statement.
(j) Except as to defaults which individually or in the aggregate
would not be material to the Company and its Subsidiaries, taken as a
whole, neither the Company nor any Subsidiary is in violation or default of
any provision of its articles of incorporation or bylaws, or other
organizational documents, or is in breach of or default with respect to any
provision of any material agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of its properties
are bound. There does not exist any state of facts which constitutes an
event of default on the part of the Company or any Subsidiary as defined in
such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
(k) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The descriptions of
contracts so described in the Prospectus are accurate and complete. All
such contracts are in full force and effect on the date hereof. Neither
the Company nor any Subsidiary nor, to the best of the Company's knowledge,
any other party is in breach of or default under any of such contracts.
(l) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any Subsidiary is or may be a party or of which property owned
or leased by the Company or any Subsidiary is or may be the subject, or
related to environmental, intellectual property or discrimination matters,
which actions, suits or proceedings might, individually or in the
aggregate, prevent or adversely affect the transactions contemplated by
this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
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prospects of the Company and its Subsidiaries, taken as a whole. No labor
disturbance by the employees of the Company or any Subsidiary exists or is
imminent which might be expected to affect adversely such condition,
properties, business, results of operations or prospects. Neither the
Company nor any Subsidiary is a party or subject to the provisions of any
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other United States or foreign governmental body,
which is material to the Company and its Subsidiaries, taken as a whole.
(m) Each of the Company and its Subsidiaries, as the case may be,
has good and marketable title to all the properties and assets reflected as
owned in the consolidated financial statements hereinabove described (or
elsewhere in the Prospectus), in each case free and clear of any lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property by
the Company and its Subsidiaries, taken as a whole. The Company and its
Subsidiaries hold their respective leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company and its Subsidiaries, taken as a
whole. Except as disclosed in the Prospectus, the Company and each
Subsidiary own or lease all such properties as are necessary to their
respective operations as now conducted or as proposed to be conducted.
(n) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) neither the Company nor
any Subsidiary has incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or
written agreement or other transaction which is not in the ordinary course
of business or which could result in a material reduction in the future
earnings of the Company and its Subsidiaries, taken as a whole; (ii)
neither the Company nor any Subsidiary has sustained any material loss or
interference with their respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock and the Company and
its Subsidiaries are not in default in the payment of principal or interest
on any outstanding debt obligations; (iv) there has not been any change in
the capital stock (other than upon the 1996 reclassification of the Common
Stock described in the Registration Statement, and the 3-for-2 stock
dividend paid July 10, 1997, upon the sale of the Common Shares hereunder
and upon the exercise of options described in the Registration Statement
and the 3-for-2 stock dividend paid July 10, 1997) or indebtedness material
to the Company and the Subsidiaries (other than in the ordinary course of
business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties, results of
operations or prospects of the Company and its Subsidiaries, taken as a
whole.
(o) Except as disclosed in or specifically contemplated by the
Prospectus, (i) the Company and its Subsidiaries have sufficient
intellectual property rights (including, without limitation, trademarks,
trade names, copyrights and licenses), approvals and governmental
authorizations to conduct their businesses as now conducted; (ii) the
expiration of any intellectual property rights (including, without
limitation, trademarks, trade names, copyrights and licenses), approvals or
governmental authorizations would not have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of
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the Company and its Subsidiaries, taken as a whole; and the Company has no
knowledge of any infringement by it or any Subsidiary of intellectual
property rights (including, without limitation, trademarks, trade name
rights, patent rights, mask works, copyrights or licenses), trade secret or
other similar rights of others, and there is no claim being made against
the Company or any Subsidiary regarding trademark, trade name, patent, mask
work, copyright, license, trade secret or other infringement of
intellectual property rights which could have a material adverse effect on
the condition (financial or otherwise), business, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole. Neither
the Company nor any Subsidiary holds, owns or licenses any patent rights or
mask works.
(p) The Company has not been advised, and has no reason to believe,
that either it or any Subsidiary is not conducting their respective
businesses in compliance with all applicable laws, rules and regulations of
the jurisdictions in which either of them is conducting business,
including, without limitation, all applicable local, state (United States
and foreign) and federal and foreign environmental, intellectual property
and anti-discrimination laws and regulations; except where failure to be so
in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of
the Company and its Subsidiaries, taken as a whole.
(q) The Company and each Subsidiary have filed all necessary federal,
state, local and foreign income and franchise tax returns and have paid all
taxes shown as due thereon. The Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the
Company or any Subsidiary which could materially and adversely affect the
business, operations or properties of the Company and its Subsidiaries,
taken as a whole.
(r) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(s) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Preliminary
Prospectus, the Prospectus, the Registration Statement and the other
materials permitted by the Act.
(t) Each of the Company and its Subsidiaries maintains insurance of
the types and in the amounts generally deemed adequate for its business,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily
insured against by other comparable companies, all of which insurance is in
full force and effect.
(u) The Common Stock is registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
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Common Shares have been approved for quotation on the Nasdaq National
Market, subject only to formal notice of issuance.
(v) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
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(w) To the best knowledge of the Company, the Principal Shareholder
and the Selling Shareholders, after due inquiry, neither the Company nor
any Subsidiary has at any time during the last five years (i) made any
unlawful contribution to any candidate for United States or foreign office,
or failed to disclose fully any contribution in violation of law, or (ii)
made any payment to any United States or foreign governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States and any other applicable jurisdiction.
(x) Neither the Company, the Principal Shareholder nor any Selling
Shareholder has taken, nor will take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
SECTION 3. Representations, Warranties and Covenants of the Selling
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Shareholders.
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(a) The Principal Shareholder and each of the Selling Shareholders
controlled by the Principal Shareholder, on the one hand, and each of the
other Selling Shareholders,on the other hand, severally and not jointly,
represent and warrant to, and agree with, the several Underwriters that:
(i) Such Selling Shareholder has, and on the First Closing Date
and the Second Closing Date hereinafter mentioned will have, good and
marketable title to the Common Shares proposed to be sold by such
Selling Shareholder hereunder on such Closing Date and full right,
power and authority to enter into this Agreement and to sell, assign,
transfer and deliver such Common Shares hereunder, free and clear of
all liens, encumbrances, equities, security interests, voting trusts,
restrictions and other adverse claims whatsoever. Upon delivery of
and payment for such Common Shares hereunder, the Underwriters will
acquire good and marketable title thereto, free and clear of all
liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts, restrictions or other defects of title
whatsoever.
(ii) Such Selling Shareholder has executed and delivered a Power
of Attorney and caused to be executed and delivered on his behalf a
Custody Agreement (hereinafter collectively referred to as the
"Shareholders Agreement") and in connection herewith such Selling
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Shareholder further represents, warrants and agrees that such Selling
Shareholder has deposited in custody, under the Shareholders
Agreement, with the agent named therein (the "Agent") as custodian,
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certificates in negotiable form for the Common Shares to be sold
hereunder by such Selling Shareholder, for the purpose of further
delivery pursuant to this Agreement. Such Selling Shareholder agrees
that the Common Shares to be sold by such Selling Shareholder on
deposit with the Agent are subject to the interests of the Company and
the Underwriters, that the arrangements made for such custody are to
that extent irrevocable, and that the obligations of such Selling
Shareholder hereunder shall not be terminated, except as provided in
this Agreement or in the Shareholders Agreement, by any act of such
Selling Shareholder, by operation of law, by the death or incapacity
of such Selling Shareholder or by the occurrence of any other event.
If the Selling Shareholder should die or become incapacitated, or if
any other event should occur,
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before the delivery of the Common Shares hereunder, the documents
evidencing Common Shares then on deposit with the Agent shall be
delivered by the Agent in accordance with the terms and conditions of
this Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Agent shall have received
notice thereof. This Agreement and the Shareholders Agreement have
been duly executed and delivered by or on behalf of such Selling
Shareholder and the form of such Shareholders Agreement has been
delivered to you. Each of the Shareholders Agreement and this
Agreement is a valid and binding agreement of the Selling Shareholder
and is enforceable against the Selling Shareholder in accordance with
the terms hereof and thereof, except (i) as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and (ii) that remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding may be brought.
(iii) The performance of this Agreement and the Shareholders
Agreement and the consummation of the transactions contemplated herein
and therein will not result in a breach or violation by such Selling
Shareholder of any of the terms or provisions of, or constitute a
default by such Selling Shareholder under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder or
any of its properties is bound, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency or body
applicable to such Selling Shareholder or any of its properties.
(iv) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Shares.
(v) Each Preliminary Prospectus and the Prospectus, insofar as it
has related to such Selling Shareholder has not included any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Neither the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as it relates to such Selling Shareholder, will
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(vi) Such Selling Shareholder is not aware that any of the
representations or warranties set forth in Section 2 above is untrue
or inaccurate in any material respect.
(vii) None of the proceeds received by such Selling Shareholder
from the sale of the Common Shares will be paid to a member of the
NASD or any affiliate of such member.
(viii) On the Closing Date, all stock transfer or other taxes
(other than income taxes), if any, that are required to be paid in
connection with the sale and
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transfer of the Common Shares to the several Underwriters pursuant to
the Underwriting Agreement will have been fully paid or provided for
by such Selling Shareholder, to the extent such taxes have not been
paid by the Company, and all laws imposing such taxes will have been
fully complied with.
(ix) No consent, approval, authorization or order of, or any
filing with, any court or governmental agency or body is required for
the consummation by such Selling Shareholder of the transactions on
its part contemplated in the Shareholders Agreement or this Agreement,
except as may be required under the Act or state or provincial
securities or "blue sky" laws.
(x) Other than as permitted by the Act and the rules and
regulations thereunder, such Selling Shareholder has not distributed
and will not distribute any preliminary prospectus, the Prospectus or
any other offering material in connection with the offering and sale
of the Shares.
(b) The Principal Shareholder and each of the Selling Shareholders
agree with the Company and the Underwriters not to offer to, directly or
indirectly, sell, sell or contract to sell or otherwise dispose of any
shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock, for a period of 90 days after the first date
that any of the Common Shares are released by you for sale to the public,
without the prior written consent of Xxxxxxxxxx Securities, which consent
may be withheld at the sole discretion of Xxxxxxxxxx Securities.
Notwithstanding the foregoing, such shareholder may make bona fide gifts or
transfers, effected through private transfers to family members of such
shareholder or to trusts, all of the beneficiaries of which are family
members of such shareholder, provided such donee agrees to be bound by the
restrictions to which such shareholder has agreed to be bound pursuant to
this Agreement and any "lock-up" agreement to be executed by such Selling
Shareholder and delivered to the Underwriters.
SECTION 4. Representations and Warranties of the Underwriters. The
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Underwriters represent and warrant to the Company and to the Selling
Shareholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering, (ii) with respect to stabilization and overallotment set
forth on the inside cover page of the Prospectus, and (iii) under "Underwriting"
in the Prospectus (other than the fourth paragraph thereof (disclosing lock-up
arrangments) and the ninth paragraph thereof (describing the Company's Nasdaq
symbol)) was furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Registration Statement and the
Prospectus and is correct in all material respects.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
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the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, (i) the Company agrees to issue and
sell to the Underwriters 1,500,000 of the Firm Common Shares, and (ii) the
Selling Shareholders agree, severally and not jointly, to sell to the
Underwriters in the respective amounts set forth in Schedule B hereto, an
aggregate of 1,500,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Shareholders, respectively, the number of Firm Common Shares described below.
The purchase price per share to be paid by the several Underwriters to the
Company and to the Selling Shareholders, respectively, shall be $_____ per
share.
10
The obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,500,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Shareholders shall be to purchase from the Selling
Shareholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,500,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 P.M.
Washington D.C. time, the fourth) full business day following the first date
that any of the Common Shares are released by you for sale to the public, as you
shall designate by at least 24 hours prior notice to the Company (or at such
other time and date, not later than one week after such third or fourth full
business day, as the case may be, as may be agreed upon by the Company and the
Underwriters) (the "First Closing Date"); provided, however, that if the
------------------
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that any
of the Common Shares are released by you for sale to the public or the date that
is 48 hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Shareholders to you, for the respective
accounts of the Underwriters with respect to the Firm Common Shares to be sold
by the Company and by the Selling Shareholders against payment by you, for the
accounts of the several Underwriters, of the purchase price therefor by wire
transfer of immediately available funds to an account designated by the Company
and to an account designated by the Agent (each such wire transfer shall be in
proportion to the number of Firm Common Shares to be sold by the Company and the
Selling Shareholders, respectively). The certificates for the Firm Common
Shares shall be registered in such names and denominations as you shall have
requested at least two full business days prior to the First Closing Date, and
shall be made available for checking and packaging on the business day preceding
the First Closing Date at a location in New York, New York, as may be designated
by you. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company and the Selling Shareholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
450,000 Optional Common Shares at the purchase price per share to be paid for
the Firm Common Shares, for use solely in covering any over-allotments made by
you for the account of the Underwriters in the sale and distribution of the Firm
Common Shares. If the Underwriters exercise such option, the Company agrees to
sell to the Underwriters an aggregate of 225,000 Optional Common Shares, and the
Selling Shareholders agree to sell to the Underwriters an aggregate of 225,000
Optional Common Shares. If the option granted hereby is exercised in part, the
respective number of Optional Common Shares to be sold by the Company and the
Selling Shareholders shall be determined on a pro rata basis
11
in the same proportion as (x) the number of Optional Common Shares that the
Company or the Selling Shareholders would have sold had the option been
exercised in whole bears to (y) the total number of Optional Common Shares that
would have been sold had the option been exercised in whole, with such
adjustments made by you as are necessary to avoid fractional shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Common Shares are released by you
for sale to the public, upon notice by you to the Company and the Selling
Shareholders setting forth the aggregate number of Optional Common Shares as to
which the Underwriters are exercising the option, the names and denominations in
which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any
-------------------
time other than the First Closing Date shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise.
The number of Optional Common Shares to be purchased by each Underwriter shall
be determined by multiplying the number of Optional Common Shares to be sold by
the Company and the Selling Shareholders pursuant to such notice of exercise by
a fraction, the numerator of which is the number of Firm Common Shares to be
purchased by such Underwriter as set forth opposite its name in Schedule A and
the denominator of which is the total number of Firm Common Shares (subject to
such adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New York, New York, as may be designated by you.
The manner of payment for and delivery of the Optional Common Shares shall be
the same as for the Firm Common Shares purchased from the Company and the
Selling Shareholders as specified in the two preceding paragraphs. At any time
before lapse of the option, you may cancel such option by giving written notice
of such cancellation to the Company and the Selling Shareholders. If the option
is cancelled or expires unexercised in whole or in part, the Company will as
soon as practicable deregister under the Act the number of Option Shares as to
which the option has not been exercised.
You, individually and not as the Underwriters, may (but shall not be obligated
to) make payment for any Common Shares to be purchased by any Underwriter whose
funds shall not have been received by you by the First Closing Date or the
Second Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to make a
public offering of their respective portions of the Common Shares as soon after
the effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the final Prospectus.
Not later than 12:00 p.m. on the second business day following the date the
Common Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Underwriters shall request.
SECTION 6. Covenants of the Company. The Company covenants and agrees
------------------------
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
12
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly
advise you in writing (i) of the receipt of any written or oral comments of
the Commission or its staff, (ii) of any written or oral request of the
Commission or its staff for amendment of or supplement to the Registration
Statement (either before or after it becomes effective), any Preliminary
Prospectus or the Prospectus or for additional information, (iii) when the
Registration Statement shall have become effective, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the institution of any proceedings for
that purpose. If the Commission shall enter any such stop order at any
time, the Company will use its best efforts to obtain the lifting of such
order as soon as practicable. The Company will not file any amendment or
supplement to the Registration Statement (either before or after it becomes
effective), any Preliminary Prospectus or the Prospectus of which you have
not been furnished with a copy a reasonable time prior to such filing or to
which you reasonably object or which is not in compliance with the Act and
the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable the several Underwriters to continue the distribution
of the Common Shares and will use its best efforts to cause the same to
become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and
Regulations with respect to information omitted from the Registration
Statement in reliance upon such Rule.
(c) Within the time during which a prospectus relating to the Common
Shares is, in the opinion of counsel for the Underwriters or counsel for
the Company, required under the Act to be delivered in connection with
sales by an Underwriter or dealer, the Company will comply with all
requirements imposed upon it by the Act and by the Rules and Regulations,
as from time to time are in force, so far as necessary to permit the
continuance of sales of or dealings in the Common Stock as contemplated by
the provisions hereof and the Prospectus. If during such period any event
occurs as a result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or omit
to state any material fact necessary to make the statements therein, in
light of the circumstances then existing, not misleading, or if during such
period it is necessary at any time to amend the Registration Statement,
including any amendments or supplements, to comply with the Act or the
Rules and Regulations, the Company will promptly notify you thereof and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement to the Registration Statement which will correct
such statement or omission or an amendment or supplement which will effect
such compliance and will use its best efforts to cause the same to become
effective as soon as possible; and, in case any Underwriter is required to
deliver a prospectus after such nine-month period, the Company upon
request, but at the expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and such Prospectus
or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
13
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you and the Selling
Shareholders or mail to your order copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as available and in
such quantities as you and the Selling Shareholders may request, for the
purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the blue sky laws of such United States and
Canadian jurisdictions as you designate, will comply with such laws and
will continue such qualifications, registrations and exemptions in effect
so long as reasonably required for the distribution of the Common Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise you promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the
consolidated balance sheet of the Company as of the close of such fiscal
year and consolidated statements of income, shareholders' equity and cash
flows for the year then ended and the opinion thereon of the Company's
independent public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by
the Company with the Commission, the NASD or any securities exchange; and
(iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock.
(h) During the period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Xxxxxxxxxx Securities (which consent may be withheld at
the sole discretion of the Xxxxxxxxxx Securities), the Company will not
other than (i) pursuant to the exercise of outstanding stock options or the
grant or the issuance of options or shares pursuant to stock option or
stock purchase plans (which vest or become exercisable after the expiration
of such 90-day period) disclosed in the Prospectus, or (ii) issuances of
equity securities as consideration for the acquisition of any business
provided the shares so issued may not be
14
resold within such 90-day period, issue, offer, sell, grant options to
purchase or otherwise dispose of any of the Company's equity securities or
any other securities convertible into or exchangeable with its Common Stock
or other equity security.
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the blue sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with such
blue sky laws and will continue such qualifications, registrations and
exemptions in effect for a period of five years after the date hereof.
(k) The Company will use its best efforts to cause the Common Stock
to be quoted on the Nasdaq National Market.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and, unless otherwise paid by the Company, the Selling
Shareholders agree to pay in such proportions as they may agree upon among
themselves all costs, fees and expenses incurred in connection with the
performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel and the Company's independent accountants, (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the blue sky memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the preliminary and final Underwriters in connection with qualifying or
registering (or obtaining exemptions from the qualification or registration of)
all or any part of the Common Shares for offer and sale under the United States
and Canadian blue sky laws designated by you pursuant to Section 6(f), (vii) the
filing fee of the NASD and the related fees and expenses of counsel to the
Underwriters in connection with the NASD's review of the Underwriting
arrangements contemplated hereby, and (viii) all other fees, costs and expenses
referred to in Item 13 of the Registration Statement. The Underwriters may deem
the Company to be the primary obligor with respect to all costs, fees and
expenses to be paid by the Company and by the Selling Shareholders. Except as
provided in this Section 7, Section 9 and Section 11 hereof, the Underwriters
shall pay all of their own expenses, including the fees and disbursements of
their counsel (excluding those relating to qualification, registration or
15
exemption under the blue sky laws, the blue sky memorandum and the NASD's review
of underwriting arrangements referred to above). This Section 7 shall not
affect any agreements relating to the payment of expenses between the Company
and the Selling Shareholders.
The Company will pay (directly or by reimbursement) all fees and expenses
incident to the performance of their obligations under this Agreement which are
not otherwise specifically provided for herein, including but not limited to (i)
any fees and expenses of counsel for the Selling Shareholders; (ii) any fees and
expenses of the Agent; and (iii) all expenses and taxes incident to the sale and
delivery of the Common Shares to be sold by the Selling Shareholders to the
Underwriters hereunder.
SECTION 8. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date, if any, shall be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Shareholders herein
set forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Shareholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares,
not later than 10 P.M.), Washington, D.C. Time, on the date of this
Agreement, or at such later time as shall have been consented to by you; if
the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and Regulations; and prior to such Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company, the
Selling Shareholders or you, shall be contemplated by the Commission, and
any request of the Commission for inclusion of additional information in
the Registration Statement, or otherwise, shall have been complied with to
your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any change in the capital stock of the
Company or any Subsidiary (other than pursuant to the exercise of
outstanding options disclosed in the Prospectus or the issuance of options
or shares pursuant to stock option or stock purchase plans (which vest or
become exercisable after the expiration of the 90-day "lock-up" period
described in Section 6(h))) or any material change in the indebtedness
(other than in the ordinary course of business) of the Company and its
Subsidiaries, taken as a whole, (ii) except as set forth or contemplated by
the Registration Statement or the Prospectus, no material verbal or written
agreement or other transaction shall have been entered into by the Company
or any Subsidiary, which is not in the ordinary course of business or which
could result in a material reduction in the future earnings of the Company
and its Subsidiaries, taken as a whole, (iii) no loss or damage (whether or
not insured) to the property of the Company or any Subsidiary shall have
been sustained which materially and adversely affects the condition
(financial or otherwise), business, results of operations or prospects of
the Company and its Subsidiaries, taken as a whole, (iv) no legal or
16
governmental action, suit or proceeding affecting the Company or any
Subsidiary which is material to the Company and its Subsidiaries, taken as
a whole, or which affects or may affect the transactions contemplated by
this Agreement shall have been instituted or threatened, and (v) there
shall not have been any material change in the condition (financial or
otherwise), business, management, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole, which makes it impractical
or inadvisable in the judgment of the Underwriters to proceed with the
public offering or purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly
provided below:
(i) An opinion of Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P., counsel for
the Company and the Selling Shareholders, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing
Date, as the case may be, in the form of Schedule C hereto.
(ii) An opinion of Xxxxxxx Xxxxx, counsel for IMR-India,
addressed to the Underwriters and dated the First Closing Date, or the
Second Closing Date, as the case may be, in the form of Schedule D
hereto.
(iii) An opinion of Xxxxx Xxxxx Solicitors, counsel for The Link
Group Holdings Limited and Information Management Resources (U.K.)
Limited ("IMR-U.K."), addressed to the Underwriters and dated the
--------
First Closing Date, or the Second Closing Date, as the case may be, in
the form of Schedule E hereto.
(iv) Such opinion or opinions of Xxxxxx & Xxxxxxx, counsel for
the Underwriters, dated the First Closing Date or the Second Closing
Date, as the case may be, with respect to such legal matters relating
to this Agreement, the Registration Statement and the Prospectus and
other related matters as you may reasonably require, and the Company
and the Selling Shareholders shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as
they may reasonably request for the purpose of enabling them to pass
upon such matters. In connection with such opinions, such counsel may
rely on representations or certificates of officers of the Company and
governmental officials.
(v) A certificate of the Company executed by the chief executive
officer and the chief financial officer of the Company, dated the
First Closing Date or the Second Closing Date, as the case may be, to
the effect that, to the best of such officers' knowledge:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied on or prior to such
Closing Date;
17
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the best of
the knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or contemplated under
the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus;
in his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein
regarding the Company and its Subsidiaries; and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which should have been set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed in such
a supplement or amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, there
has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), business, properties, results of operations,
management or prospects of the Company and its Subsidiaries,
taken as a whole; and no legal or governmental action, suit or
proceeding is pending or threatened against the Company or any
Subsidiary which is material to the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; since such dates and
except as so disclosed, neither the Company nor any Subsidiary
has entered into any verbal or written agreement or other
transaction which is not in the ordinary course of business or
which could result in a material reduction in the future earnings
of the Company and its Subsidiaries, taken as a whole, or
incurred any material liability or obligation, direct, contingent
or indirect, made any change in its capital stock, made any
material change in its short-term debt or funded debt or
repurchased or otherwise acquired any of the Company's capital
stock; and the Company has not declared or paid any dividend, or
made any other distribution, upon its outstanding capital stock
payable to shareholders of record on a date prior to the First
Closing Date or Second Closing Date; and
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, neither the
Company nor any Subsidiary has
18
sustained a loss or damage by strike, fire, flood, windstorm,
accident or other calamity (whether or not insured), which is
material to the Company and the Subsidiaries, taken as a whole.
(vi) On the First Closing Date or the Second Closing Date, as
the case may be, a certificate, dated such Closing Date and addressed
to you, signed by or on behalf of each of the Selling Shareholders to
the effect that the representations and warranties of such Selling
Shareholder in this Agreement are true and correct, as if made at and
as of the First Closing Date or the Second Closing Date, as the case
may be, and such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on his part to be
performed or satisfied prior to the First Closing Date or the Second
Closing Date, as the case may be.
(vii) On the date before this Agreement is executed and also on
the First Closing Date and the Second Closing Date a letter addressed
to you from each of Coopers & Xxxxxxx L.L.P. and Xxxxxx Xxxxxxxx &
Associates, the first one to be dated the day before the date of this
Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a Second Closing) to be dated the Second
Closing Date, in form and substance satisfactory to you.
(viii) On or before the First Closing Date, letters from each of
the Selling Shareholders, each director and officer of the Company and
other shareholder designated by you, in form and substance
satisfactory to you, confirming that for a period of 90 days after the
first date that any of the Common Shares are released by you for sale
to the public, such person will not directly or indirectly sell or
offer to sell or otherwise dispose of any shares of Common Stock (or
any right to acquire such shares, including options, warrants or any
other securities convertible into or exchangeable for Common Stock),
without the prior written consent of Xxxxxxxxxx Securities, which
consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities.
All such opinions, certificates, letters and documents shall be in compliance
with the provisions hereof only if they are satisfactory to you and to Xxxxxx &
Xxxxxxx, counsel for the Underwriters. The Company shall furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as you request. Any certificate signed by any officer of the Company
and delivered to the Underwriters or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the Underwriters as
to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you, to the Company and the
Selling Shareholders without liability on the part of any Underwriter, the
Company or the Selling Shareholders, except for the expenses to be paid or
reimbursed by the Company and by the Selling Shareholders pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding any
---------------------------------------
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 8, or if the sale to the Underwriters of the Common Shares at the
First Closing is not consummated because of any refusal, inability or failure on
19
the part of the Company or the Selling Shareholders to perform any agreement
herein or to comply with any provision hereof, the Company agrees to reimburse
you and the other Underwriters upon demand for all out-of-pocket expenses that
shall have been reasonably incurred by you and them in connection with the
proposed purchase and the sale of the Common Shares, including but not limited
to fees and disbursements of counsel, printing expenses, travel expenses,
postage, telegraph charges and telephone charges relating to the offering
contemplated by the Prospectus. Any such termination shall be without liability
of any party to any other party except that the provisions of this Section 9,
Section 7 and Section 11 shall at all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You, the Company and
---------------------------------------
the Selling Shareholders will use your, its and their respective best efforts to
cause the Registration Statement to become effective, to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the lifting thereof.
SECTION 11. Indemnification.
---------------
(a) The Company, the Principal Shareholder and each Selling
Shareholder, jointly and severally, agree to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Underwriter or
such controlling person may become subject, under the Act, the Exchange
Act, or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company and the
Principal Shareholder), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading (in the case of a Preliminary Prospectus or the Prospectus, in
light of the circumstances in which they are made), or arise out of or are
based in whole or in part on any inaccuracy in the representations and
warranties of the Company, the Principal Shareholder or any Selling
Shareholder contained herein or any failure of the Company, the Principal
Shareholder or any Selling Shareholder to perform their respective
obligations hereunder or under law; and will reimburse each Underwriter and
each such controlling person for any legal and other expenses as such
expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling (only with the
indemnifying party's written approval, as provided above), compromising or
paying any such loss, claim, damage, liability, expense or action;
provided, however, that none of the Company, the Principal Shareholder or
any Selling Shareholder will be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto (i) in
reliance upon and in conformity with the information furnished to the
Company pursuant to Section 4 hereof or (ii) with respect to the
Underwriter from whom the person asserting the loss, claim, damage or
liability purchased securities, made in any Preliminary Prospectus if a
copy of the Prospectus (as amended or supplemented, if the Company shall
20
have furnished the Underwriters with such amendments or supplements thereto
on a timely basis) was not delivered by or on behalf of any of the
Underwriters seeking indemnification, at or prior to the written
confirmation of the sale of the Common Shares (other than due to the
failure of the Company to deliver adequate copies of the Prospectus on a
timely basis as required hereunder), and if the Prospectus (as so amended
or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability; and provided, further that, under this
Agreement, the liability of the (i) Principal Shareholder and A & S Family
Limited Partnership under this Section 11 shall not exceed the aggregate
total price paid to them for the Common Shares sold by them to the
Underwriters (net of underwriting discounts and commissions but before
deducting any expenses of the offering), it being understood that each such
person shall be jointly and severally obligated for such amount, and (ii)
the liability of Xxxxxxx X. Xxxxxxxxx under this Section 11 shall not
exceed the total price paid to him for the Common Shares sold by him to the
Underwriters net of underwriting discounts and commissions but before
deducting any expenses of the offering. The Company, the Principal
Shareholder and the Selling Shareholders 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.
In addition to their other obligations under this Section 11(a), the
Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
or any inaccuracy in the representations and warranties of the Company or
the Selling Shareholders herein or failure to perform its obligations
hereunder, all as described in this Section 11(a), it will reimburse in the
manner set forth above each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's or
the Principal Shareholder's obligation to reimburse each Underwriter for
such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Company together
with interest, compounded daily, determined on the basis of the prime rate
(or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim reimbursement
----------
payments which are not made to an Underwriter within 30 days of a request
for reimbursement, shall bear interest at the Prime Rate from the date of
such request. This indemnity agreement will be in addition to any
liability which the Company or the Principal Shareholder may otherwise
have.
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement, the Principal Shareholder, the Selling Shareholders
and each person, if any, who controls the Company, the Principal
Shareholder or any Selling Shareholder within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company, or any such director, officer, the Principal Shareholder, Selling
Shareholder or controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter),
21
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, (i) in
reliance upon and in conformity with the information furnished to the
Company by the Underwriters pursuant to Section 4 hereof or (ii) with
respect to the Underwriter from whom the person asserting the loss, claim,
damage or liability purchased securities, made in any Preliminary
Prospectus if a copy of the Prospectus (as amended or supplemented, if the
Company shall have furnished the Underwriters with such amendments or
supplements thereto on a timely basis) was not delivered by or on behalf of
any of the Underwriters to the person asserting the claim or action, if
required by law to have been so delivered by the Underwriter seeking
indemnification, at or prior to the written confirmation of the sale of the
Common Shares (other than due to the failure of the Company to deliver
adequate copies of the Prospectus on a timely basis as required hereunder)
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability; and will
reimburse the Company, or any such director, officer, Selling Shareholder
or controlling person for any legal and other expense reasonably incurred
by the Company, or any such director, officer, Selling Shareholder or
controlling person in connection with investigating, defending, settling
(only with the indemnifying party's written approval, as provided above),
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(b),
each Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 11(b) which relates to
information furnished to the Company by the Underwriters pursuant to
Section 4 hereof, it will reimburse the Company (and, to the extent
applicable, each officer, director, controlling person, the Principal
Shareholder or any Selling Shareholder) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Underwriters'
obligation to reimburse the Company (and, to the extent applicable, each
officer, director, controlling person, Principal Shareholder or Selling
Shareholder) for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to
have been improper, the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Shareholder) shall
promptly return it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within 30 days of
a request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
22
under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement
contained in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends
to seek indemnity from an indemnifying party, the indemnifying party will
be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting
the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses
of more than one separate counsel, approved by the Underwriters in the case
of paragraph (a) and approved by the indemnified parties in the case of
paragraph (b), representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received, directly or indirectly, by the
Company, the Principal Shareholder, the Selling Shareholders and the
Underwriters from the offering of the Common Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the Principal Shareholder, the Selling Shareholders and the
Underwriters in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company, the Principal Shareholder, the Selling Shareholders and the
Underwriters shall be deemed to be in the same proportion, (x) in the case
of the Company, the Principal Shareholder and the Selling Shareholders, as
the total price paid, directly or indirectly, to the Company, the Principal
23
Shareholder and to the Selling Shareholders, respectively, for the Common
Shares sold by them or on their behalf to the Underwriters (net of
underwriting commissions but before deducting expenses) bears to the total
price to the public set forth on the cover page of the Prospectus and (y)
in the case of the Underwriters, as the underwriting commissions received
by them bears to the total price to the public set forth on the cover page
of the Prospectus. The relative fault of the Company, the Principal
Shareholder, the Selling Shareholders and the Underwriters shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged
inaccurate representation and/or warranty relates to information supplied
by the Company, the Principal Shareholder, the Selling Shareholders or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subparagraph (c) of
this Section 11, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or
claim. The provisions set forth in subparagraph (c) of this Section 11
with respect to notice of commencement of any action shall apply if a claim
for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to any
action for which notice has been given under subparagraph (c) for purposes
of indemnification. The Company, the Principal Shareholder, the Selling
Shareholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined
solely by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 11, no Underwriter shall be required to contribute any amount in
excess of the amount of the total underwriting commissions received by such
Underwriter in connection with the Common Shares underwritten by it and
distributed to the public. The Principal Shareholder and the A & S Family
Limited Partnership shall not be required to contribute pursuant to this
Section 11 any amount in excess of the proceeds received by them in this
offering (net of underwriting discounts and commission, but before
deducting any expenses of the offering). Xxxxxxx X. Xxxxxxxxx shall not be
required to contribute pursuant to this Section 11 any amount in excess of
the proceeds received by him in this offering (net of underwriting
discounts and commission, but before deducting any expenses of the
offering). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 11 are
several in proportion to their respective underwriting commitments and not
joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 11(a) and
11(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board
of Governors of the New York Stock Exchange, Inc. or pursuant to the Code
of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice
of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding
24
to said demand or notice is authorized to do so. Such an arbitration would
be limited to the operation of the interim reimbursement provisions
contained in Sections 11(a) and 11(b) hereof and would not resolve the
ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of such Sections 11(a) and
11(b) hereof.
(f) The Company and each of the Underwriters agrees with the
Principal Shareholder and the Selling Shareholders that any claim of such
Underwriter against such person for indemnification, reimbursement or
advancement of expenses or breach of any representation or warranty shall
first be sought by such Underwriter to be satisfied in full by the Company
and, subject to the limitation on the aggregate liability of such persons
set forth in Section 11(a), shall be satisfied by the Principal Shareholder
and Selling Shareholders only to the extent that any such claim has not
been satisfied in full by the Company within the 60-day period following
the date requested for satisfaction of such claim in accordance with the
terms of this Agreement.
SECTION 12. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and the obligation of the Company and the Selling Shareholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for all
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Underwriters of all such shares in accordance with the terms
hereof. If any Underwriter or Underwriters default in their obligations to
purchase Common Shares hereunder on either the First or Second Closing Date and
the aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase on such Closing Date does not exceed
10% of the total number of Common Shares which the Underwriters are obligated to
purchase on such Closing Date, the non-defaulting Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the Common Shares which such defaulting Underwriters agreed but failed
to purchase on such Closing Date. If any Underwriter or Underwriters so default
and the aggregate number of Common Shares with respect to which such default
occurs is more than the above percentage and arrangements satisfactory to the
Underwriters and the Company for the purchase of such Common Shares by other
persons are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company or the Selling Shareholders, except for the expenses to be paid by the
Company and the Selling Shareholders pursuant to Section 7 hereof and except to
the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be purchased
by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the Company shall have the right to postpone the First or Second
Closing Date, as the case may be, for not more than five business days in order
that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
-----------
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
--------------
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M.,
25
California time, on the first full business day following the effectiveness of
the Registration Statement, or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, at 2:00 P.M.,
California time, on the first full business day following the date of execution
of this Agreement; but this Agreement shall nevertheless become effective at
such earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the Common
Shares for sale to the public. For the purposes of this Section 13, the Common
Shares shall be deemed to have been so released upon the release for publication
of any newspaper advertisement relating to the Common Shares or upon the release
by you of telegrams (i) advising Underwriters that the Common Shares are
released for public offering, or (ii) offering the Common Shares for sale to
securities dealers, whichever may occur first.
SECTION 14. Termination. Without limiting the right to terminate this
-----------
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Shareholders or by you by notice to the Company and the
Selling Shareholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling Shareholders
to any Underwriter (except for the expenses to be paid or reimbursed by the
Company and the Selling Shareholders pursuant to Sections 7 and 9 hereof
and except to the extent provided in Section 11 hereof) or of any
Underwriter to the Company or the Selling Shareholders (except to the
extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred
or shall have accelerated or escalated to such an extent, as, in the
judgment of the Underwriters, to affect adversely the marketability of the
Common Shares, (iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material respect any statement
or information contained in the Registration Statement or Prospectus or
which is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or information
contained therein not misleading in any material respect, or (iv) if there
shall be any action, suit or proceeding pending or threatened, or there
shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or
IMR-India or the transactions contemplated by this Agreement, which in any
case, in the reasonable judgment of the Underwriters, may materially and
adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any
termination pursuant to this subsection (b) shall without liability on the
part of any Underwriter to the Company or the Selling Shareholders or on
the part of the Company or the Selling Shareholders to any Underwriter
(except for expenses to be paid or reimbursed by the Company and the
Selling Shareholders pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof.
26
SECTION 15. Failure of the Selling Shareholders to Sell and Deliver. If
-------------------------------------------------------
one or more of the Selling Shareholders shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by such Selling
Shareholders at the First Closing Date under the terms of this Agreement and if
the Company is unable to arrange for an equal number of shares to be sold by
another Selling Shareholder, then the Underwriters may at their option, by
written notice from you to the Company and the Selling Shareholders, either (i)
terminate this Agreement without any liability on the part of any Underwriter
or, except as provided in Sections 7, 9 and 11 hereof, the Company or the
Selling Shareholders, or (ii) purchase the shares which the Company and other
Selling Shareholders have agreed to sell and deliver in accordance with the
terms hereof. In the event of a failure by one or more of the Selling
Shareholders to sell and deliver as referred to in this Section, either you or
the Company shall have the right to postpone the Closing Date for a period not
exceeding seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected.
SECTION 16. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Syndicate Department, with a copy to Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx Xxxxx Xxxxxx,
Esq.; and if sent to the Company, the Principal Shareholder or the Selling
Shareholders shall be mailed, delivered or telegraphed and confirmed to the
Company at Information Management Resources, Inc., 00000 X.X. Xxxxxxx 00 Xxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxx, with a copy
to Xxxxxx, Xxxxxxx & Xxxxxx L.L.P., 1600 Atlanta Financial Center, 0000
Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Attention: Xxx X. Xxxxxx III.
The Company, the Principal Shareholder, the Selling Shareholders or you may
change the address for receipt of communications hereunder by giving notice to
the others.
SECTION 18. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 19. Partial Unenforceability. The invalidity or unenforceability
------------------------
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
27
SECTION 20. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 21. General. This Agreement constitutes the entire agreement of
-------
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the singular
and the plural include one another. The section headings in this Agreement are
for the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified,
and the observance of any term of this Agreement may be waived, only by a
writing signed by the Company, the Selling Shareholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact for the
Selling Shareholders represents by so doing that he has been duly appointed as
Attorney-in-fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-fact to take such
action. Any action taken under this Agreement by any of the Attorneys-in-fact
will be binding on all the Selling Shareholders.
* * * *
(Signature Pages to Follow)
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company, the Principal Shareholder,
the Selling Shareholders and the several Underwriters including you, all in
accordance with its terms.
Very truly yours,
Information Management Resources, Inc.
By:__________________________
Xxxxxx X. Xxxxx
President and
Chief Executive Officer
Xxxxxx X. Xxxxx, the Principal Shareholder
______________________________
Xxxxxx X. Xxxxx
Selling Shareholders
By:__________________________
Xxxxxx X. Xxxxx
Attorney-in-fact
S-1
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
ALEX. XXXXX & SONS, INCORPORATED
XXXXXX XXXX LLC
XXXXXXX XXXXX & ASSOCIATES, INC.
By: XXXXXXXXXX SECURITIES
By:______________________________
Partner
S-2
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities........................................
Alex. Xxxxx & Sons Incorporated..............................
Xxxxxx Xxxx LLC..............................................
Xxxxxxx Xxxxx & Associates, Inc..............................
TOTAL............................................. 3,000,000
=========
A-1
SCHEDULE B
Number of Firm Number of Optional Common
Common Shares to Shares to
be Sold by Selling be Sold by Selling
Name of Selling Shareholder Shareholder Shareholder
--------------------------- -------------------------- ---------------------------
The A & S Family Limited Partnership 1,350,000 202,500
Xxxxxxx X. Xxxxxxxxx 150,000 22,500
--------- -------
TOTAL 1,500,000 225,000
B-1
SCHEDULE C
Form of Opinion of
Xxxxxx, Xxxxxxx & Xxxxxx L.L.P.
U.S. Counsel to the Company
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Florida, is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions where the ownership or leasing of properties or the conduct
of its business requires such qualification, except for jurisdictions in which
the failure to so qualify would not have a material adverse effect on the
Company, and has full corporate power and authority to own its properties and
conduct its business as described in the Registration Statement;
(2) The authorized, issued and outstanding capital stock of the Company is
as set forth under the heading "Capitalization" in the Prospectus. The issued
and outstanding shares of Common Stock (including the Firm Common Shares and any
Optional Common Shares) have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
conform to the description thereof contained in the Prospectus. Without
limiting the foregoing, there are no preemptive or other rights to subscribe for
or purchase any of the Common Shares to be sold by the Company hereunder;
(3) The Company beneficially owns ________ Equity Shares of IMR-India
(representing approximately _____ of the outstanding equity of IMR-India); the
Company beneficially owns ____ Ordinary Shares of IMR-U.K. (representing
approximately _____% of the outstanding equity of IMR-U.K.), and the Principal
Shareholder beneficially owns ____ Ordinary Shares (representing approximately
___% of the outstanding equity of IMR-U.K.); all equity shares of IMR-India and
IMR-U.K. beneficially owned by the Company or the Principal Shareholder are
owned free and clear of all liens, encumbrances, equities, claims, security
interests, voting trusts, restrictions or other defects of title whatsoever;
(4) The certificates evidencing the Common Shares to be delivered hereunder
are in due and proper form under Florida law, and when duly countersigned by the
Company's transfer agent and registrar and delivered to you or upon your order
against payment of the agreed consideration therefor in accordance with the
provisions of this Agreement, the Common Shares represented thereby will be duly
authorized and validly issued, fully paid and nonassessable and will conform in
all material respects to the description thereof contained in the Prospectus;
(5) Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, to the best of such counsel's knowledge, neither the Company nor
any Subsidiary has outstanding any options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations.
C-1
(6) The Registration Statement has become effective under the Act, and, to
the best of such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement or preventing the use of the Prospectus has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated by the Commission; any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) of the Rules and Regulations has been
made in the manner and within the time period required by such Rule 424(b);
(7) The 1934 Act Registration Statement has become effective under the
Exchange Act.
(8) The Registration Statement as of its effective date, the Prospectus
and each amendment or supplement thereto at the time it became effective (except
for the consolidated financial statements, schedules, pro forma and other
financial and statistical data included therein and in the exhibits to the
Registration Statement as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Act and the
Rules and Regulations;
(9) To the best of such counsel's knowledge, there are no franchises,
leases, contracts, agreements or documents of a character required to be
disclosed in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement which are not disclosed or filed, as required;
(10) To the best of such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened against the
Company or IMR-India which are required to be described in the Prospectus which
are not described as required;
(11) The statements set forth in the Prospectus under the headings "Risk
Factors--Immigration Issues; --Benefits to Principal Selling Shareholder; --
Control by Principal Shareholder; --Intellectual Property Rights; --Certain
Anti-Takeover Provisions; --Shares Eligible for Future Sale," "Prior S
Corporation Status and Distributions," "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview; --Affiliate
Relationships; --Income Tax Matters; --Net Charge Resulting from S Corporation
Termination; --Liquidity and Capital Resources," "Business--Intellectual
Property; --Human Resources; --Legal Proceedings; --Facilities," "Management,"
"Principal and Selling Shareholders," "Certain Transactions," "Description of
Capital Stock," "Shares Eligible for Future Sale," and "Underwriting", and Items
14 and 15 of the Registration Statement, insofar as such statements constitute a
summary of the terms of legal matters, documents, agreements or other
instruments or governmental, regulatory or other legal proceedings, are fair and
accurate in all material respects;
(12) The Company has full right, power and authority to enter into this
Agreement and to sell and deliver the Common Shares to be sold by it to the
several Underwriters; this Agreement has been duly and validly authorized by all
necessary corporate action by the Company, has been duly and validly executed
and delivered by and on behalf of the Company, and is a valid and binding
agreement of the Company enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and except as to those provisions of this Agreement relating to
indemnity or contribution for liabilities arising under the Act, as to which no
opinion need be expressed; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with any court,
regulatory, administrative or other governmental body is required for the
execution and delivery of this Agreement by the Company or the consummation of
the transactions contemplated herein or therein, except such as have been
obtained and are in full force and effect under
C-2
the Act and such as may be required under applicable blue sky laws in connection
with the purchase and distribution of the Common Shares by the Underwriters, and
the clearance of such offering with the NASD;
(13) The execution and performance of this Agreement and the consummation
of the transactions contemplated herein and therein will not conflict with,
result in the breach of, or constitute, either by itself or upon notice or the
passage of time or both, a default under, any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument known to
such counsel to which the Company or IMR-India is a party or by which the
Company or IMR-India may be bound or affected which is material to the Company
or violate any of the provisions of the articles of incorporation or bylaws, or
other organizational documents, of the Company or, so far as is known to such
counsel, violate any statute, judgment, decree, order, rule or regulation of any
court or governmental body having jurisdiction over the Company or any of its
property;
(14) The Company is not in violation or default of any provision of its
articles of incorporation or bylaws, or other organizational documents, or to
the best of such counsel's knowledge, in breach of or default with respect to
any provision of any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such counsel to which
the Company is a party or by which it or any of its properties may be bound or
affected and which is material to the Company, except where such default would
not materially adversely affect the Company; and, to the best of such counsel's
knowledge, the Company is in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or jurisdiction to which
they are subject, except where noncompliance would not materially adversely
affect the Company;
(15) To the best of such counsel's knowledge, no holders of securities of
the Company have rights to the registration of shares of Common Stock or other
securities, because of the filing of the Registration Statement by the Company
or the offering contemplated hereby, except for rights fully satisfied or
effectively waived;
(16) To the best of such counsel's knowledge, this Agreement and the
Shareholders Agreement have been duly authorized, executed and delivered by or
on behalf of each of the Selling Shareholders party thereto; the Agent has been
duly and validly authorized to act as the custodian of the Common Shares to be
sold by each such Selling Shareholder; and the performance of this Agreement and
the Shareholders Agreement and the consummation of the transactions herein
contemplated by the Selling Shareholders will not result in a breach of, or
constitute a default under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or other
agreement or instrument known to such counsel to which any of the Selling
Shareholders is a party or by which any of the Selling Shareholders or any of
their properties may be bound, or violate any statute, judgment, decree, order,
rule or regulation known to such counsel of any court or governmental body
having jurisdiction over any of the Selling Shareholders or any of their
properties; and, to the best of such counsel's knowledge, no approval,
authorization, order or consent of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the Shareholders Agreement or the consummation by the Selling
Shareholders party thereto of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect under the Act
and such as may be required under the rules of the NASD and applicable blue sky
laws;
(17) To the best of such counsel's knowledge, the Selling Shareholders
have full right, power and authority to enter into this Agreement and the
Shareholders Agreement and to sell, transfer
C-3
and deliver the Common Shares to be sold on such Closing Date by such Selling
Shareholders hereunder and good and marketable title to such Common Shares so
sold, free and clear of all liens, encumbrances, equities, claims, security
interests, voting trusts, restrictions or other defects of title whatsoever, has
been transferred to the Underwriters (whom counsel may assume to be bona fide
purchasers) who have purchased such Common Shares hereunder);
(18) To the best of such counsel's knowledge, this Agreement and the
Shareholders Agreement are valid and binding agreements of each of the Selling
Shareholders in accordance with their respective terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and except with respect to those provisions of this Agreement relating to
indemnities or contributions for liabilities under the Act, as to which no
opinion need be expressed; and
(19) Except for the payment of the documentary stamp tax imposed by the
State of Florida, no transfer taxes are required to be paid in connection with
the sale and delivery of the Common Shares to the Underwriters hereunder.
In rendering such opinion, such counsel may rely as to matters of
local law, on opinions of local counsel, and as to matters of fact, on
certificates of the Selling Shareholders and of officers of the Company and of
governmental officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such opinions or
certificates and copies of said opinions or certificates are to be attached to
the opinion. Such counsel shall also include a statement to the effect that
although such counsel has not independently verified the accuracy or
completeness of the information in the Registration Statement and Prospectus,
they have participated in conferences with representatives of the Company and
its counsel and independent accountants, at which the contents of the
Registration Statement and Prospectus were discussed at length, nothing has come
to such counsel's attention that would lead such counsel to believe that either
at the effective date of the Registration Statement or at the applicable Closing
Date the Registration Statement or the Prospectus, or any such amendment or
supplement, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (excluding consolidated financial statements, schedules,
pro forma and other financial and statistical data and exhibits contained
therein).
C-4
SCHEDULE D
Form of Opinion of
Xxxxxxx Xxxxx
India Counsel to the Company
(1) IMR-India has been duly organized and is validly existing as a public
limited company;
(2) Based on a review of the organizational documents of IMR-India, such
counsel believe that IMR-India has its share capital organized as under:
Authorized share capital:
(i) 18,000,000 equity shares of Rupees 10 each;
(ii) 2,000,000 non- voting equity shares of Rupees 10 each;
Issued, subscribed and paid-up capital:
(i) _______ equity shares of Rupees 10 each;
(ii) _______ non- voting equity shares of Rupees 10 each.
(3) As of the date of this opinion, the Company beneficially owns
approximately ____% of the equity shares of IMR-India;
(4) Such counsel is not aware of any legal requirement, whether statutory
or otherwise, of approval, authorization, order or consent of any court,
regulatory body, administrative agency or other government body for the
execution and delivery of the Underwriting Agreement or the consummation by the
Company or the Selling Shareholders, as the case may be, of the transactions
contemplated thereby, except as have been made.
(5) Such counsel is not aware of any fact that leads us to believe that
IMR-India does not possess any approval, permission or authority to carry on its
existing business activities and that it has not performed any of its material
obligations with respect to such approvals, permission or authorities.
(9) The statements set forth in the Prospectus under the headings "Risk
Factors--Dependence on India Offshore Software Development Center; --
Intellectual Property Rights," "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Affiliate Relationships; --
Income Tax Matters; --Liquidity and Capital Resources," "Business--Human
Resources; --Intellectual Property Rights," "Management--Employee Benefit Plans-
-IMR-India Benefit Plans," "Certain Transactions--IMR-India Transactions,"
insofar as such statements constitute a summary of the terms of Indian legal
matters, documents, agreements or other instruments governed by Indian law or
Indian governmental, regulatory or other legal proceedings, are fair and
accurate in all material respects.
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of the officers of the Company and of governmental
officials, in which case their opinion is to state that they are so doing and
that the Underwriters are justified in relying on such opinions or certificates
and copies of said opinions or certificates are to be attached to the opinion.
D-1
SCHEDULE E
Form of Opinion of
Xxxxx Xxxxx Solicitors,
U.K. Counsel to the Company
(1) IMR-U.K. has been duly organized and is validly existing as a
corporation in good standing under the laws of the United Kingdom.
(2) All of the issued and outstanding shares of IMR-U.K. is owned of
record by the Company and there are not outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations.
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of the officers of the Company and of governmental
officials, in which case their opinion is to state that they are so doing and
that the Underwriters are justified in relying on such opinions or certificates
and copies of said opinions or certificates are to be attached to the opinion.
E-1
