EXHIBIT 1
THE PROVIDENCE SERVICE CORPORATION
(a Delaware Corporation)
4,300,000 Shares of Common Stock
Par Value $0.001 Per Share
Underwriting Agreement
August ___, 2003
SunTrust Capital Markets, Inc.
Xxxxxxxxx & Company, Inc.
Avondale Partners, LLC
c/o SunTrust Capital Markets, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Ladies and Gentlemen:
The Providence Service Corporation, a Delaware corporation (the
"Company"), and those certain stockholders of the Company listed in Schedule I
(the "Selling Stockholders") propose to sell to the several underwriters named
in Schedule II (collectively, the "Underwriters") an aggregate of 4,300,000
shares (the "Firm Shares") of the Company's common stock, $0.001 par value per
share (the "Common Stock"), of which 3,000,000 shares will be sold by the
Company and 1,300,000 shares will be sold by the Selling Stockholders. The Firm
Shares are to be sold to each Underwriter, acting severally and not jointly, in
such amounts as are set forth in Schedule II opposite the name of such
Underwriter. The respective number of shares to be sold by the Selling
Stockholders is set forth opposite their names in Schedule I.
Solely for the purpose of covering over-allotments in the sale of the
Firm Shares, the Company grants to the Underwriters the right to purchase up to
an additional 645,000 shares of Common Stock (the "Option Shares"), which option
shall be exercisable in the manner, and such Option Shares shall be sold in the
denominations, set forth in Section 3(b) below. The Firm Shares and Option
Shares are herein sometimes referred to as the "Shares."
Section 1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-106286) with respect to the Shares, including a preliminary form of
prospectus subject to completion, in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations
of the Commission thereunder (all such rules and regulations, including
Regulation S-X and Regulation S-K to the extent applicable, referred to as the
"1933 Act Regulations"); and such amendments to such registration statement as
may have been required, if any, prior to the date hereof have been filed with
the Commission, and such amendments have been similarly prepared. Copies of such
registration statement and amendment or amendments and of each related
preliminary prospectus, and the exhibits, financial statements and schedules, as
finally amended and revised, have been delivered to you. The Company has
prepared in the same manner, and proposes so to file with the Commission, one of
the following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus, or (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the 1933 Act
Regulations. If the Company elects, with the consent of the Underwriters, to
rely on Rule 434 of the 1933 Act Regulations, all references to the Prospectus
shall be deemed to include the form of prospectus and term sheet contemplated by
Rule 434, taken together, provided to the Underwriters by the Company in
reliance on Rule 434 (the "Rule 434 Prospectus"). The Company also may file a
related registration statement with the Commission pursuant to Rule 462(b) of
the 1933 Act Regulations for the purpose of registering certain additional
shares of Common Stock, which registration statement will be effective upon
filing with the Commission. As filed, such amendment, any registration statement
filed pursuant to Rule 462(b) of the 1933 Act Regulations and the final
prospectus, shall include all Rule 430A Information (as hereinafter defined)
and, except to the extent that you shall agree in writing to a modification,
shall be in all respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
preliminary prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Time (as hereinafter defined), shall also mean
such registration statement as so amended; provided, however, that such term
shall also include all Rule 430A Information contained in any Prospectus (as
hereinafter defined) and deemed to be included in such registration statement at
the time such registration statement becomes effective as provided by Rule 430A
of the 1933 Act Regulations. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean any Rule 434 Prospectus or the prospectus
relating to the Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations or, if no filing
pursuant to Rule 424(b) of the 1933 Act Regulations is required, shall mean the
form of final prospectus included in the Registration Statement at the time such
Registration Statement becomes effective. The term "Rule 430A Information" means
information with respect to the Shares and the offering thereof permitted
pursuant to Rule 430A of the 1933 Act Regulations to be omitted from the
Registration Statement when it becomes effective. The term "462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) of the 1933 Act Regulations (including the Registration Statement
and any Preliminary Prospectus or Prospectus incorporated therein at the time
such registration statement becomes effective).
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(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, threatened by the
Commission or the state securities authority of any jurisdiction.
(c) When the Registration Statement and any 462(b) Registration
Statement shall become effective, when the Prospectus is first filed pursuant to
Rule 424(b) of the 1933 Act Regulations, when any amendment to the Registration
Statement or any 462(b) Registration Statement becomes effective, when any Rule
434 Prospectus is filed with the Commission, when any supplement to the
Prospectus is filed with the Commission, and at each Closing Date (as
hereinafter defined in Section 3), (i) the Registration Statement, the 462(b)
Registration Statement, the Prospectus and all amendments thereof and
supplements thereto will conform in all respects with the requirements of the
1933 Act and the 1933 Act Regulations and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the Prospectus nor any amendment
or supplement thereto, will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statement or omission made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(d) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Delaware, with all
requisite corporate power and authority to own, lease and license its
properties, and conduct its business as currently carried on and as contemplated
in the Prospectus. The Company has qualified to do business and is in good
standing as a foreign corporation in every jurisdiction in which the ownership
or leasing of its properties or the nature or conduct of its business, as
currently carried on and as contemplated in the Prospectus, requires such
qualification, except where the failure to do so would not reasonably be
expected to have a material adverse effect on the financial condition, results
of operations or cash flows of the Company and its subsidiaries taken as a whole
(a "Material Adverse Effect").
(e) Each subsidiary of the Company has been duly incorporated or
organized and is an existing corporation or other entity in good standing under
the laws of the jurisdiction of its incorporation or organization, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; and each subsidiary of the Company is
duly qualified to do business as a foreign corporation or other entity in good
standing in all other jurisdictions in which its ownership or leasing of
property or the conduct of its business requires such qualification except where
the failure to be so qualified or in good standing would not reasonably be
expected to have a Material Adverse Effect; all of the issued and outstanding
capital stock or other equity interest of each subsidiary of the Company has
been duly authorized and validly issued and is fully paid and non-assessable;
and the capital stock or other equity interest of each subsidiary owned by the
Company, directly or through its subsidiaries, is owned free from liens and
encumbrances, except for those set forth in the Company's credit facilities with
Healthcare Business Credit Corporation ("HBCC").
(f) The Company has the full legal right, power and authority to enter
into this Agreement and to consummate the transactions contemplated herein. The
Company has the full corporate power and authority to issue, sell and deliver
the Shares as provided herein. This Agreement has been duly
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authorized, executed and delivered by the Company and constitutes the valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, except to the extent that the indemnification provisions set
forth in Section 8 of this Agreement may be limited by federal and state
securities laws or principles of public policy and except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws and court decisions affecting the
enforceability of creditors' rights generally and general principles of equity
and rules of law governing specific performance, estoppel, waiver, injunctive
relief and other equitable remedies (regardless of whether enforcement is sought
in a proceeding at law or in equity).
(g) Each consent, approval, authorization, order, designation or filing
by or with any governmental agency or body necessary for the valid
authorization, issuance, sale and delivery of the Shares, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, has been made or obtained by the Company, and
is in full force and effect, except as may be required under applicable state
securities laws. The issuance, sale and delivery of the Shares, the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated by this Agreement, (i) will not result in a breach or
violation of any of the terms and provisions of, or constitute a default by the
Company or any subsidiary under, its Certificate of Incorporation or Bylaws,
each as amended (or similar corporate documents) and (ii) will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default by the Company or any subsidiary, under, any provision of any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company or any subsidiary is a party or to which it or
its properties is subject, except where such breach, violation or default would
not reasonably be expected to have a Material Adverse Effect, or (iii) will not
result in a breach or violation of any statute, rule or regulation, or, to the
best of the Company's knowledge, any judgment, decree or order, of any court or
governmental agency or body applicable to the Company or any subsidiary or any
of their properties, except where such breach or violation would not reasonably
be expected to have a Material Adverse Effect.
(h) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization." All of the
issued and outstanding shares of Class A common stock of the Company, have been
duly authorized and validly issued, are fully paid and non-assessable. As of the
Closing Time, the Common Stock of the Company will conform to the description of
the Common Stock contained in the Registration Statement and the Prospectus. All
offers and sales of the Company's capital stock prior to the date hereof were at
all relevant times duly registered under the 1933 Act or were exempt from the
registration requirements of the 1933 Act by reason of Sections 3(b), 4(2) or
4(6) thereof and were duly registered or the subject of an available exemption
from the registration requirements of the applicable state securities or blue
sky laws. The Shares to be sold by the Company, when issued and delivered by the
Company and paid for pursuant to this Agreement, will be validly issued, fully
paid and non-assessable and will conform in all respects to the description
thereof contained in the Prospectus. The Shares to be sold by the Selling
Stockholders, when issued and delivered to the Selling Stockholders by the
Company in accordance with the terms set forth in the Prospectus, will be
validly issued, fully paid and non-assessable and will conform in all respects
to the description thereof contained in the Prospectus. No preemptive rights of
stockholders exist with respect to any of the Shares. Except as described in the
Prospectus, no person or entity holds a right to require or participate in the
registration of the offer and sale of the Shares under the 1933 Act, and, except
as described in the Prospectus, no person holds a right to require
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registration under the 1933 Act of the offer and sale of any shares of Common
Stock of the Company at any other time. No person or entity has a right of
participation or first refusal with respect to the sale of the Shares by the
Company or Selling Stockholders. None of the issued shares of capital stock of
the Company has been issued in violation of any preemptive or similar right of
any security holder of the Company. Except as described in the Prospectus, there
are no outstanding options, warrants or other rights calling for the issuance of
any share of capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company. There is no commitment, plan or
arrangement to issue any share of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company, except as is
disclosed in the Prospectus.
(i) The financial statements of the Company (including all related
notes and schedules) included in the Registration Statement and the Prospectus
present fairly the financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their operations,
stockholders' equity and cash flows for the periods specified, all in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (subject, in the case of unaudited financial
statements, to normal year-end adjustments) and in conformity with Regulation
S-X of the Commission. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information required to be
stated therein. The historical financial data of the Company and its
consolidated subsidiaries included in the Prospectus, including that set forth
under the captions "Summary Financial and Operating Information," "Selected
Historical Consolidated Financial and Operating Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
present fairly the information shown therein and have been compiled on a basis
consistent with that of the financial statements included in the Registration
Statement and the Prospectus. No financial statements or schedules other than
those included in the Prospectus are required by Form S-1 or otherwise to be
included in the Registration Statement or the Prospectus.
The pro forma financial data set forth in the Registration
Statement and Prospectus comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act Regulations,
the assumptions underlying the pro forma adjustments are reasonable, and such
adjustments have been properly applied to the historical amounts in the
compilation of such statements.
(j) Each of Ernst & Young LLP and Deloitte & Touche LLP has examined
and are reporting upon certain of the audited financial statements and schedules
included in the Registration Statement and the Prospectus, and each are, and
were during the periods covered by their reports included in the Registration
Statement and the Prospectus, independent public accountants with respect to the
Company and its subsidiaries within the meaning of the 1933 Act and the 1933 Act
Regulations.
(k) The Company has obtained, for the benefit of the Underwriters, from
each of the Company's directors and officers and each of its stockholders
beneficially owning 1% or more of the Company's outstanding Common Stock
immediately following the sale of the Firm Shares, a written agreement ("Lock-Up
Agreement") that for a period of 180 days from the date of the Prospectus (the
"Lock-Up Period") such director, officer or stockholder will not, without the
prior written consent of SunTrust Capital Markets, Inc. on behalf of the
Underwriters, except as permitted in such Lock-Up Agreement, offer, sell,
contract to sell, pledge, grant any option to purchase, or otherwise dispose of,
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directly or indirectly, any shares of Common Stock or other instrument which by
its terms is convertible into, or exercisable or exchangeable for, any shares of
Common Stock except shares of Common Stock being sold pursuant hereto and listed
in the Prospectus.
(l) Neither the Company nor any of its subsidiaries has sustained, since
December 31, 2002, any material loss or interference with its business from
fire, explosion, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or arbitration, or from any
court or governmental action or inaction (including action or inaction relating
to budget or appropriation matters materially impacting the Company), order or
decree, otherwise than as set forth in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been (i) any change in the capital stock, long-term
debt, obligations under capital leases or short-term borrowings of the Company
or any of its subsidiaries; (ii) any event or development which could reasonably
be seen as having a Material Adverse Effect; or (iii) any liability or
obligation, direct or contingent, incurred or undertaken by the Company or any
of its subsidiaries, except for liabilities or obligations incurred in the
ordinary course of business or which otherwise would not reasonably be expected
to have a Material Adverse Effect.
(m) Nether the Company nor any of its subsidiaries is in violation of
its Certificate of Incorporation or similar organizational document, or its
Bylaws or similar document governing the internal affairs of the entity and, as
of the date hereof, no default exists, and no event has occurred, nor state of
facts exists, which, with notice or after the lapse of time to cure or both,
would constitute a default in the due performance and observance of any
obligation, agreement, covenant, consideration or condition contained in any
indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which it, any of its subsidiaries or any of their respective
properties is subject, and no violation of any law, order, rule, regulation,
writ, injunction or decree of any government, governmental instrumentality or
court, domestic or foreign, has occurred or exists, in any such case where the
consequences of such violation or default would reasonably be expected to have a
Material Adverse Effect.
(n) Except as otherwise disclosed in the Prospectus, (i) the Company
has not authorized or conducted, and otherwise has no knowledge of the
generation, transportation, storage, presence, use, treatment, disposal, release
or handling of (in an amount or of a type that has been or must be reported to
any governmental agency, violates any Environmental Law (as hereinafter
defined), or has required or could require remediation expenditures) any
hazardous substance, asbestos, radon, polychlorinated biphenyl ("PCBs"),
petroleum product or waste (including crude oil or any fraction thereof),
natural gas, liquefied gas, synthetic gas or other material defined, regulated,
controlled or potentially subject to any remediation requirement under any
Environmental Law (collectively, "Hazardous Materials"), on, in or under any
real property owned, leased or used by the Company or any of its subsidiaries,
(ii) the Company and each of its subsidiaries is in compliance with all federal,
state and local laws, ordinances, rules, regulations and other governmental
requirements relating to pollution, control of chemicals, management of waste,
discharges of materials into the environment, health, safety, natural resources,
and the environment (collectively, "Environmental Laws"), and (iii) the Company
and each of its subsidiaries has, and is in compliance with, all licenses,
permits, registrations and government authorizations necessary to operate under
all applicable Environmental Laws, except in the case of clause (i) or (ii)
where such noncompliance would not reasonably be expected to have a Material
Adverse Effect. Except as otherwise disclosed in the Prospectus, neither the
Company nor any of its
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subsidiaries has received any written or oral notice from any governmental
entity or any other person, and there is no pending or, to the knowledge of the
Company or any of its subsidiaries, threatened claim, litigation or any
administrative agency proceeding, that: (i) alleges a violation of any
Environmental Laws by the Company or any of its subsidiaries; (ii) alleges that
the Company or any of its subsidiaries is a liable party or a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act, 42 X.X.X.xx.xx. 9601, et seq., or any state superfund law;
(iii) has resulted in or could result in the attachment of an environmental lien
on any real property owned, leased or used by the Company or any of its
subsidiaries; or (iv) alleges the occurrence of contamination of any of such
real property, damage to natural resources, property damage, or personal injury
based on activities of the Company or any of its subsidiaries, or the activities
of its predecessors, if any, or third parties (whether at the real property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
(o) The Company and its subsidiaries have good and marketable title to
all real property owned by them, free and clear of all liens, encumbrances,
claims, security interests, restrictions and defects, except such as are
reflected in the Prospectus. Each parcel of real property owned or leased by the
Company or any of its subsidiaries, and each improvement thereon, complies with
all applicable codes, laws and regulations (including, without limitation,
building and zoning codes, laws and regulations and laws relating to access to
facilities located on such real property), except for such failures to comply
that would not reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any of its subsidiaries has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on or access to such real property and improvements, except such
proceedings or actions that would not reasonably be expected to have a Material
Adverse Effect.
(p) All real property and buildings held or occupied under lease by the
Company or any of its subsidiaries are held or occupied under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere in any material respect with the use made and proposed to be made of
such property and buildings by the Company or any of its subsidiaries; such
leases conform to the description thereof, if any, set forth in the Registration
Statement and the Prospectus; and no notice has been given or claim asserted by
anyone adverse to the rights of the Company or any of its subsidiaries under any
of the leases or affecting the Company's or any of its subsidiaries' rights to
the continued possession of the leased property.
(q) Except as described in the Prospectus, there is not pending, nor to
the Company's knowledge threatened, any action, suit, proceeding, inquiry or
investigation, against the Company, any of its subsidiaries or any of their
respective officers, directors or stockholders or to which the properties,
assets or rights of the Company or any of its subsidiaries are subject, before
or brought by any court or governmental agency or body or board of arbitrators,
which would, if adversely determined, reasonably be expected to have a Material
Adverse Effect, or which could prevent consummation of the transactions
contemplated by this Agreement.
(r) There are no contracts or other documents required by the 1933 Act
or the 1933 Act Regulations to be described in or incorporated by reference into
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been accurately
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described in all material respects in the Prospectus or incorporated or filed as
required. To the best of the Company's or any of its subsidiary's knowledge, the
agreements to which the Company or any of its subsidiaries is a party which are
described in the Registration Statement and the Prospectus are valid and
enforceable in all material respects by the Company or its subsidiary in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws and court decisions relating to or affecting the enforceability of
creditors' rights generally or by general principles of equity and rules of law
governing specific performance, estoppel, waiver, injunctive relief and other
equitable remedies (regardless of whether enforcement is sought in a proceeding
at law or in equity), and no party thereto is in breach or default under any of
such agreements except where such breach or default would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received notice of the intention of any other party to any
contract to which the Company or any such Subsidiary is also a party to
terminate such contract, except such contracts termination of which,
individually or in the aggregate with other contracts with respect to which such
notice shall have been received, would not reasonably be expected to have a
Material Adverse Effect.
(s) The Company and each of its subsidiaries owns, possesses or has
obtained all permits, licenses, franchises, certificates, consents, orders,
approvals and other authorizations of governmental or regulatory authorities and
other third parties as are necessary to own or lease, as the case may be, and to
operate its properties and to carry on its businesses as presently conducted and
as contemplated by the Prospectus, except where a failure to own, possess or
obtain such permits, licenses, franchises, certificates, consents, orders,
approvals and other authorizations would not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries have
received any notice relating to termination, revocation or modification of any
such license, permit, franchise, certificate, consent, order, approval or
authorization, which termination, revocation or modification would reasonably be
expected to have a Material Adverse Effect.
(t) The Company and each of its subsidiaries owns or possesses all
intangible property rights and know-how necessary for the conduct of its
business as currently carried on and as contemplated by the Prospectus
(collectively, the "Intellectual Property"). Except as described in the
Prospectus, (i) no third parties have received rights to any such Intellectual
Property from the Company or any subsidiary, other than licenses granted in the
ordinary course of business; (ii) to the Company's or any subsidiary's
knowledge, there is no infringement by third parties of any such Intellectual
Property; (iii) there is no pending or, to the Company's or any subsidiary's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's or any subsidiary's rights in or to any such Intellectual
Property, and the Company and each subsidiary is unaware of any facts which
would form a basis for any such claim; and (iv) there is no pending or, to the
Company's or any subsidiary's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property, and the Company and each subsidiary is unaware of any facts which
would form a basis for any such claim. To the Company's and each subsidiary's
knowledge, none of the technology employed by the Company or any subsidiary has
been obtained or is being used by the Company or any subsidiary in violation of
the rights of any person or third party. Neither the Company nor any subsidiary
knows of infringement by others of Intellectual Property owned by or licensed to
the Company or any subsidiary.
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(u) The Company and its subsidiaries have implemented controls and
other procedures that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms and is accumulated and communicated to the Company's management,
including its chief executive officer and chief financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure; and the Company makes and keeps books, records, and
accounts, which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company and its subsidiaries;
and the Company and its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific 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) 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; and, to the Company's knowledge, neither the Company nor any
subsidiary, nor any employee or agent thereof, has made any payment of funds of
the Company or any subsidiary, as the case may be, or received or retained any
funds, and no funds of the Company or any subsidiary, as the case may be, have
been set aside to be used for any payment, in each case in violation of any law,
rule or regulation.
(v) The Company and each subsidiary has filed all federal, state, local
and foreign income, franchise, property and other tax returns and tax forms
required to be filed or has duly obtained extensions of time for the filing
thereof, except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any subsidiary is in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than any which the Company or any
subsidiary is contesting in good faith and as to which adequate reserves have
been provided, except where any such default would not reasonably be expected to
have a Material Adverse Effect. Such returns and forms are complete and correct
in all material respects. The Company and each subsidiary has made all payroll
withholdings required to be made by it with respect to employees. The charges,
accruals and reserves on the books of the Company and each subsidiary in respect
of any tax liability for any year not finally determined are adequate to meet
any assessments or reassessments for additional taxes. There have been no tax
deficiencies asserted and, to the Company's and each subsidiary's knowledge, no
tax deficiency might be reasonably asserted or threatened against the Company or
any subsidiary that could individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
(w) The Company and each subsidiary maintains insurance (issued by
insurers of recognized financial responsibility) of the types and in the amounts
generally deemed adequate for its business and, to the best of the Company's and
each subsidiary's knowledge, generally consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company or any subsidiary against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, professional liability and
casualty and liability (including, but not limited to product liability)
insurance covering the Company's and its subsidiaries' operations, all of which
insurance is in full force and effect.
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(x) To the Company's and each subsidiary's knowledge, no labor problem
exists with the Company's or any subsidiary's employees, or is threatened or
imminent, that would reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any subsidiary is aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal vendors,
suppliers, contractors or customers that would reasonably be expected to have a
Material Adverse Effect.
(y) Neither the Company nor its officers, directors, stockholders or
affiliates, have taken, and such parties will not take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or result
in or constitute, the stabilization or manipulation of the price of the Shares
to facilitate the sale or resale of the Shares.
(z) The Common Stock has been registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the Shares
have been approved for listing on the Nasdaq Stock Market's National Market (the
"NASDAQ"), subject to official notice of issuance.
(aa) The Company has not incurred any liability for a fee, commission
or other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby or as described in the Prospectus.
(bb) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its business in
a manner that would cause it to become, an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(cc) Except as described in the Registration Statement or Prospectus,
the Company has not sold or issued any shares of Common Stock during the
six-month period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the 1933 Act Regulations.
(dd) The Company and each subsidiary has good and marketable title to
all personal property owned by it, free and clear of all encumbrances and
defects except for those set forth in the Company's credit facilities with HBCC
as described in the Prospectus and other than such as would not reasonably be
expected to have a Material Adverse Effect; and all personal property held under
lease by the Company and each subsidiary is held by it under valid, subsisting
and enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property by the
Company or its subsidiary.
(ee) No relationship, direct or indirect, exists between or among the
Company or any subsidiary on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any subsidiary on the
other hand, which is required to be described in the Prospectus and which is not
so described.
(ff) The market-related statistical data and other market-related data
included in the Prospectus and the Registration Statement are based on or
derived from sources that the Company believes to be reliable and accurate.
10
(gg) The Company and each subsidiary is in compliance in all material
respects with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); to the Company's and each
subsidiary's knowledge, no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in Section 3(2) ERISA) for which
the Company or any subsidiary would have any liability; neither the Company nor
any subsidiary has incurred, and does not expect 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 Code; and each "pension plan"
for which the Company or any subsidiary 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, that would reasonably be expected to cause the loss of such qualification.
(hh) Except as set forth in the Registration Statement and the
Prospectus, the Company and each of its subsidiaries is in material compliance
with all of its obligations arising under any contract to which the Company (or
any if its subsidiaries) is a party or by which it is bound where the Company
(or any of its subsidiaries) is a prime contractor to a government entity or
agency or a subcontractor or supplier at any tier to any entity providing
services to a government entity or agency including material compliance with all
statutes, regulations and contractual provisions applicable to the Company as a
government contractor, prime contractor, subcontractor or supplier as
incorporated into any prime contracts, subcontracts or supply agreements, except
where such noncompliance would not reasonably be expected to have a Material
Adverse Effect. Except as set forth in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries has questioned or
disallowed costs pending pursuant to any government contract audit of which the
Company or any subsidiary has knowledge and has no pending or threatened claims
against it as a result of the performance or non-performance of any government
contract, subcontract or supply agreement.
Section 2. Representations and Warranties of the Selling Stockholders.
----------------------------------------------------------
Each Selling Stockholder severally and not jointly represents and warrants to
each Underwriter and agrees that:
(a) Such Selling Stockholder has duly and irrevocably executed and
delivered a custody agreement and power of attorney (the "Custody Agreement) (i)
appointing Xxxxxxxx X. XxXxxxxx and Xxxxxxx X. Xxxxxx and either one of them
acting singly, as attorneys-in-fact (the "Attorneys-in-Fact"), with full power
of substitution, and with full authority (exercisable by either one or both of
them) to execute and deliver this Agreement and to take such other action as may
be necessary or desirable to carry out the provisions hereof on behalf of the
Selling Stockholder and (ii) appointing SunTrust Bank as custodian (the
"Custodian") thereunder.
(b) Such Selling Stockholder has, pursuant to the terms of the Custody
Agreement, placed in custody, for delivery under this Agreement, the following
items: (i)(A) the certificate or certificates, if any, representing not less
than the total number of shares of Class A common stock that will be converted
into the Shares to be sold by such Selling Stockholder to the Underwriters as
set forth on Schedule I hereto or (B) if such Selling Stockholder is exercising,
exchanging or converting derivative securities to acquire the Shares to be sold
by such Selling Stockholder to the Underwriters as set forth on Schedule I
hereto, (1) such derivative securities, (2) a notice of irrevocable exercise,
exchange or conversion of such derivative securities and (3) in the case of
warrant exercises for cash, the total cash
11
exercise price payable to the Company; and (ii) in all cases, a stock power,
duly endorsed in blank, with the signature of such Selling Stockholder thereon
guaranteed by a financial institution that is a participant in the Security
Transfer Agents Medallion Program or the Stock Exchange Medallion Program,
relating to the Shares to be sold by such Selling Stockholder.
(c) Such Selling Stockholder has all legal capacity necessary to
execute and deliver this Agreement and the Custody Agreement, to sell and
deliver the Shares to be sold by him, her or it hereunder and to perform all
other obligations under this Agreement and the Custody Agreement; each of this
Agreement and the Custody Agreement has been duly executed and delivered by such
Selling Stockholder and constitutes the valid and binding agreement of such
Selling Stockholder, enforceable against him, her or it in accordance with its
terms, except as enforceability may be limited by bankruptcy, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and rules of law governing specific performance, injunctive relief and
other equitable remedies.
(d) At the Closing Time and any Delivery Date, such Selling Stockholder
will be the owner of the Shares being sold by him or her hereunder; and upon the
delivery of and payment for such Shares as contemplated herein, and upon
delivery to the Underwriters of the certificates evidencing such Shares, and
assuming that the Underwriters have purchased such Shares without notice of any
"adverse claims," as defined in Section 8-102 of the New York Uniform Commercial
Code, the Underwriters will have acquired such Shares free of any such adverse
claims.
(e) The sale of the Shares by such Selling Stockholder pursuant to this
Agreement is not prompted by any information concerning the Company that is not
set forth in the Prospectus.
(f) The Selling Stockholder has not incurred any liability for a fee,
commission or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby.
Section 3. Sale and Delivery of Shares to the Underwriters; Closing.
---------------------------------------------------------
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Company
and the Selling Stockholders agree to sell to the Underwriters named in Schedule
II hereto, and the Underwriters agree, severally and not jointly, to purchase
from the Company and the Selling Stockholders, at a purchase price of
$[_________] per share, the aggregate number of Firm Shares set forth opposite
the name of such Underwriter in Schedule II hereto. The number of Firm shares to
be sold by each Selling Stockholder is set forth on Schedule I hereto.
(b) 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 Underwriters, severally and not jointly, to
purchase up to an additional 645,000 Option Shares on the same terms and
conditions as the Firm Shares. The option hereby granted will expire if not
exercised within the 30-day period after the first date on which you release the
Firm Shares for sale to the public. The option granted hereby may be exercised
by the Underwriters, in whole or in part (but not more than once), only for the
purpose of covering the over-allotments that may be made in connection with the
offering
12
and distribution of the Firm Shares, by giving written notice to the Company.
The notice of exercise shall set forth the number of Option Shares as to which
the several Underwriters are exercising the option, and the time and date of
payment and delivery thereof. Such time and date of delivery (the "Date of
Delivery") shall be determined by you but shall not be earlier than the second
business day after the date on which the notice of the exercise of the option
shall have been given nor later than seven full business days after the exercise
of such option, nor in any event prior to the Closing Time. If the option is
exercised as to all or any portion of the Option Shares, the Option Shares as to
which the option is exercised shall be purchased by the Underwriters, severally
and not jointly, in their respective underwriting obligation proportions.
(c) Payment of the purchase price for and delivery of the Firm Shares
shall be made at the offices of SunTrust Capital Markets, Inc. ("SunTrust") or
at such other place as shall be agreed upon by the Company, the Selling
Stockholders and you, at 9:00 A.M. (prevailing Eastern time), either (i) on the
third full business day after the effective date of the Registration Statement,
or (ii) at such other time not more than ten full business days thereafter as
you, the Selling Stockholders and the Company shall determine (unless, in either
case, postponed pursuant to Section 10 hereof) (such date and time of payment
and delivery being herein called the "Closing Time") (the Closing Time and each
Date of Delivery, if any, being sometimes referred to as a "Closing Date"). In
addition, in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for and delivery of the Option
Shares shall be made at the offices of SunTrust in the manner set forth above,
or at such other place as the Company and you shall determine, on the Date of
Delivery as specified in the notice from you to the Company. Payment for the
Firm Shares and the Option Shares in immediately available funds shall be made
by wire transfer to the respective bank accounts designated by the Company and
SunTrust Bank as Custodian for the Selling Stockholders, against delivery to you
for the respective accounts of the Underwriters of the Shares to be purchased by
them.
(d) The Shares to be purchased by the Underwriters shall be in such
denominations and registered in such names as you may request in writing at
least two full business days before the Closing Time or the Date of Delivery, as
the case may be. The Shares will be made available at the offices of SunTrust
Bank or at such other place as you may designate for examination and packaging
not later than 9:00 A.M. (prevailing Eastern time) at least one full business
day prior to the Closing Time or the Date of Delivery, as the case may be.
(e) After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after the
initial public offering of such Shares, you may from time to time increase or
decrease the public offering price, in your sole discretion, by reason of
changes in general market condition or otherwise.
Section 4. Certain Covenants of the Company. The Company covenants and
--------------------------------
agrees with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time that
this Agreement is executed and delivered by the parties hereto). If the Company
elects to rely upon Rule 430A of the 1933 Act Regulations or the filing of the
Prospectus is otherwise required under Rule 424(b) of the 1933 Act Regulations,
and subject to the provisions of Section 4(b) of this Agreement, the Company
will comply with the requirements of
13
Rule 430A and will file the Prospectus, properly completed, pursuant to the
applicable provisions of Rule 424(b), within the time period prescribed. If the
Company elects to rely upon Rule 462(b), the Company shall file a 462(b)
Registration Statement with the Commission in compliance with Rule 462(b) by
10:00 A.M., prevailing Eastern time, on the date of this Agreement, and the
Company shall at the time of filing either pay to the Commission the filing fee
for the Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee. If the Company elects, with the consent of the
Underwriters, to rely on Rule 434 under the 1933 Act, the Company will file with
the Commission in accordance with Rule 424(b) of the 1933 Act Regulations the
Rule 434 Prospectus. The Company will notify you immediately and confirm the
notice in writing, (i) when the Registration Statement, the 462(b) Registration
Statement or any post-effective amendment to the Registration Statement, shall
have become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission to amend the Registration
Statement or the 462(b) Registration Statement or amend or supplement the
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any 462(b) Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threat of any proceedings for any of such purposes. The Company
will make every reasonable effort to prevent the issuance of any such stop order
or of any order preventing or suspending such use and, if any such order is
issued, to obtain the withdrawal thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement or any amendment or supplement (i) to the Prospectus, if
the Company has not elected to rely upon Rule 430A, or (ii) if the Company has
elected to rely upon Rule 430A, to either the Prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectus
filed in accordance with Rule 424(b), or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement, in any case if you
shall not have previously been advised and furnished a copy thereof a reasonable
time prior to the proposed filing, or if you or counsel for the Underwriters
shall reasonably object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at the Company's
expense, as soon as available, as many signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished or
will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto (but without
exhibits).
(d) The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act and the 1933 Act
Regulations. If the Company elects, with the consent of the Underwriters, to
rely on Rule 434 under the Act, the Company will provide the Underwriters with
copies of the Rule 434 Prospectus (including copies of a term sheet that
complies with the requirements of Rule 434 under the 1933 Act), in such numbers
as each Underwriter may reasonably request. The Company will deliver to each
14
Underwriter, at the Company's expense, as soon as the Registration Statement
shall have become effective, and thereafter from time to time as requested
during the period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as supplemented or amended) as
each Underwriter may reasonably request. The Company will use its best efforts
to comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and in the Prospectus. In case you are required to deliver a prospectus within
nine months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is delivered, not
misleading, or, if for any reason it shall be necessary during such period to
amend or supplement the Prospectus in order to comply with the 1933 Act or the
1933 Act Regulations, the Company will notify you and upon your request prepare
promptly and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance. In case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, the Company will prepare
and deliver to such Underwriter as many copies as you may request of an amended
or supplemented Prospectus complying with the requirements of Section 10(a)(3)
of the 1933 Act.
(e) The Company will use its best efforts, in cooperation with you, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not otherwise so subject.
The Company will file such statements and reports as may be required by the laws
of each jurisdiction in which the Shares have been qualified as above provided.
(f) The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds."
(g) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the 1933 Act
Regulations), an earnings statement (in reasonable detail but which need not be
audited) complying with the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Regulations and covering a period of at least 12 months
beginning after the effective date of the Registration Statement.
(h) During a period of three years from the date hereof, the Company
will furnish to you: (i) copies of all reports mailed to stockholders of the
Company; and (ii) copies of all reports and financial statements furnished to or
filed with the Commission, NASDAQ, any securities exchange or the NASD.
15
(i) During the Lock-Up Period, the Company will not, without the prior
written consent of SunTrust, on behalf of the Underwriters, directly or
indirectly, sell, offer to sell, grant any option for the sale of, hypothecate,
pledge, enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by the
Company or any affiliate, or otherwise issue or dispose of, any Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock, or
register or publicly announce any intent to register under the 1933 Act the
offer or sale of any capital stock of the Company, except for: (i) the issuance
of shares of Common Stock in exchange for the currently outstanding shares of
the Company's Class A common stock upon the effectiveness of the Company's
amended and restated Certificate of Incorporation as set forth in the
Prospectus; (ii) the issuance of shares of Common Stock pursuant to the exercise
or conversion of options, warrants, convertible notes or convertible preferred
stock in existence on the date of execution of this Agreement; (iii) the
registration of the offer and sale of the Shares and sales to the Underwriters
pursuant to this Agreement; (iv) contributions to employee benefit plans in
existence on the date of the execution of this Agreement; (v) the grant of
options, not exercisable during the Lock-Up Period, pursuant to the Company's
1997 Stock Option and Incentive Plan or 2003 Stock Option Plan in effect at the
time of execution of this Agreement; (vi) a registration statement filed on Form
S-8 limited in scope to the Company's 1997 Stock Option and Incentive Plan and
2003 Stock Option Plan described in the Registration Statement and Prospectus
and the Company's tax-qualified employee savings plan under Section 401(k) of
the Code; and (vii) the issuance of shares of Common Stock or securities
convertible into or exchangeable or exercisable for shares of Common Stock (and
the shares of Common Stock issuable upon the conversion, exercise or exchange
thereof) in connection with any future acquisition, merger or other business
combination, or purchase of assets or of all or a portion of a business by the
Company or any of its subsidiaries. The Company will not, and will use its best
efforts to cause its officers, directors and affiliates not to, take, directly
or indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to stabilize or manipulate
the price of any security of the Company, or which may cause or result in, or
which might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of any of the Shares.
(j) For a period of three years from the date hereof, the Company will
maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar (which may be the same entity as the
transfer agent) for its Common Stock.
(k) For as long as the Common Stock of the Company is publicly traded,
the Company will use its commercially reasonable efforts to maintain the listing
of its shares of Common Stock on the NASDAQ; provided that nothing herein shall
prevent the Company from listing its Common Stock on the New York Stock
Exchange.
(l) If at any time during the 30-day period after the Registration
Statement becomes effective, any publication or event relating to or affecting
the Company shall occur as a result of which in your reasonable opinion the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such publication or event necessitates a supplement or
amendment of the Prospectus), the Company agrees to forthwith consult and
cooperate with you concerning the Company's response to or comment on such
publication or event.
16
(m) The Company will file timely and accurate information with the
Commission in accordance with Rule 463 of the 1933 Act Regulations or any
successor provision.
(n) The Company will supply the Underwriters with copies of all
correspondence to and from and all documents issued to and by the Commission or
the Commission staff in connection with the registration of the Shares under the
1933 Act.
Section 5. Covenants of the Selling Stockholders. Each Selling
-------------------------------------
Stockholder covenants and agrees with each Underwriter as follows:
(a) Such Selling Stockholder will pay all taxes, if any, on the
transfer and sale of the Shares to be sold by him, her or it hereunder.
(b) Such Selling Stockholder will comply with all reasonable requests
of the Company to cause the Registration Statement to become effective, to do
and perform all things to be done and performed by the Selling Stockholder
hereunder prior to the Closing Time and, if applicable, the Date of Delivery,
and to satisfy all conditions precedent to the delivery of the Shares to be sold
by the Selling Stockholders.
(c) Such Stockholder acknowledges and agrees that the shares to be sold
by the Selling Stockholder hereunder, which are represented by the certificates
held in custody for the Selling Stockholder, are subject to the interests of the
Underwriters and the other Selling Stockholders thereunder, that the
arrangements made by the Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholder hereunder shall
not be terminated by any act of the Selling Stockholder, by operation of law, by
the death or incapacity of any individual Selling Stockholder or, in the case of
a trust, by the death or incapacity of any executor or trustee or the
termination of such trust, or the occurrence of any other event.
(d) Such Selling Stockholder will deliver to you prior to the Closing
Time a properly completed and executed U.S. Treasury Department Form W-9.
Section 6. Payment of Expenses.
-------------------
(a) General. The Company will pay or cause to be paid and bear all
-------
costs, fees and expenses incident to the performance of its obligations under
this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the Preliminary Prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriters; (ii) the preparation, printing and distribution of
this Agreement and any instruments relating to any of the foregoing; (iii) the
issuance and delivery of the Shares to the Underwriters, including any transfer
taxes payable upon the sale of the Shares to the Underwriters (other than
transfer taxes on resales by the Underwriters); (iv) the fees and disbursements
of the Company's counsel and accountants; (v) the qualification of the Shares
under the applicable securities laws in accordance with Section 4(e) hereof and
any filing for review of the offering with the NASD, including filing fees and
fees and disbursements of counsel for the Underwriters in connection therewith,
up to an aggregate maximum of $10,000; (vi) the transfer agent's and registrar's
fees and all miscellaneous expenses referred to in
17
Item 13 of the Registration Statement; (vii) costs related to travel and lodging
incurred by the Company and its representatives relating to meetings with and
presentations to prospective purchasers of the Shares; and (viii) all other
costs and expenses incident to the performance of the Company's obligations
hereunder (including costs incurred in closing the purchase of the Option
Shares, if any) that are not otherwise specifically provided for in this
section.
(b) Selling Stockholders. The Selling Stockholders shall pay (i) their
--------------------
proportionate share of the Underwriters' discount relating to Shares sold by
such Selling Stockholders and (ii) any transfer taxes imposed on the sale of the
Shares to the Underwriters by the Selling Stockholders (other than transfer
taxes on resales by the Underwriters).
(c) Termination. If this Agreement is terminated by the Underwriters in
-----------
accordance with the provisions of Section 7 or Section 10(b) hereof, the Company
shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and expenses of counsel for the Underwriters.
Section 7. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the Underwriters to purchase and pay for the Shares that they have severally
agreed to purchase pursuant to this Agreement (whether Firm Shares at the
Closing Time or, upon exercise of the option granted in Section 3, Option Shares
on the Date of Delivery) are subject to the following conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., prevailing Eastern time, on the date of this Agreement or, with
your consent, at a later time and date not later, however, than 5:30 P.M.,
prevailing Eastern time, on the first business day following the date hereof, or
at such later time or on such later date as you may agree to in writing; as of
such Closing Date the Registration Statement shall remain effective and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to your knowledge or the knowledge of the
Company or the Selling Stockholders, shall be contemplated by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel for the
Underwriters. If the Company has elected to rely upon Rule 430A, a prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) You shall have received the favorable opinion, dated such Closing
Date, of Blank Rome LLP, counsel for the Company, with respect to the Company,
together with signed or reproduced copies of such opinions for each of the other
Underwriters, in form and substance satisfactory to you and counsel for the
Underwriters, stating that:
(i) the Company and each of its subsidiaries is validly existing as a
corporation or other entity in good standing under the laws of the state
of its incorporation or organization, and to such counsel's knowledge,
based solely on its review of certificates of public officials, is duly
qualified to do business and is in good standing as a foreign corporation
or other entity in the jurisdictions listed on a schedule to such opinion
provided by such counsel;
18
(ii) all of the issued and outstanding capital stock or other equity
interest of each subsidiary of the Company has been duly authorized and
validly issued and is fully paid and non-assessable; and, to such
counsel's knowledge, except as described in the Prospectus, the capital
stock or other equity interest of each subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens, encumbrances
and defects, based solely on such counsel's review of the certificates, if
any, representing such capital stock or other equity interests and an
officers' certificate, it being understood such counsel shall not have
conducted any tax, lien or UCC, litigation, judgment or similar searches;
(iii) the Company and each of its subsidiaries has all corporate power
and authority necessary to own or hold its properties and conduct its
business as described in the Registration Statement and Prospectus;
(iv) the authorized capital stock of the Company as of June 30, 2003
was as set forth for June 30, 2003 under the heading "Capitalization" in
the Prospectus, and, as of the date of such counsel's opinion, all of the
4,701,338 issued and outstanding shares of capital stock of the Company
set forth in the first paragraph under the heading "Description of Capital
Stock" in the Prospectus have been duly authorized and validly issued and
are fully paid and non-assessable;
(v) the outstanding shares of capital stock of the Company are free of
statutory, preemptive rights, and, to such counsel's knowledge, the
outstanding shares of capital stock of the Company are free of contractual
preemptive rights granted by the Company; to such counsel's knowledge
there are no outstanding securities of the Company convertible or
exchangeable into, or evidencing the right to purchase or subscribe for,
any shares of capital stock of the Company, except for options under the
Company's 1997 Stock Option and Incentive Plan and warrants, preferred
stock and convertible notes described in the Registration Statement and
Prospectus; there are no restrictions upon the voting or transfer of any
shares of the Company's capital stock pursuant to the Company's
Certificate of Incorporation or Bylaws, each as amended, or any agreement
or other instrument known to such counsel;
(vi) the Shares being delivered by the Company to the Underwriters
hereunder have been duly authorized and, when issued and delivered against
payment therefore as described in the Prospectus, will be validly issued,
fully paid and non-assessable;
(vii) to such counsel's knowledge, other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending or
threatened to which the Company or any subsidiary is a party or of which
any property or assets of the Company or any subsidiary is the subject
which is required to be set forth in the Prospectus except for any such
proceeding which would not reasonably be expected to have a Material
Adverse Effect;
(viii) the Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company (except as to the
financial statements and schedules and other financial and statistical
data contained therein, as to which such counsel need express no opinion)
comply in all material respects with the requirements of the 1933 Act and
the 1933 Regulations;
19
(ix) based solely on requests for acceleration of the effectiveness of
the Registration Statement filed by the Company with the Commission and a
telephone call made to representatives of the Commission on the date
specified in such opinion, the Registration Statement was declared
effective under the 1933 Act as of the date and time specified in such
opinion, any required filing with the Commission of the Prospectus
pursuant to Rule 424 of the 1933 Act Regulations was made as of the date
specified in such opinion, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose is pending or threatened by the
Commission;
(x) the statements contained in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to summarize
certain legal provisions of the capital stock of the Company, are correct
in all material respects and constitute a fair summary thereof; the
statements contained in the Prospectus under the captions "Management,"
"Description of Capital Stock" and "Shares Eligible for Future Sales" and
in the Registration Statement in Item 14, in each case insofar as such
statements constitute summaries of statutes, rules, regulations, or legal
matters, are correct in all material respects and constitute a fair
summary thereof;
(xi) to such counsel's knowledge, there are no contracts or other
documents that are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations that have not been described or filed as exhibits to the
Registration Statement;
(xii) this Agreement has been duly authorized, executed and delivered
by the Company, and it constitutes the valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to usual
limitations on enforceability;
(xiii) the issuance and sale of the Shares being delivered by the
Company pursuant to this Agreement and the execution, delivery and
performance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument filed as
exhibits to the Registration Statement pursuant to the 1933 Act
Regulations to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any
of the property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions
of the Certificate of Incorporation or Bylaws, each as amended (or similar
corporate documents) of the Company or any of its subsidiaries or any
statute, rule or regulation which an attorney admitted to practice in the
state of Delaware exercising reasonable diligence would recognize as being
applicable to transactions of the type contemplated by this Agreement, or
any order known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or
any of their respective properties or assets, in any case which conflict,
breach or violation would reasonably be expected to have a Material
Adverse Effect; and, except for the registration of the Shares under the
1933 Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state securities laws in connection with the purchase
20
and distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any court or
governmental agency or body under a law which an attorney admitted to
practice in the state of Delaware exercising reasonable diligence would
recognize as being applicable to transactions of the type contemplated by
this Agreement is required for the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
hereby, except for such consents, approvals, authorizations, orders,
filings or registrations as have been obtained or made;
(xiv) to such counsel's knowledge, based on an officer's certificate
setting forth the factual matters underlying the definitions of
"investment company" and an entity "controlled" by an "investment
company," as those terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act"), the Company is not and, after giving
effect to the offering and sale of the Shares, will not be, an "investment
company" or an entity "controlled" by an "investment company", as those
terms are defined in the 1940 Act, as amended;
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the 1933 Act and the 1940 Act and the laws of the
state of Delaware. Such counsel shall also state to the effect that (x) such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statement, and (y) based on the foregoing, no facts have
come to the attention of such counsel which leads it to believe that the
Registration Statement (except for the financial statements, notes and schedules
and other financial and numerical and statistical information and data included
therein or omitted therefrom, as to which such counsel need express no view), as
of the Closing Date, contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or that the Prospectus (except as stated above) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as set forth in clause (x)
above) and have not undertaken any independent investigation to determine the
existence or absence of any factual circumstance or condition.
(c) You shall have received a favorable opinion, dated as of the
Closing Time, of counsel to each Selling Stockholder substantially in the form
set forth as Exhibit 1 hereto.
(d) You shall have received a favorable opinion from Bass, Xxxxx & Xxxx
PLC, counsel for the Underwriters, dated such Closing Date, with respect to the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(e) As of such Closing Date,
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(i) the Registration Statement, any 462(b) Registration Statement, and
the Prospectus, as they may then be amended or supplemented, shall contain
all statements that are required to be stated therein under the 1933 Act
and the 1933 Act Regulations and in all respects shall conform to the
requirements of the 1933 Act and the 1933 Act Regulations, the Company
shall have complied in all respects with Rules 424(b), 430A and 462 under
the 1933 Act and neither the Registration Statement, any 462(b)
Registration Statement nor the Prospectus, as they may then be amended or
supplemented, shall contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
(ii) there shall not have been any change in the capital stock or
long-term debt of the Company or any subsidiary or any change, or any
development involving a prospective change, in or affecting the business,
general affairs, management, condition (financial or otherwise),
stockholders' equity, results of operations, properties or prospects of
the Company and its subsidiaries, otherwise than as set forth in the
Prospectus, the effect of which is, in your judgment, so material and
adverse as to make it impracticable or inadvisable to proceed with the
completion of the public offering or the sale of payment for the Shares;
(iii) no action, suit or proceeding at law or in equity before or by
any federal, state or other commission, court, board or administrative
agency shall be pending or, to the best of the Company's or any
subsidiary's knowledge, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus,
other than as set forth therein, wherein an unfavorable decision, ruling
or finding would reasonably be expected to have a Material Adverse Effect;
(iv) the Company and the Selling Stockholders shall have complied with
all agreements and satisfied all conditions contained herein in all
respects on their respective parts to be performed or satisfied at or
prior to such Closing Date; and
(v) the representations and warranties of the Selling Stockholders set
forth in Section 2 shall be accurate in all respects as though expressly
made at and as of the Closing Time. The representations and warranties of
the Company set forth in Section 1 shall be accurate in all respects as
though expressly made at and as of such Closing Date and you shall have
received certificates, dated as of such Closing Date, executed by the
Chief Executive Officer and the Chief Financial Officer of the Company to
such effect and with respect to the following additional matters:
(A) the Registration Statement has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus has been
issued, and no proceedings for that purpose have been instituted or are
pending or, to the best of their knowledge, threatened under the 1933
Act;
(B) they have carefully reviewed the Registration Statement, any
462(b) Registration Statement and the Prospectus and when the
Registration Statement and any
22
462(b) Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement, any 462(b) Registration Statement and the
Prospectus and any amendments or supplements thereto contained all
statements and information required to be included therein or
necessary to make the statements therein in light of the circumstances
in which they were made, not misleading and neither the Registration
Statement, any 462(b) Registration Statement, the Prospectus nor any
amendment or supplement thereto included any untrue statement of a
material fact or omitted to state any 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, there has occurred no event required to be set forth in an
amended or supplemented Prospectus that has not been so set forth, and
(C) all agreements herein to be performed by the Company and the
Selling Stockholders, respectively, on or prior to such Closing Date
have been duly performed.
(f) You shall have received from Ernst & Young LLP a letter addressed
to the Underwriters and dated the date hereof and the Closing Date,
substantially in the form heretofore approved by you and your counsel.
(g) You shall have received from Deloitte & Touche, LLP a letter
addressed to the Underwriters and dated the date hereof and the Closing Date,
substantially in the form heretofore approved by you and your counsel.
(h) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the NASDAQ or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or the
settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by federal or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions, including without limitation as a result of terrorist
activities after the date hereof, or the effect of international conditions on
the financial markets in the United States shall be such as to make it, in your
judgment, impracticable or inadvisable to proceed with the completion of the
public offering or the sale or payment for the Shares.
(i) As of such Closing Date, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated in this Agreement and the matters
referred to in Section 7 and in order to evidence the accuracy and completeness
of any of the representations and warranties or statements of the Company and
the Selling Stockholders, the performance of any of the covenants of the Company
and the Selling Stockholders, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling
23
Stockholders at or prior to such Closing Date in connection with the
authorization, issuance and sale of the Shares as contemplated in this Agreement
shall be reasonably satisfactory in form and substance to you and to counsel for
the Underwriters. The Company will furnish you with such number of conformed
copies of such opinion, certificates, letters and documents, as you shall
request.
(j) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(k) The Firm Shares and the Option Shares, if any, shall have been
approved for listing on the NASDAQ National Market upon official notice of the
issuance, sale and evidence of satisfactory distribution thereof pursuant to
this underwritten public offering.
(l) Each officer, director and stockholder of the Company referred to
in Section 1(k) shall have agreed in writing as to the matters set forth in
Section 1(k).
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company and the Selling
Stockholders at any time at or prior to such Closing Date, and such termination
shall be without liability of any party to any other party.
Section 8. Indemnification and Contribution.
--------------------------------
(a) The Company will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the Exchange Act, and the successors and assigns of all such persons, from and
against any losses, claims, damages or liabilities, joint or several, to which
any such Underwriter or any such other person may become subject under the 1933
Act, the Exchange Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any Rule 434 Prospectus, or any amendment or supplement thereto, or
in any "blue sky" application or other document executed by the Company or based
upon any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, and will reimburse each
Underwriter and each such partner, director, officer, employee and controlling
person for any legal or other expenses reasonably incurred by such Underwriter,
partner, director, officer, employee or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage 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, such Preliminary Prospectus,
Prospectus or Rule 434 Prospectus, or such amendment or supplement, or any Blue
Sky Application in reliance upon and in conformity with written information
furnished to the Company by you or by any Underwriter through you expressly for
use therein, it being understood and agreed that the only such information
furnished by you or by any Underwriter through you consists of the
24
information specified in Section 8(f) below; provided, further, that the Company
will not be liable for any such losses, claims, damages, or liabilities arising
from the sale of the Shares to any person if a copy of the Prospectus (as first
filed pursuant to Rule 424(b)) or the Prospectus as amended or supplemented by
all amendments or supplements thereto which has been furnished to the
Underwriters (within a reasonable amount of time prior to such sale) shall not
have been sent, mailed or given to such person, at or prior to the written
confirmation of the sale of such Shares to such person, but only if and to the
extent that such Prospectus, if so sent or delivered, would have cured the
defect giving rise to, and been a complete defense against the person asserting,
such loss, claim, damage or liability. In addition to its other obligations
under this Section 8(a), the Company agrees that, as an interim measure during
the pendency of any such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any breach or any statement or omission,
or any alleged statement or omission, described in this Section 8(a), it will
reimburse the Underwriters, their partners, directors, officers, employees and
controlling persons on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse the Underwriters and such other persons for
such expense and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. This indemnity agreement
shall be in addition to any liabilities that the Company may otherwise have.
(b) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject under the 1933 Act, the Exchange Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, any Rule 434
Prospectus, or any amendment or supplement thereto, or any Blue Sky Application
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, such Preliminary Prospectus, Prospectus or Rule
434 Prospectus, or such amendment or supplement, or any Blue Sky Application, in
reliance upon and in conformity with information furnished to the Company by
such Underwriter expressly for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information specified in Section 8(f) below, and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such loss, claim, damage, liability or
action. In addition to their other obligations under this Section 8(b), the
Underwriters agree that, as an interim measure during the pendency of any such
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any breach or any statement or omission, or any alleged statement or
omission, described in this Section 8(b), they will reimburse the Company on a
monthly basis for all reasonable legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of their obligation to reimburse the Company
for such expense and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction.
25
This indemnity agreement shall be in addition to any liabilities that the
Underwriters may otherwise have.
The indemnity agreement in this Section 8(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the Exchange Act, to the same extent as such
agreement applies to the Company.
(c) Within ten days after receipt by an indemnified party under Section
8(a) or 8(b) above of notice of commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; no indemnification provided 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
prejudiced by the failure to give such notice, but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party otherwise than under this Section 8.
In case any such action 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 after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized by the indemnifying party, (ii) the indemnified party
shall have been advised by such counsel that there may be a conflict of interest
between the indemnifying party and the indemnified party in the conduct of the
defense of such action (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying party shall not in fact have employed counsel to
assume the defense of such action, in any of which events the fees and expenses
of one such counsel shall be borne by the indemnifying party. 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.
(d) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 8 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred by
the Company and one or more of the Underwriters, as incurred, in such
proportions that (i) the Underwriters are responsible pro rata for that portion
represented by the underwriting discount
26
appearing on the cover page of the Prospectus bears to the public offering price
(before deducting expenses) appearing thereon, and (ii) the Company is
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation; provided, further, that if the allocation
provided above is not permitted by applicable law, the Company and the
Underwriters shall contribute to the aggregate losses in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. 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
or by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
or liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. For purposes of this Section 8(d), the partners,
directors, officers and employees and each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Company.
(e) The parties to this Agreement acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including without
limitation, the provisions of this Section 8, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the 0000 Xxx. The
parties are advised that federal or state public policy, as interpreted by the
courts in certain jurisdictions, may be contrary to certain of the provisions of
this Section 8, and the parties hereto hereby expressly waive and relinquish any
right or ability to assert such public policy as a defense to a claim under this
Section 8 and further agree not to attempt to assert any such defense.
(f) For purposes of this Section 8, the Underwriters severally confirm,
and the Company and the Selling Stockholders acknowledge, that the concession
and reallowance figures appearing under the caption "Underwriting--Underwriting
Discount and Expenses" and under the caption "Underwriting--Stabilization, Short
Positions and Penalty Bids" in any Preliminary Prospectus and in the Prospectus
constitutes the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
27
Section 9. Representations and Agreements to Survive Delivery. The
--------------------------------------------------
representations, warranties, indemnities, agreements and other statements of the
Company and the Selling Stockholders, set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, the Selling Stockholders, any
Underwriter or any representative, officer, director or any controlling person
with respect to an Underwriter or the Company, and will survive delivery of and
payment for the Shares or termination of this Agreement.
Section 10. Effective Date of Agreement and Termination.
-------------------------------------------
(a) This Agreement shall become effective upon the later of (a) the
execution and delivery hereof by the parties hereto and (b) release of
notification of the effectiveness of the Registration Statement by the
Commission, provided, however, that the provisions of Sections 6 and 9 shall at
all times be effective.
(b) You may terminate this Agreement by notice to the Company and the
Selling Stockholders at any time at or prior to the Closing Date in accordance
with the last paragraph of Section 7 of this Agreement.
(c) If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party, except
that, notwithstanding any such termination, (i) the provisions of Section 6 and
Section 8 shall remain in effect, and (ii) if any Shares have been purchased
hereunder, the representations and warranties in Section 1 and Section 2 and all
obligations under Section 4 and Section 5 shall also remain in effect.
Section 11. Default by One or More of the Underwriters.
------------------------------------------
(a) If any Underwriter shall default in its obligation to purchase the
Firm Shares that it has agreed to purchase hereunder, you may in your discretion
arrange for you, another party, or other parties to purchase such Firm Shares on
the terms contained herein. If within 36 hours after such default by any
Underwriter you do not arrange for the purchase of such Firm Shares, then the
Company or the Selling Stockholders shall be entitled to a further period of 36
hours within which to procure another party or other parties satisfactory to you
to purchase such Firm Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the Selling
Stockholders that you have so arranged for the purchase of such Firm Shares, or
the Company or the Selling Stockholders notifies you that it has so arranged for
the purchase of such Firm Shares, you or the Company or the Selling Stockholders
shall have the right to postpone the Closing Time for a period of not more than
seven days in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any persons substituted under this Section 11 with like effect as if such person
had originally been a party to this Agreement with respect to such Firm Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Stockholders as
28
provided in subsection (a) above, the aggregate number of Firm Shares which
remains unpurchased does not exceed 10% then the Company shall have the right to
require each non-defaulting Underwriter to purchase the Firm Shares which such
Underwriter agreed to purchase hereunder and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Firm Shares which such Underwriter agreed to purchase hereunder) of the Firm
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Stockholders as provided in subsection (a) above, the
number of Firm Shares which remains unpurchased exceeds 10%, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Firm Shares of a defaulting Underwriter
or Underwriters, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Stockholders except for the expenses to be borne by the Company, the
Selling Stockholders and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
Section 12. Default by the Company or the Selling Stockholders. If the
--------------------------------------------------
Company or the Selling Stockholders shall fail at the Closing Time to sell and
deliver the respective aggregate number of Firm Shares that they are obligated
to sell, then this Agreement shall terminate without any liability on the part
of any non-defaulting party, except to the extent provided in Section 6 and
except that the provisions of Section 8 shall remain in effect. No action taken
pursuant to this Section shall relieve the Company or the Selling Stockholders
from liability, if any, in respect of its default.
Section 13. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, delivered or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o SunTrust Xxxxxxxx Xxxxxxxx,
000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx
Xxxxx and notices to the Company and the Selling Stockholders shall be directed
to The Providence Service Corporation, 000 Xxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx
00000, Attention: Xxxxxxxx XxXxxxxx. Each notice hereunder shall be effective
upon receipt by the party to which it is addressed.
Section 14. Parties. This Agreement is made solely for the benefit of
-------
the Underwriters, the Selling Stockholders, and the Company and, to the extent
so provided, the partners, directors, officers and employees of the Underwriters
and any person controlling any of the Underwriters, the directors of the
Company, the officers of the Company who have signed the Registration Statement
and any person controlling the Company, and their respective executors,
administrators, successors and assigns and, subject to the provisions of Section
11, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Shares.
Section 15. Governing Law and Time. This Agreement shall be governed
----------------------
by, and construed in accordance with, the laws of the State of Delaware.
Specified time of the day refers to United States Eastern Time, unless otherwise
specified.
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Section 16. Counterparts. This Agreement may be executed in any number
------------
of counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.
Very truly yours,
THE PROVIDENCE SERVICE CORPORATION
By:
--------------------------------
Xxxxxxxx X. XxXxxxxx, Chairman
and Chief Executive Officer
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE I:
By:
---------------------------------
[_________], Attorney-in-Fact
Confirmed and accepted in Atlanta, Georgia,
as of the date first above written, by SunTrust
Capital Markets, Inc. on behalf of the Underwriters
named in Schedule II hereto.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
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SCHEDULE I
-----------
Number of Firm
Selling Stockholder Shares to be Sold
-------------------- -----------------
Xxxxxx Xxxxxxxx and Xxxxxx Xxxxx, JTWROS ......................................250,483
Xxxxxx Xxxxxx Darling .........................................................128,385
Harbinger Mezzanine Partners, L.P. ............................................224,128
Petra Mezzanine Fund, L.P. ....................................................168,096
Xxxxxxx Xxxxxxxxx .............................................................10,715
Xxxxx Xxxxx ...................................................................1,326
Xxxxx X. Xxxxxx ...............................................................7,143
Xxxxxxx X. Xxxxxx .............................................................14,286
Xxxxxxx X. Xxxxxx .............................................................3,334
Xxxxx X. Xxxx .................................................................31,905
Xxxxxxx X. Xxxx, III, as trustee of the Xxxx Family Trust .....................10,636
Xxxxxx Healthcare Finance, Inc. ...............................................41,672
Xxxxxx Financial Leasing, Inc. ................................................6,411
Linc Capital, Inc. ............................................................20,530
Xxxxx Xxxxxxx .................................................................51,430
Xxxxx Xxxxxxx .................................................................1,490
Xxxx X. Xxxxxxxx ..............................................................16,131
Xxxxx Xxxxxxx Family Trust dated November 17, 1995 ............................16,131
Xxxxx X. Xxxxxx Family Trust dated November 23, 1987, as amended ..............96,881
Xxxxxxx X. Xxxxxx Family Trust dated November 23, 1987, as amended ............96,881
Xxxx X. Xxxxxxx ...............................................................16,131
Xxxxx X. Xxxxxxx ..............................................................18,449
Xxxx XxxXxxxxxx ...............................................................15,131
Xxxxxxx X. XxXxxxxxxx .........................................................22,139
Xxx Xxxxxxxx ..................................................................17,298
Xxxxxx X. Xxxxxxx .............................................................6,429
Xxxxxxxx NCT Business Brokers, L.L.C. .........................................6,429
SCHEDULE II
Name Number of Shares
------ -----------------
SunTrust Capital Markets, Inc. . [_________]
Xxxxxxxxx & Company, Inc. [_________]
Avondale Partners, LLC [_________]
Total [_________]
EXHIBIT 1
Form of Selling Stockholder Opinion
August ___, 2003
SunTrust Capital Markets, Inc.
Xxxxxxxxx & Company, Inc.
Avondale Partners, LLC
c/o SunTrust Capital Markets, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Re: The Providence Service Corporation
Ladies and Gentlemen:
We have acted as legal counsel to [_________] ("Selling Stockholder").
This opinion is being given in connection with the underwriting agreement dated
August __, 2003 (the "Underwriting Agreement") entered into among the Selling
Stockholder and other selling stockholders similarly situated, the Providence
Service Corporation, a Delaware corporation (the "Company") and SunTrust Capital
Markets, Inc., Xxxxxxxxx & Company, Inc., and Avondale Partners, LLC, as
underwriters listed on schedule II to the Underwriting Agreement (the
Underwriters") with respect to the sale of certain shares of common stock, $.001
par value per share (the "Common Stock"), of the Company (the "Shares"),
pursuant to a registration statement on Form S-1, as amended through the date of
this opinion (File No. 333-106286) (the "Registration Statement").
In connection with this opinion, we have examined (i) the Underwriting
Agreement, (ii) that certain Custody Agreement and Power of Attorney dated
August ___, 2003 executed by the Selling Stockholder (the "Custody Agreement"),
(iii) either the original or a copy identified to our satisfaction of the stock
certificate issued by Providence to the Selling Stockholder for a number of
shares at least as great as the number of shares being sold by the Selling
Stockholder pursuant to the Underwriting Agreement, and we have relied, without
independent verification and with your permission, upon representations and
warranties or certificates as to factual matters delivered to us by the Selling
Stockholder for our use in rendering this opinion. We have also examined and
relied on the originals or copies identified to our satisfaction of such
corporate records of the Company, such other agreements, instruments or
documents as we deemed necessary as a basis for the opinions hereinafter
expressed.
In rendering this opinion, we have assumed the genuineness and
authenticity of all signatures on original documents, the authenticity of all
documents submitted to us as original documents, the conformity to original
documents of all documents submitted to us as copies, the authenticity of the
originals of all such documents submitted to us as copies, and the due
authorization, execution and delivery of all documents by all of the parties
thereto where authorization, execution and delivery are prerequisites to the
effectiveness of such documents.
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We also have assumed that all individuals executing and delivering documents in
their individual capacities had the legal capacity to so execute and deliver.
Based on the foregoing, and subject to the limitations, qualifications
and exceptions set forth below, we are of the opinion that:
(1) the Custody Agreement has been duly executed by the Selling
Stockholder and constitutes the valid and binding agreement of the Selling
Stockholder, enforceable in accordance with its terms; and
(2) the Selling Stockholder has good and valid title to the Shares to
be sold by such Selling Stockholder under the Underwriting Agreement, free and
clear of all liens, encumbrances, equities or claims, and full right, power and
authority to sell, assign, transfer and deliver such Shares to be sold by such
Selling Stockholder thereunder.
We do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement. We have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence of
any fact should be drawn from representation of you or the rendering of the
opinions set forth herein.
This opinion is furnished by us for your benefit solely in connection
with the transaction described herein, and it is not to be quoted in whole or in
part or otherwise referred to, nor is it to be filed with any governmental
agency or any other person, and no person or entity other than you shall be
entitled to rely upon this opinion for any purpose without our express written
consent. This opinion is given as of the date hereof, and we assume no
obligation to advise you after the date hereof of facts or circumstances that
come to our attention or changes in law that occur which could affect the
opinions contained herein.
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