_______________ SHARES
ZEBU, INC.
COMMON STOCK
($0.01 PAR VALUE)
EQUITY UNDERWRITING AGREEMENT
_______________, 2000
Deutsche Banc Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxxxx, Xxxxxxx Securities LLC
As Representatives of the
Several Underwriters
c/o Deutsche Banc Securities Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Zebu, Inc., a Delaware corporation (the "Company"), proposes to sell
to the several underwriters (the "Underwriters") named in Schedule I hereto
for whom you are acting as representatives (the "Representatives") an
aggregate of __________ shares of the Company's common stock, $0.01 par value
(the "Firm Shares"). The respective numbers of Firm Shares to be purchased by
the several Underwriters are set forth opposite their names in Schedule I
hereto. The Company also proposes to sell at the Underwriters' option an
aggregate of up to __________ additional shares of the Company's common stock
(the "Option Shares") as set forth below.
As the Representatives, you have advised the Company (a) that you
are authorized to enter into this Agreement on behalf of the several
Underwriters, and (b) that the several Underwriters are willing, acting
severally and not jointly, to purchase the numbers of Firm Shares set forth
opposite their respective names in Schedule I, plus their pro rata portion of
the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and
the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares."
Deutsche Banc Securities Inc. ("Deutsche Banc") has agreed to
reserve a portion of the Shares to be purchased by it under this Agreement
for sale to the Company's directors, officers, employees and business
associates and other parties related to the Company (collectively,
"Participants"), as set forth in the Prospectus under the heading
"Underwriters" (the "Directed Share Program"). The Shares to be sold by
Deutsche Banc pursuant to the Directed Share Program are hereinafter referred
to as the "Directed Shares." Any Directed Shares not orally confirmed for
purchase by any Participants by the end of the business day on which this
Agreement is executed will be offered to the public by the Underwriters as
set forth in the Prospectus.
In consideration of the mutual agreements contained herein and of
the interests of the parties in the transactions contemplated hereby, the
parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form S-1 (File No. 333-______) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. The Company has complied with the conditions for
the use of Form S-1. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore
been delivered by the Company to you. Such registration statement, together
with any registration statement filed by the Company pursuant to Rule 462(b)
of the Securities Act, herein referred to as the "Registration Statement,"
which shall be deemed to include all information omitted therefrom in
reliance upon Rule 430A and contained in the Prospectus referred to below,
has become effective under the Securities Act and no post-effective amendment
to the Registration Statement has been filed as of the date of this
Agreement. "Prospectus" means the form of prospectus first filed with the
Commission pursuant to Rule 424(b). Each preliminary prospectus included in
the Registration Statement prior to the time it becomes effective is herein
referred to as a "Preliminary Prospectus." Any reference herein to the
Registration Statement, any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein, and, in the case of any reference herein to any Prospectus, also
shall be deemed to include any documents incorporated by reference therein,
and any supplements or amendments thereto, filed with the Commission after
the date of filing of the Prospectus under Rules 424(b) or 430A, and prior to
the termination of the offering of the Shares by the Underwriters.
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. SelectQuote Insurance
Services, a California corporation and
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wholly-owned subsidiary of the Company ("SQIS"), has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of California, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. SQIS is the only subsidiary, direct or indirect, of the Company.
The Company and SQIS are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such
qualification. All of the outstanding shares of capital stock of SQIS have
been duly authorized and validly issued, are fully paid and non-assessable
and are owned by the Company free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in SQIS are
outstanding.
(c) The outstanding shares of common stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
Shares to be issued and sold by the Company have been duly authorized and
when issued and paid for as contemplated hereby will be validly issued, fully
paid and non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue and sale thereof. Neither the
filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of
any shares of common stock.
(d) The Agreement and Plan of Merger, dated December 23, 1999, and
the Agreement and Plan of Reorganization, dated August 17, 1999
(collectively, the "Merger Agreements"), by and among SQIS, SelectTech, Inc.,
a Nevada corporation ("SelectTech"), the Company and SelectQuote Acquisition
Sub, a California corporation ("SQAS"), have been duly authorized by all
necessary action by the board of directors and stockholders of each of the
parties thereto and have been duly executed and delivered by each of the
parties thereto. The execution and delivery of the Merger Agreements and the
consummation of the merger contemplated thereby (the "Merger") did not
contravene (i) any provision of applicable law, (ii) the Articles of
Incorporation or By-laws of SQIS, (iii) the Articles of Incorporation or
By-laws of SelectTech, (iv) the Certificate of Incorporation or By-laws of
the Company, (v) the Articles of Incorporation or By-laws of SQAS (vi) any
agreement or other instrument binding upon the Company, SelectTech or SQIS
that is material to the Company, SelectTech or SQIS and that is set forth as
an exhibit to the Registration Statement (vii) any judgment or decree of any
governmental body, agency or court having jurisdiction over the Company,
SelectTech or SQIS, except for any such contravention that would not have a
material adverse effect on the condition (financial or otherwise), business,
results of operation or prospects of the Company and SQIS, taken as a whole.
No consent, approval, authorization or order of qualification with any
governmental body or agency was required for the performance by the Company,
SelectTech or SQIS of its obligations under the Merger Agreements except such
as were obtained. The Merger is effective under the laws of the State of
California, the State of Delaware and the State of Nevada. Pursuant to the
Merger Agreements, SQIS succeeded to all rights, privileges and obligations
of SelectTech. The offer and sale of the securities issued in connection with
the Merger were in compliance with the applicable federal and state
securities laws. Neither the Merger Agreements nor the exchange of shares
consummated in connection therewith
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(i) contravened, conflicted with or resulted in a material violation or
breach of, or resulted in a default under, any provisions of any agreement or
contract of SQIS, SelectTech, the Company or SQAS, except for any
contravention, conflict, violation, breach or default which could not
reasonably be expected to result in a material adverse effect on the Company
and SQIS, taken as a whole; (ii) gave any person the right to (a) declare a
default or exercise any remedy under any such agreement or contract, except
where any such default or exercise of a remedy could not reasonably be
expected to result in a material adverse effect on the Company and SQIS,
taken as a whole, (b) accelerate the maturity or performance of any such
agreement or contract, except where such acceleration could not reasonably be
expected to result in a material adverse effect on the Company and SQIS,
taken as a whole, or (c) cancel, terminate or modify any such contract,
except where any such cancellation, termination or modification could not
reasonably be expected to result in a material adverse effect on the Company
and SQIS, taken as a whole; or (iii) resulted in the imposition or creation
of any encumbrance upon or with respect to any of the shares of capital stock
or the assets of the Company, except where such encumbrance would not result
in a material adverse effect on the Company and SQIS, taken as a whole.
(e) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the jurisdiction
of the Company's incorporation.
(f) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain,
all statements which are required to be stated therein by, and will conform
to, the requirements of the Securities Act and the Rules and Regulations. The
Registration Statement and any amendment thereto do not contain, and will not
contain, any untrue statement of a material fact and do not omit, and will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus and
any amendments and supplements thereto do not contain, and will not contain,
any untrue statement of material fact and do not omit, and will not omit, to
state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from
the Registration Statement or 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 through the
Representatives, specifically for use in the preparation thereof.
(g) The consolidated financial statements of each of SQIS and
SelectTech, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results
of operations and cash flows of each of SQIS and SelectTech, at the indicated
dates and for the indicated periods. Such financial statements and related
schedules have been prepared in accordance with generally accepted principles
of accounting, consistently applied throughout the periods involved, except
as disclosed therein, and all adjustments necessary for a fair presentation
of results
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for such periods have been made. The summary financial, operating and other
statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis
consistent with the financial statements presented therein and the books and
records of each of SQIS and SelectTech. The pro forma financial statements
and other pro forma financial information included in the Registration
Statement and the Prospectus present fairly the information shown therein,
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements, have been properly compiled
on the pro forma bases described therein, and, in the opinion of the Company,
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(h) Deloitte & Touche LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Securities
Act and the Rules and Regulations.
(i) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or SQIS before any
court or administrative agency or otherwise which if determined adversely to
the Company or SQIS might result in any material adverse change in the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and of SQIS
taken as a whole or to prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement.
(j) Each of the Company and SQIS has good and marketable title to
all of the properties and assets reflected in the financial statements (or as
described in the Registration Statement) hereinabove described, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the Registration
Statement) or which are not material in amount. Each of the Company and SQIS
occupies its leased properties under valid and binding leases conforming in
all material respects to the description thereof set forth in the
Registration Statement.
(k) Each of the Company, SQIS and SelectTech has filed all federal,
state, local and foreign tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due. All tax
liabilities have been adequately provided for in the financial statements of
the Company, SQIS and SelectTech, and the Company does not know of any actual
or proposed additional material tax assessments.
(l) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, (i) there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise), or prospects of the Company and SQIS taken as a whole, whether or
not occurring in the ordinary course of business, (ii) there
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has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or SQIS,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be amended or
supplemented, (iii) there has not been any material adverse change or any
development involving a prospective material adverse change in the capital
stock or in the long-term debt of the Company or SQIS, and (iv) neither the
Company nor SQIS has purchased any of its outstanding capital stock nor
declared, paid or made any dividend or other distribution on its capital
stock of any class or series. The Company and SQIS have no material
contingent obligations which are not disclosed in the financial statements of
SQIS and SelectTech which are included in the Registration Statement.
(m) Neither the Company nor SQIS is or with the giving of notice or
lapse of time or both, will be, in violation of or in default under its
Certificate of Incorporation or Articles of Incorporation, as applicable, or
its By-Laws or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any of its
properties, is bound and which default is of material significance in respect
of the condition, financial or otherwise of the Company and SQIS, taken as a
whole or the business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and SQIS taken
as a whole. The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment of
the terms hereof do not and will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which
the Company or SQIS is a party, or of the Certificate of Incorporation or
Articles of Incorporation, as applicable, or the By-Laws of the Company or
SQIS, or any order, rule or regulation applicable to the Company or SQIS of
any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or SQIS.
(n) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by
the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the
Commission, the National Association of Securities Dealers, Inc. (the "NASD")
or such additional steps as may be necessary to qualify the Shares for public
offering by the Underwriters under state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
(o) Each of the Company and SQIS holds all material licenses,
certificates and permits from governmental authorities which are necessary to
own or lease, as the case may be, and to operate its properties and to
conduct its business as described in the Registration Statement; and, except
as described in the Registration Statement (and any amendment or supplement
thereto), neither the Company nor SQIS has to its knowledge infringed any
patents issued prior to the Closing Date, trade names, trademarks or
copyrights, which infringement is material to the business of the Company and
SQIS, taken as a whole, as described in the Registration Statement. The
Company knows of no material infringement by others of patents,
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patent rights, trade names, trademarks or copyrights owned by or licensed to
the Company or SQIS. Each of the Company and SQIS owns, or possesses adequate
rights to use, all patents, patent rights, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes and
substances, trademarks, service marks, trade names and copyrights described
or referred to in the Registration Statement as owned or used by it or which
are necessary for the conduct of its business as described in the
Registration Statement, except as otherwise disclosed in the Registration
Statement. To the best knowledge of the Company, except as disclosed in the
Registration Statement, all such patents, patent rights, licenses,
trademarks, service marks and copyrights are (i) valid and enforceable and
(ii) not being infringed by any third parties which infringement could,
whether singly or in the aggregate, materially and adversely affect the
business, properties, operations, condition (financial or otherwise), income,
business prospects or results of operations of the Company and SQIS, taken as
a whole, as presently being conducted or as proposed to be conducted in the
Registration Statement. Except as disclosed in the Registration Statement,
the Company has no knowledge of, nor has it received any notice of,
infringement of or conflict with, asserted rights of others with respect to
any patents issued prior to the Closing Date, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes and
substances, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding could materially and adversely affect the business, properties,
operations, condition (financial or otherwise), income, business prospects or
results of operations of the Company and SQIS, taken as a whole, as presently
being conducted or as proposed to be conducted in the Registration Statement.
(p) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of common stock to facilitate the sale or resale of
the Shares. The Company acknowledges that the Underwriters may engage in
passive market making transactions in the Shares on the Nasdaq National
Market in accordance with Rule 10b-6A under the Exchange Act.
(q) The Company has been advised concerning the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder; neither the Company nor SQIS is and, after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof
as described in the Registration Statement, neither the Company nor SQIS will
be, an "investment company" as such term is defined in the 1940 Act; and each
of the Company, SQIS and SelectTech has in the past conducted, and each of
the Company and SQIS intends in the future to conduct, its affairs in such a
manner as to ensure that it will not become an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
1940 Act and the rules and regulations thereunder.
(r) Each of the Company and SQIS maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
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access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(s) Each of the Company and SQIS carries, or is covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar business.
(t) Each of the Company and SQIS is in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined
in ERISA) for which the Company or SQIS would have any liability; neither the
Company nor SQIS has incurred nor expects to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company or SQIS would
have any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(u) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's or
SQIS's officers, directors or securityholders, except as set forth in the
Registration Statement or previously disclosed on NASD questionnaires
provided to counsel for the Representatives.
(v) Neither the Company, SQIS nor SelectTech has violated any
foreign, federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants ("Environmental Laws"), any provisions
of the Employee Retirement Income Security Act of 1974, as amended, or any
provisions of the Foreign Corrupt Practices Act, or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company and
SQIS, taken as a whole.
(w) Each of the Company and SQIS has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each,
an "Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and
all courts and other tribunals, including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease, license and
operate its properties and to conduct its business, except where the failure
to have any such Authorization or to make any such filing or notice would
not, singly or in
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the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and SQIS, taken
as a whole. Each such Authorization is valid and in full force and effect and
each of the Company and SQIS is in compliance with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time
or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or SQIS; except where such failure to be valid and
in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and SQIS, taken
as a whole.
(x) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization, any related constraints on operating activities
and any potential liabilities to third parties) which would, singly or in the
aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and SQIS, taken
as a whole.
(y) This Agreement has been duly authorized, executed and delivered
by the Company.
(z) No relationship, direct or indirect, exists between or among the
Company or SQIS on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or SQIS on the other hand, which is
required by the Securities Act to be described in the Registration Statement
or the Prospectus which is not so described. The statements in the
Registration Statement describing any such relationship, including without
limitation any description of Innovative Information Group, Inc., a
California corporation, and any other entity controlled by any director,
officer, stockholder, customer or supplier of the Company, are accurate,
complete and fair.
(aa) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or threatened against the Company
or SQIS before the National Labor Relations Board or any state or local labor
relations board, (ii) strike, labor dispute, slowdown or stoppage pending or
threatened against the Company or SQIS, or (iii) union representation
question existing with respect to the employees of the Company or SQIS,
except for such actions specified in clause (i), (ii) or (iii) above which,
singly or in the aggregate, would not have a material adverse effect on the
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company or SQIS, taken as a
whole. To the best of the Company's knowledge, no collective bargaining
organizing activities are taking place with respect to the Company or SQIS.
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(ab) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company, SQIS or SelectTech to or for the
benefit of any of the officers or directors of the Company or SQIS, or any of
the members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
(ac) There are no issues related to the Company's or SQIS's
preparedness for the Year 2000 that (i) are of a character required to be
described or referred to in the Registration Statement or Prospectus by the
Securities Act which have not been accurately described in the Registration
Statement or Prospectus or (ii) might reasonably be expected to result in any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and SQIS, taken as
a whole, or that might materially affect their properties, assets or rights.
All internal computer systems and each Constituent Component (as defined
below) of those systems and all computer-related products and each
Constituent Component of those products of the Company and SQIS, by December
31, 1999, fully complied with the Year 2000 Qualification Requirements. "Year
2000 Qualification Requirements" means that the internal computer systems and
each Constituent Component (as defined below) of those systems and all
computer-related products of each Constituent Component (as defined below) of
those products of the Company and SQIS (i) have been reviewed to confirm that
they store, process (including sorting and performing mathematical
operations, calculations and computations), input and output data containing
date and information correctly regardless of whether the date contains dates
and times before, on or after January 1, 2000, (ii) have been designated to
ensure date and time entry recognition and calculations, and date data
interface values that reflect the century, (iii) accurately manage and
manipulate data involving dates and times, including single century formulas
and multi-century formulas, and will not cause an abnormal ending scenario
within the application or generate incorrect values or invalid results
involving such dates, (iv) accurately process any date rollover, and (v)
accept and respond to two-digit year date input in a manner that resolves any
ambiguities as to the century. "Constituent Component" means all software
(including operating systems, programs, packages and utilities), firmware,
hardware, networking components and peripherals provided as part of the
configuration. Each of the Company and SQIS has inquired of material vendors
as to their preparedness for the Year 2000 and has disclosed in the
Registration Statement or Prospectus any issues that might reasonably be
expected to result in any material adverse change.
(ad) The Company's common stock has been approved for quotation on
the Nasdaq National Market, subject to official notice of issuance.
(ae) The Company has not distributed and will not distribute prior
to the later of (i) the Closing Date, or any date on which Option Shares are
to be purchased, as the case may be, and (ii) completion of the distribution
of the Shares, any offering material in connection with the offering and sale
of the Shares other than any preliminary prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the
Securities Act.
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(af) Each officer and director of the Company and SQIS and each
beneficial owner of common stock of the Company listed on Schedule II hereto
has agreed in writing that such person will not make any offering, sale,
short sale or other disposition of any shares of common stock of the Company
or other capital stock of the Company or other securities convertible,
exchangeable or exercisable for common stock or derivative of common stock of
the Company owned or hereafter acquired by such person or request the
registration for the offer or sale of any of such shares of common stock (or
as to which such person has the right to direct the disposition of), directly
or indirectly, for a period of 180 days following the effective date of the
Registration Statement, otherwise than (i) with the prior written consent of
Deutsche Banc or (ii) in a distribution of shares of common stock to its
respective partners, if a partnership, or by transfer to any affiliate of
such person, including any trust, or to any other transferee in a private
transaction not requiring registration under the Securities Act, or by any
bona fide gift or pledge of such shares of common stock, provided that such
partner, affiliate, trustee, donee or other transferee and/or lender or
creditor acknowledges in writing that it is bound by these terms.
Furthermore, each such person has also authorized the Company to cause the
Company's transfer agent to decline to transfer and/or to note stop transfer
restrictions on the transfer books and records of the Company with respect to
any shares of common stock and any securities convertible into or exercisable
or exchangeable for common stock for which such person is the record holder
and, in the case of any such shares or securities for which such person is
the beneficial but not the record holder, agrees to cause the record holder
to cause the transfer agent to decline to transfer and/or to note stop
transfer restrictions on such books and records with respect to such shares
or securities. The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company, and of each
of SQIS and SelectTech prior to the closing of the Merger, and the number and
type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and the stockholders
listed on Schedule II hereto have agreed to such or similar restrictions (the
"Lock-up Agreements") presently in effect or effected hereby. The Company
hereby represents and warrants that it will not release any of its officers,
directors or stockholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of Deutsche Banc.
(ag) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $_____ per share, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof.
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(b) Payment for the Firm Shares to be sold hereunder is to be made
in New York Clearing House funds by federal (same day) funds against delivery
of certificates therefor to the Representatives for the several accounts of
the Underwriters. Such payment and delivery are to be made through the
facilities of the Depository Trust Company, New York, New York at 10:00 a.m.,
New York time, on the third business day after the date of this Agreement or
at such other time and date not later than five business days thereafter as
you and the Company shall agree upon, such time and date being herein
referred to as the "Closing Date." (As used herein, "business day" means a
day on which the New York Stock Exchange is open for trading and on which
banks in New York are open for business and are not permitted by law or
executive order to be closed.)
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company hereby grants an option to the several Underwriters to purchase
the Option Shares at the price per share set forth in the first paragraph of
this Section 2. The option granted hereby may be exercised in whole or in
part by giving written notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of this Agreement, by
you, as Representatives of the several Underwriters, to the Company setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the Option Shares
are to be registered and the time and date at which such certificates are to
be delivered. The time and date at which certificates for Option Shares are
to be delivered shall be determined by the Representatives but shall not be
earlier than 3 nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the
notice of exercise shall set the Closing Date as the Option Closing Date. The
number of Option Shares to be purchased by each Underwriter shall be in the
same proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to
__________, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised
only to cover over-allotments in the sale of the Firm Shares by the
Underwriters. You, as Representatives of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of
such cancellation to the Company. To the extent, if any, that the option is
exercised, payment for the Option Shares shall be made on the Option Closing
Date in federal (same day) funds through the facilities of the Depository
Trust Company in New York, New York.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable
to do so. The Firm Shares are to be initially offered to the public at the
initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option
Shares are purchased pursuant to Section 2 hereof, the Underwriters will
offer them to the public on the foregoing terms.
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It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance
with a Master Agreement Among Underwriters entered into by you and the
several other Underwriters.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Rules and Regulations, (B) not file any
amendment to the Registration Statement or supplement to the Prospectus of
which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations and (C) file on a timely basis all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the
termination of the offering of the Shares by the Underwriters.
(b) The Company will advise the Representatives promptly (A) when
the Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C) of
any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and (D)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or
of the institution of any proceedings for that purpose. The Company will use
its best efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish
such information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Company will, from
time to time, prepare and file such statements, reports, and other documents,
as are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for distribution
of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the
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Representatives during the period when delivery of a Prospectus is required
under the Securities Act, as many copies of the Prospectus in final form, or
as thereafter amended or supplemented, as the Representatives may reasonably
request. The Company will deliver to the Representatives at or before the
Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver
to the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the
Representatives may reasonably request.
(e) The Company will comply with the Securities Act and the Rules
and Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder,
so as to permit the completion of the distribution of the Shares as
contemplated in this Agreement and the Prospectus. If during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in
the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering
a period of at least 12 consecutive months beginning after the effective date
of the Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Securities Act and Rule 158 of the Rules
and Regulations and will advise you in writing when such statement has been
so made available.
(g) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company
for any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(h) No offering, sale, short sale or other disposition of any shares
of common stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of or derivative of common stock of
the Company (or agreement for such) will be made for a period of 180 days
after the date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder or with the prior written consent of Deutsche Banc.
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(i) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the Nasdaq National Market.
(j) The Company has caused each officer and director of the Company
and each stockholder of the Company listed on Schedule II hereto to furnish
to you, on or prior to the date of this Agreement, a letter or letters (a
"Lockup Agreement"), in form and substance satisfactory to the Underwriters,
pursuant to which each such person shall agree not to offer, sell, sell short
or otherwise dispose of any shares of common stock of the Company or other
capital stock of the Company, or any other securities convertible,
exchangeable or exercisable for or derivative of the Company's common stock
owned by such person (or as to which such person has the right to direct the
disposition of) or request the registration for the offer or sale of any of
the foregoing for a period of 180 days after the date of this Agreement,
directly or indirectly, except with the prior written consent of Deutsche
Banc.
(k) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the
Securities Act.
(l) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company to register as an investment company under the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary
under the laws of the State of Delaware, a registrar for the Common Stock.
(n) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the price of
any securities of the Company.
(o) The Company will not take, directly or indirectly, any action
designated to cause or result in the filing of a registration statement on
Form S-8 under the Securities Act relating to shares of its common stock
reserved for issuance under the Company's employee benefit plans for a period
of 180 days after the date of this Agreement.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses,
the Prospectus, this Agreement, the Underwriters' Invitation Letter, the
Listing Application, the Blue Sky Survey and any supplements or amendments
thereto; the filing fees of the Commission; the filing fees and expenses
(including legal fees and disbursements) incident to securing any required
review by the National Association of Securities Dealers, Inc. (the "NASD")
of the terms of the sale of the Shares; the Listing Fee of The Nasdaq Stock
Market; and the expenses, including the fees
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and disbursements of counsel for the Underwriters, incurred in connection
with the qualification of the Shares under State securities or Blue Sky laws.
The Company agrees to pay all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters,
incident to the offer and sale of the Directed Shares. The Company shall not,
however, be required to pay for any of the Underwriters' expenses (other than
those related to qualification under NASD regulation and State securities or
Blue Sky laws) except that, if this Agreement shall not be consummated
because the conditions in Section 6 hereof are not satisfied, or because this
Agreement is terminated by the Representatives pursuant to Section 11 hereof,
or by reason of any failure, refusal or inability on the part of the Company
to perform any undertaking or satisfy any condition of this Agreement or to
comply with any of the terms hereof on its part to be performed, unless such
failure to satisfy said condition or to comply with said terms be due to the
default or omission of any Underwriter, then the Company shall reimburse the
several Underwriters for reasonable out-of-pocket expenses, including fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for
damages on account of loss of anticipated profits from the sale by them of
the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and
warranties of the Company contained herein, and to the performance by the
Company of its covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made, and any
request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission and no injunction, restraining order, or order
of any nature by a federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance of
the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of McCutchen, Doyle,
Xxxxx & Xxxxxxx, LLP ("XxXxxxxxx"), counsel for the Company, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; SQIS has
been duly organized and is validly existing as a
-16-
corporation in good standing under the laws of the State of California, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; each of the Company and
SQIS is duly qualified to transact business in all jurisdictions in which the
conduct of its business requires such qualification, or in which the failure
to qualify would have a materially adverse effect upon the business of the
Company and SQIS, taken as a whole; and all of the outstanding shares of
capital stock of SQIS have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Company; and, to the best
of such counsel's knowledge, all of the outstanding shares of capital stock
of SQIS are owned by the Company free and clear of all liens, encumbrances
and equities and claims, and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into any shares of capital stock or of ownership interests in
SQIS are outstanding.
(ii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's common stock have been duly authorized;
the outstanding shares of the Company's common stock have been duly
authorized and validly issued and are fully paid and non-assessable; the
outstanding shares of the Company's common stock have been issued in
compliance with all applicable federal and state securities laws; the
authorized capital stock of the Company and all of the Shares conform to the
description thereof contained in the Prospectus; the certificates for the
Shares, assuming they are in the form filed with the Commission, are in due
and proper form; the shares of common stock, including the Option Shares, if
any, to be sold by the Company pursuant to this Agreement have been duly
authorized and will be validly issued, fully paid and non-assessable when
issued and paid for as contemplated by this Agreement; and no preemptive
rights of stockholders exist with respect to any of the Shares or the issue
or sale thereof.
(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company, SQIS or SelectTech convertible or exchangeable
into or evidencing the right to purchase or subscribe for any shares of
capital stock of the Company, SQIS or SelectTech and there are no outstanding
or authorized options, warrants or rights of any character obligating any of
the Company, SQIS or SelectTech to issue any shares of its capital stock or
any securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and except as described
in the Prospectus, to the knowledge of such counsel, no holder of any
securities of the Company, SQIS or SelectTech or any other person has the
right, contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company, SQIS or SelectTech to sell or otherwise issue
to them, or to permit them to underwrite the sale of, any of the Shares or
the right to have any common stock or other securities of the Company, SQIS
or SelectTech included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require registration
under the Securities Act of any shares of common stock or other securities of
the Company, SQIS or SelectTech.
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(iv) The Registration Statement has become effective under
the Securities Act and, to the best of the knowledge of such counsel, no stop
order proceedings with respect thereto have been instituted or are pending or
threatened under the Securities Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the Securities Act and the applicable Rules and
Regulations thereunder (except that such counsel need express no opinion as
to the financial statements and related schedules therein).
(vi) The statements under the captions "Description of
Capital Stock," "Shares Eligible for Future Sale," "Management," "Certain
Transactions," and "Underwriting" in the Prospectus, and Items 14 and 15 of
Part II to the Registration Statement insofar as such statements constitute a
summary of documents referred to therein or matters of law, accurately and
fairly summarize in all material respects the information called for with
respect to such documents and matters.
(vii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are no so
filed or described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are accurately and
fairly summarized in all material respects.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or SQIS
except as set forth in the Prospectus.
(ix) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or SQIS is a party, or of the Certificate of
Incorporation or Articles of Incorporation, as applicable, or By-Laws of the
Company or SQIS or any order, rule or regulation applicable to the Company or
SQIS of any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or SQIS.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative
or other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by
State securities and Blue Sky laws as to which such counsel
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need express no opinion) except such as have been obtained or made,
specifying the same.
(xii) Neither the Company nor SQIS is, and neither will
become, as a result of the consummation of the transactions contemplated by
this Agreement and application of the net proceeds therefrom as described in
the Prospectus, required to register as an investment company under the 1940
Act.
(xiii) The Merger Agreements have been duly authorized by
all necessary action by the board of directors and stockholders of each of
the parties thereto and have been duly executed and delivered by each of the
parties thereto. The execution and delivery of the Merger Agreements and the
consummation of the Merger did not contravene (i) any provision of applicable
law, (ii) the Articles of Incorporation or By-laws of SQIS, (iii) the
Articles of Incorporation or By-laws of SelectTech, (iv) the Certificate of
Incorporation or By-laws of the Company, (v) the Articles of Incorporation or
By-laws of SQAS (vi) any agreement or other instrument binding upon the
Company, SelectTech or SQIS that is material to the Company, SelectTech or
SQIS and that is set forth as an exhibit to the Registration Statement (vii)
any judgment or decree of any governmental body, agency or court having
jurisdiction over the Company, SelectTech or SQIS that is known to such
counsel, except for any such contravention that would not have a material
adverse effect on the condition (financial or otherwise), business, results
of operation or prospects of the Company. No consent, approval, authorization
or order of qualification with any governmental body or agency was required
for the performance by the Company, SelectTech or SQIS of its obligations
under the Merger Agreements except such as were obtained and except such
consents, approvals, authorizations, orders or qualifications, which if not
obtained, would not have a material adverse effect on the condition
(financial or otherwise), business, results of operation or prospects of the
Company and SQIS, taken as a whole. The Merger is effective under the laws of
the State of California, the State of Delaware and the State of Nevada.
Pursuant to the Merger Agreements, SQIS succeeded to all rights, privileges
and obligations of SelectTech. The offer and sale of the securities issued in
connection with the Merger were in compliance with the applicable federal and
state securities laws. Neither the Merger Agreements nor the exchange of
shares consummated in connection therewith (i) contravened, conflicted with
or resulted in a material violation or breach of, or resulted in a default
under, any provisions of any agreement or contract of SQIS, SelectTech, the
Company or SQAS, except for any contravention, conflict, violation, breach or
default which could not reasonably be expected to result in a material
adverse effect on the Company and SQIS, taken as a whole; (ii) gave any
person the right to (a) declare a default or exercise any remedy under any
such agreement or contract, except where any such default or exercise of a
remedy could not reasonably be expected to result in a material adverse
effect on the Company and SQIS, taken as a whole, (b) accelerate the maturity
or performance of any such agreement or contract, except where such
acceleration could not reasonably be expected to result in a material adverse
effect on the Company and SQIS, taken as a whole, or (c) cancel, terminate or
modify any such contract, except where any such cancellation, termination or
modification could not reasonably be expected to result in a material adverse
effect on the Company and SQIS, taken as a whole; or (iii) resulted in the
imposition or creation of any encumbrance upon or with respect to any of the
shares of capital stock or the assets of the Company, SQIS or SelectTech,
except where such encumbrance would not result in a material adverse effect
on the Company and SQIS, taken as a whole.
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In rendering such opinion, XxXxxxxxx may rely as to matters governed
other than by the laws of the State of California or the State of Delaware,
or federal law, on local counsel in such jurisdictions, provided that in each
case XxXxxxxxx shall state that it believes that it and the Underwriters are
justified in relying on such other counsel. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads it to believe
that (i) the Registration Statement, at the time it became effective under
the Securities Act (but after giving effect to any modifications incorporated
therein pursuant to Rule 430A under the Securities Act) and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to
such statement, XxXxxxxxx may state that its belief is based upon the
procedures set forth therein, but is without independent check and
verification.
(c) The Representatives shall have received from Xxxxxx Xxxxxxx
XxXxxx Xxxx & Xxxxxx, special regulatory counsel to the Company, an opinion
dated the Closing Date or the Option Closing Date, as the case may be, to the
effect that: (i) the Company and SQIS have all necessary authorizations,
approvals, orders, consents, licenses, certificates, permits, registrations
or qualifications of and from all insurance regulatory authorities to conduct
their businesses as described in the Registration Statement, or are subject
to no material liability or disability by reason of the failure to have
authorizations, approvals, orders, consents, licenses, certificates, permits,
registrations or qualifications; and neither the Company nor SQIS has
received any notification from any insurance regulatory authority to the
effect that any additional authorization, approval, order, consent, license,
certificate, permit, registration or qualification is needed to be obtained
by the Company or SQIS in any case where it could be reasonably expected that
the failure to obtain such authorization, approval, order, consent, license,
certificate, permit, registration or qualification or the limiting of such
business would have a material adverse effect on the Company and SQIS, taken
as a whole; (ii) to the best of such counsel's knowledge, each of the Company
and SQIS is in compliance with the requirements of the insurance laws and
regulations of its state of incorporation and the insurance laws and
regulations of other jurisdictions which are applicable to the Company or
SQIS, and has filed all notices, reports, documents or other information
required to be filed thereunder (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the Company,
provided that such counsel shall state that it believes that both you and it
are justified in relying upon such opinions and certificates); and (iii) the
statements set forth in the Registration Statement addressing insurance
licensing and regulatory issues, including without limitation, those under
the caption ["Regulation"] and under the caption ["Risk Factors"], insofar as
they purport to describe the laws and documents referred to therein, are
accurate, complete and fair. Such counsel shall also state that although it
does not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus,
except for
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those referred to in the opinion in subsection (iii) of this Section 6(c), it
has no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the
Closing Date or the Option Closing Date, as the case may be (other than the
financial statements and related schedules therein, as to which such counsel
need express no opinion), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the Company
prior to such Closing Date or Option Closing Date, as the case may be (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion), contained an 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 or that, as of such Closing Date or Option Closing Date, as the
case may be, either the Registration Statement or the Prospectus or any
further amendment or supplement thereto made by the Company prior to such
Closing Date or Option Closing Date (other than the financial statements and
related schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits 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 it does not
know of any amendment to the Registration Statement required to be filed or
of any contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described as
required.
(d) The Representatives shall have received from Pillsbury Madison &
Sutro LLP ("PM&S"), counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, with respect to
the incorporation of the Company, the validity of the Shares, the
Registration Statement and the Prospectus and such other related matters as
it may reasonably request, and the Company shall have furnished to such
counsel such documents as it may reasonably request for the purposes of
enabling it to pass upon such matters. In rendering such opinion PM&S may
rely as to all matters governed other than by the laws of the State of
California or the State of Delaware, or federal law, on the opinion of
counsel referred to in Paragraph (b) of this Section 6. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads it
to believe that (i) the Registration Statement, or any amendment thereto, as
of the time it became effective under the Securities Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A under
the Securities Act) as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and
as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact, necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, PM&S may
state that its belief is based upon the procedures set forth therein, but is
without independent check and verification.
-21-
(e) The Representatives shall have received at or prior to the
Closing Date from PM&S a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state
securities laws or Blue Sky laws of such jurisdictions as the Representatives
may reasonably have designated to the Company.
(f) You shall have received, on each of the dates hereof, the
Closing Date and the Option Closing Date, as the case may be, a letter dated
the date hereof, the Closing Date or the Option Closing Date, as the case may
be, in form and substance satisfactory to you, of Deloitte & Touche LLP
confirming that they are independent public accountants within the meaning of
the Securities Act and the applicable Rules and Regulations and stating that
in their opinion the financial statements and schedules examined by them and
included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Securities Act
and the related published Rules and Regulations; and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration Statement
and Prospectus.
(g) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the
case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under
the Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such purpose
have been taken or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or
the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Securities Act have been made;
(iv) He has carefully examined the Registration Statement
and the Prospectus and, in his or her opinion, as of the effective date of
the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
and since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an amendment
of the Prospectus which has not been so set forth in such supplement or
amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the
-22-
condition, financial or otherwise, of the Company and SQIS, taken as a whole,
or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and SQIS, taken as a whole, whether or not arising in the ordinary course of
business.
(h) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as
the Representatives may reasonably have requested.
(i) The Firm Shares and Option Shares, if any, have been approved
for designation upon notice of issuance on the Nasdaq National Market.
(j) The Lockup Agreements described in Section 4(j) are in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to PM&S, counsel
for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date or the Option Closing Date, as
the case may be. In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections
5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of
the Shares required to be delivered as and when specified in this Agreement
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(i) To indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any losses, claims, damages or liabilities to which such
Underwriter or any such controlling person may become subject under the
Securities Act , the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) 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, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii)
any alleged act or failure to act by any Underwriter in connection
with, or relating
-23-
in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (PROVIDED, that the Company
shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be
taken by such Underwriter through its gross negligence or willful
misconduct); provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or
liability 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 such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or
through the Representatives specifically for use in the preparation
thereof.
(ii) To reimburse each Underwriter and each such
controlling person upon demand for any legal or other out-of-pocket
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage or liability, action or proceeding or in responding to
a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a
party to any action or proceeding. In the event that it is finally
judicially determined that the Underwriters were not entitled to
receive payments for legal and other expenses pursuant to this
subparagraph, the Underwriters will promptly return all sums that
had been advanced pursuant hereto.
(iii) To indemnify and hold harmless Deutsche Banc, and
each person, if any, who controls Deutsche Banc within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act (a "Deutsche Banc Entity"), against any losses, claims, damages
or liabilities to which Deutsche Banc or any Deutsche Banc Entity
may become subject under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any material prepared by or with the
consent of the Company for distribution to Participants in
connection with the Directed Share Program, (ii) 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, (iii) any act or failure to act caused by the failure of
any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase or (iv) any alleged act or
failure to act by Deutsche Banc or any Deutsche Banc Entity in
connection with, or relating in any manner to, the Directed Share
Program, other than any loss, claim, damage, liability or action
that are finally judicially determined to have resulted from the bad
faith or gross negligence of Deutsche Banc or a Deutsche Banc Entity.
(iv) To reimburse Deutsche Banc and each Deutsche Banc
Entity upon demand for any legal or other out-of-pocket expenses
reasonably incurred by Deutsche Banc or such Deutsche Banc Entity in
connection with investigating or defending any such loss, claim,
damage or liability, action or proceeding or in responding to a
subpoena or governmental inquiry related to the offering of the
Directed Shares, whether or not
-24-
Deutsche Banc or such Deutsche Banc Entity is a party to any action
or proceeding. In the event that it is finally judicially determined
that Deutsche Banc or any Deutsche Banc Entity was not entitled to
receive payments for legal and other expenses pursuant to this
subparagraph, Deutsche Banc or any such Deutsche Banc Entity will
promptly return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls
the Company within the meaning of the Securities Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) 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 (ii) the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, or controlling person in connection with investigating or defending
any such loss, claim, damage, liability, action or proceeding; provided,
however, that each Underwriter will be liable in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission has been made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or 8(b) shall be available to
any party who shall fail to give notice as provided in this Section 8(c) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was materially prejudiced by the failure
to give such notice, but the failure to give such notice shall not relieve
the indemnifying party or parties from any liability which it or they may
have to the indemnified party for contribution or otherwise than on account
of the provisions of Section 8(a) or (b). In case any such proceeding shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, (ii) the
named parties to any such proceeding (including any
-25-
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and
employ counsel acceptable to the indemnified party within a reasonable period
of time after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties.
Such firm shall be designated in writing by Deutsche Banc in the case of
parties indemnified pursuant to Section 8(a) and by the Company in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a)(1), 8(a)(2) or 8(b) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation
-26-
which does not take account of the equitable considerations referred to above
in this Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Section 8(d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), (i)
no Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless Deutsche Banc or a Deutsche
Banc Entity under Section 8(a)(3) or (a)(4) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then the Company shall contribute to the amount paid or
payable by Deutsche Banc or such Deutsche Banc Entity as a result of such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and Deutsche Banc or the
Deutsche Banc Entity on the other from the offering of the Directed Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law then the Company shall contribute to such
amount in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and
Deutsche Banc or the Deutsche Banc Entity on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by
the Company on the one hand and Deutsche Banc or any Deutsche Banc Entity on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Directed Shares (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by Deutsche Banc or the Deutsche Banc Entity in
connection therewith. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or Deutsche
Banc or the Deutsche Banc Entity on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, Deutsche Banc and each Deutsche Banc Entity agrees that
it would not be just and equitable if contributions pursuant to this Section
8(e) were determined by pro rata allocation (even if Deutsche Banc and the
Deutsche Banc Entities 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 above in this Section 8(e). The amount paid or
payable by Deutsche Banc or a Deutsche Banc Entity as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 8(e) shall be deemed to include any legal
or other expenses reasonably incurred by Deutsche Banc or such Deutsche Banc
Entity in connection with investigating or defending any such action or
claim.
-27-
Notwithstanding the provisions of this subsection (e), (i) neither Deutsche
Banc nor any Deutsche Banc Entity shall be required to contribute any amount
in excess of the underwriting discounts and commissions applicable to the
Directed Shares purchased by Deutsche Banc or such Deutsche Banc Entity, and
(ii) neither Deutsche Banc nor any Deutsche Banc Entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing
from such court may be served upon him or it by any other contributing party
and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor
to any Underwriter, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company) you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or
any others, to purchase from the Company such amounts as may be agreed upon
and upon the terms set forth herein, the Firm Shares or Option Shares, as the
case may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representatives, shall not
have procured such other Underwriters, or any others, to purchase the Firm
Shares or Option Shares, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate number of
shares with respect to which such default shall occur does not exceed 10% of
the Firm Shares or Option Shares, as the case may be, covered hereby, the
other Underwriters shall be obligated, severally, in proportion to the
respective numbers of Firm Shares or Option Shares, as the case may be, which
they are obligated to purchase hereunder, to purchase the Firm Shares or
Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of
-28-
shares of Firm Shares or Option Shares, as the case may be, with respect to
which such default shall occur exceeds 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the Company or you as the
Representatives of the Underwriters will have the right, by written notice
given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company except to the extent provided in Section 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9, the Closing Date or Option Closing Date, as the case
may be, may be postponed for such period, not exceeding seven days, as you,
as Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section
9 shall not relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Deutsche
Banc Alex. Xxxxx, Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxx; [with a copy to Deutsche Banc Incorporated, One Bankers
Trust Plaza, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General
Counsel; and] with a copy to Pillsbury Madison & Sutro LLP, 00 Xxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company
at any time prior to the Closing Date if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting
the condition, financial or otherwise, of the Company and SQIS taken as a
whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and SQIS taken as a whole, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, escalation, declaration, emergency, calamity, crisis or change on
the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or to
enforce contracts for the sale of the Shares, or (iii) suspension of trading
in securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which
in your opinion materially and adversely affects or may materially and
adversely affect the business or operations of the Company, (v) declaration
of a banking moratorium by United States or New York State authorities, (vi)
any downgrading, or placement on any watch list for possible downgrading, in
the rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as
-29-
defined for purposes of Rule 436(g) under the Exchange Act); (vii) the
suspension of trading of the Company's common stock by the Nasdaq Stock
Market, the Commission, or any other governmental authority or (viii) the
taking of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any
right or obligation hereunder. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company
for inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page (insofar
as such information relates to the Underwriters), legends required by Item
502(d) of Regulation S-K under the Securities Act and the information under
the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants
in this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the
Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the
several Underwriters in accordance with its terms.
-30-
Very truly yours,
ZEBU, INC.
By
------------------------------
Name
----------------------------
Title
---------------------------
-31-
The foregoing Equity Underwriting
Agreement is hereby confirmed and
accepted as of the date first above
written.
DEUTSCHE BANC SECURITIES INC.
U.S. BANCORP XXXXX XXXXXXX INC.
XXXXXXX, XXXXXXX SECURITIES LLC
------------------------------------
As Representatives of the several
Underwriters listed on Schedule I
By: Deutsche Banc Securities Inc.
By:
---------------------------------
Authorized Officer
-32-
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares to
Underwriter be Purchased
------------ -------------
Deutsche Banc Securities Inc.
---------------------------
U.S. Bancorp Xxxxx Xxxxxxx Inc.
---------------------------
Xxxxxxx, Xxxxxxx Securities LLC
---------------------------
Total ---------------------------
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SCHEDULE II
SCHEDULE OF STOCKHOLDERS SUBJECT TO LOCK-UP AGREEMENTS
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Name Number of Shares
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