EXHIBIT 1
WF&G DRAFT
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8/28/97
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$100,000,000
SYSTEM SOFTWARE ASSOCIATES, INC.
__% CONVERTIBLE SUBORDINATED NOTES DUE 2002/1/
UNDERWRITING AGREEMENT
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September __, 0000
XXXXXXXXX & XXXXX LLC,
XXXXXX FRERES & CO. LLC
As Representative of the several Underwriters
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
System Software Associates, Inc., a Delaware corporation (the "Company"),
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proposes to issue and sell $100,000,000 aggregate principal amount of its __%
Convertible Subordinated Notes due 2002 (the "Firm Notes") (said $100,000,000
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aggregate principal amount of Firm Notes being herein called the "Underwritten
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Notes"). The Company proposes to grant to the Underwriters (as hereinafter
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defined) an option to purchase up to an additional $15,000,000 aggregate
principal amount of such Notes (the "Option Notes" and, together with the
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Underwritten Notes, the "Notes"). The Notes are more fully described in the
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Registration Statement and the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the purchase of
the Notes by the several underwriters, for whom you
_______________________
/1/ Plus an option to purchase from the Company up to $15,000,000 aggregate
principal amount of such Notes to cover over-allotments.
are acting as representatives (the "Representatives"), named in Schedule I
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hereto (collectively, the "Underwriters", which term shall also include any
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underwriter purchasing Notes pursuant to Section 2(b) hereof). You represent
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and warrant that you have been authorized by each of the other Underwriters to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
The Notes are to be issued pursuant to the provisions of an Indenture dated as
of September __, 1997 (the "Indenture") between the Company and Xxxxxx Trust and
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Savings Bank, as trustee (the "Trustee").
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each of the Underwriters as follows:
(a) A registration statement on Form S-3 (File No. 333-31272) with respect
to the Notes and the shares of Common Stock of the Company, $.0033 par
value per share (the "Common Stock"), issuable upon conversion of the Notes
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has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended, (the "Act") and the Rules and
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Regulations (the "Rules and Regulations") promulgated by the Securities and
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Exchange Commission (the "Commission") under the Act and has been filed
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with the Commission under the Act. The Company has complied with the
conditions for the use of Form S-3. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses (meeting the
requirements of the Rules and Regulations) contained therein and the
exhibits, financial statements and schedules, as finally amended and
revised, have heretofore been delivered by the Company to you. Such
registration statement, together with any registration statement filed by
the Company pursuant to Rule 462(b) of the Act, herein referred to as the
"Registration Statement," which shall be deemed to include all information
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omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of
the date of this Agreement. "Prospectus" means (i) the form of prospectus
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first filed by the Company with the Commission pursuant to Rule 424(b), or
(ii) the
last preliminary prospectus included in the Registration Statement
filed prior to the time it becomes effective or filed pursuant to Rule
424(a) under the Act that is delivered by the Company to the Underwriters
for delivery to purchasers of the Notes, together with the term sheet or
abbreviated term sheet filed with the Commission pursuant to Rule 424(b)(7)
of the Act. Each preliminary prospectus included in the Registration
Statement prior to the time it becomes effective is herein referred to as a
"Preliminary Prospectus." Any reference herein to the Registration
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Statement, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein, as to
the date of such Preliminary Prospectus or Prospectus, as the case may be,
and, in the case of any reference herein to any Prospectus, also shall be
deemed to include any documents incorporated by reference therein, and any
supplements or amendments thereto, filed with the Commission after the date
of filing of the Prospectus under Rules 424(b) or 430A, and prior to the
termination of the offering of the Notes by the Underwriters.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus. When the Registration Statement becomes
effective and at all times subsequent thereto up to and at the Closing Date
(hereinafter defined) and any later date on which Option Notes are to be
purchased, (i) the Registration Statement and Prospectus, and any
amendments or supplements thereto, will conform in all material respects to
the requirements of the Act and the Rules and Regulations, and (ii) neither
the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they
are made, not misleading; provided, however, that none of the
representations and warranties contained in this subparagraph shall apply
to information contained in or omitted from the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon, and in
conformity with, (i) written information furnished to the Company by any
Underwriter, directly or through you, specifically for use in the
preparation thereof or (ii) that part of the Registration Statement which
constitutes the
statement of Eligibility and Qualification of the Trustee (Form T-1) under
the Trust Indenture Act of 1939, as amended.
(c) Except as set forth on Schedule 1(c), the Company and each of its
subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, with full power and authority (corporate
and other) to own, lease and operate their properties and conduct their
business as described in the Registration Statement; except for the pledge
of stock of certain subsidiaries of the Company pursuant to the Amended and
Restated Secured Credit Agreement, dated as of February 28, 1997 (the
"Amended and Restated Credit Agreement") and the Collateral Agency
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Agreement and security documents executed thereunder (the "Collateral
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Documents"), each among the Company, Bank of America National Trust and
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Savings Association and the other financial institutions party thereto or
as set forth on Schedule 1(c), the Company owns all of the voting stock of
its subsidiaries free and clear of all liens, charges and encumbrances; the
Company and each of its subsidiaries have taken all necessary or required
actions in order to qualify to do business in each of the several
jurisdictions in which the Company and its subsidiaries owns or leases
property or conducts business, except where the failure to take any such
actions, in the aggregate, would not have a material adverse effect on the
business, condition (financial or otherwise), properties or prospects of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
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Effect"); the Company and each of its subsidiaries hold all licenses,
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certificates and permits from foreign, state, federal and other regulatory
authorities which are material to the conduct of their respective
businesses, all of which are valid and in full force and effect in all
material respects; the Company and each of its subsidiaries are not (i) in
violation of their respective charter or By-laws or (ii) except as set
forth in the Prospectus, in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness or in any other material lease, contract,
joint venture or other agreement or instrument to which the Company or any
subsidiary is a party or by which they or any of their properties may be
bound or
(iii) in violation of any law, order, rule, regulation, writ, injunction or
decree of any government, governmental instrumentality or court, domestic
or foreign, other than such defaults or violations which singularly or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect.
(d) The outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; the
Notes to be issued and sold by the Company have been duly authorized and,
when issued and paid for as contemplated herein, will be validly issued and
outstanding, and valid and binding obligations of the Company, enforceable
in accordance with their terms and will be entitled to the benefits of the
Indenture, except (i) as may be limited by the effects of bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and (ii) as may be
limited by general principles of equity, whether applied by a court of law
or equity; the shares of Common Stock of the Company issuable upon
conversion of the Notes have been duly authorized and reserved for issuance
upon such conversion, and when issued upon conversion in accordance with
the terms of the Indenture, will have been validly issued and will be fully
paid and non-assessable. No person or entity holds a right to require, or
participate in, the registration under the Act of the Notes or shares of
Common Stock of the Company issuable upon conversion of the Notes. No
person or entity has any preemptive or other right of participation or
first refusal with respect to any of the Notes or the Common Stock to be
issued upon conversion of the Notes or the issue or sale thereof by the
Company.
Each approval, consent, order, authorization, designation, declaration
or filing by or with any regulatory, administrative or other governmental
body necessary in connection with the execution and delivery by the Company
of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the
Commission, the National Association of Securities Dealers, Inc. (the
"NASD") or may be necessary to qualify the Notes for public offering by the
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Underwriters under state securities or Blue Sky laws) has been obtained or
made and is in full force and effect. No
approval or authorization of any shareholder is required for the issuance
and sale of the Notes by the Company or in order for the Company to
consummate the transactions described in the Registration Statement.
(e) The Notes and the authorized capital stock of the Company conform with
the statements concerning them set forth and incorporated by reference in
the Registration Statement in all material respects.
(f) The historical consolidated financial statements of the Company and
its subsidiaries, together with the related notes and schedules, included
in the Registration Statement present fairly the consolidated financial
position and the results of operations and cash flows of the Company and
its consolidated subsidiaries, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of accounting
("GAAP"), consistently applied throughout the periods involved, and all
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adjustments necessary for a fair presentation of results for such periods
have been made. Except as set forth in the Registration Statement, the pro
forma financial statements set forth in the Registration Statement fairly
present the information required to be presented therein, and such
statements meet the requirements of the Act and have been prepared in
accordance with GAAP consistently applied throughout the periods involved.
The summary financial and statistical data included in the Registration
Statement present fairly the information shown therein and have been
compiled on a basis consistent with the financial statements presented
therein. The Company and its subsidiaries have no material contingent
obligations which are not disclosed in the Company's financial statements
which are included in the Registration Statement.
(g) The Company has full corporate power and authority to enter into this
Agreement and the Indenture and to perform its obligations hereunder and
thereunder (including to issue, sell and deliver the Notes and the Common
Stock upon conversion of the Notes). This Agreement has been (and the
Indenture will be on the Closing Date) duly authorized, executed and
delivered by the Company and is (and the Indenture will be on the Closing
Date) the legal, valid and binding agreements on the part of the Company
enforceable in
accordance with their respective terms, except (i) as rights to indemnity
and contribution which may be limited by applicable law, (ii) enforcement
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights of
creditors generally and (iii) as may be limited by general principles of
equity, whether applied by a court of law or equity. The performance of
this Agreement and the Indenture and the consummation of the transactions
contemplated herein and therein will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (i) any
indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, or any other material lease,
contract, joint venture or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the property of
the Company or any of its subsidiaries is bound, or (ii) the Company's or
any of its subsidiaries' charters or By-laws, or (iii) any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or over the
properties of the Company or any of its subsidiaries.
(h) Except as set forth in the Prospectus, there is no pending or, to the
Company's knowledge, threatened action, suit, claim or proceeding against
the Company, any of its subsidiaries or any of their respective officers,
directors, properties, assets or rights before any court or governmental
agency or body or otherwise which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect or adversely
affect the consummation of the transactions contemplated hereby; and there
are no contracts or documents of the Company or any of its subsidiaries
which are required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been accurately described in all material
respects in the Prospectus and/or filed as exhibits to the Registration
Statement.
(i) KPMG Peat Marwick LLP and Price Waterhouse LLP, who have examined
certain of the consolidated financial statements, together with the related
schedules and notes of the Company, filed with the Commission as a part of
the
Registration Statement, are independent accountants within the meaning of
the Act and the Rules and Regulations.
(j) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as may be otherwise
stated in the Prospectus, there has not been (i) any material adverse
change in the condition (financial or otherwise), business, properties or
prospects of the Company and its subsidiaries, taken as a whole, (ii) any
transaction which is material to the Company and its subsidiaries, taken as
a whole, except transactions in the ordinary course of business, (iii) any
obligation which is material to the Company and its subsidiaries (taken as
a whole), direct or contingent, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course of
business, (iv)+any change which is material to the Company and its
subsidiaries, taken as a whole, in the capital stock or outstanding
indebtedness of the Company or its subsidiaries, or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company or its subsidiaries.
(k) Except as set forth in the Registration Statement, (i) the Company and
its subsidiaries have good and marketable title to all properties and
assets described in the Prospectus as owned by them, free and clear of any
liens, charges, encumbrances or restrictions, other than the liens granted
pursuant to the Amended and Restated Credit Agreement and the Collateral
Documents and such liens, charges, encumbrances or restrictions that are
not significant in relation to the business of the Company and its
subsidiaries when taken in the aggregate, and (ii) the material agreements
to which the Company and its subsidiaries are a party are valid and
enforceable by the Company and its subsidiaries (as applicable), except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting
the rights of creditors generally and as may be limited by general
principals of equity, whether applied by a court of law or equity, and, to
the Company's knowledge, the other contracting party or parties thereto are
not in material breach or material default under any of such agreements.
(l) The Company and its subsidiaries have filed all necessary foreign,
federal and state income and franchise tax returns and have paid or
adequately reserved for on the Company's books all taxes shown thereon as
due, and the Company has no knowledge of any tax deficiency which has been
or might be asserted against the Company or its subsidiaries which could
reasonably be expected to have a Material Adverse Effect; to the Company's
knowledge, all tax liabilities are adequately provided for on the books of
the Company and its subsidiaries.
(m) The Company and its subsidiaries maintain insurance of the types and
in amounts generally deemed adequate for their respective business and
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 and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
(n) To the Company's knowledge, no labor disturbance by the employees of
the Company and its subsidiaries exists or is imminent.
(o) The Company and its subsidiaries own, or possess adequate rights to
use, all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights described or referred to in the Prospects
as owned or used by it or which are material and necessary for the conduct
of their businesses; neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations or other rights which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a Material Adverse Effect.
(p) Neither the Company nor, to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the shares of Common
Stock or Notes to facilitate the sale or resale of the Notes.
(q) The Company is not, and after giving effect to the issuance of the
Notes will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the Company will not, as a
result of the consummation of the transactions contemplated by this
Agreement, be subject to regulation under said Act.
(r) Upon the execution and delivery of the Indenture by the parties
thereto, the Indenture will be duly qualified under, and conform in all
material respects to the requirements of, the Trust Indenture Act of 1939,
as amended.
(s) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Securities Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
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ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
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 Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
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liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
2. PURCHASE OF THE NOTES BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to the terms
and conditions herein set forth, the Company agrees to issue and sell
$100,000,000 aggregate principal amount of the Underwritten Notes to the several
Underwriters and each of the Underwriters agrees to purchase from the Company
the principal amount of Underwritten Notes set forth opposite its name in
Schedule I hereof at a purchase price of ___% of their
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principal amount, plus interest, if any, subject to adjustments in accordance
with paragraph (b) of this Section 2. In making this Agreement, each Underwriter
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is contracting severally and not jointly; except as provided in paragraphs (b)
and (c) of this Section 2, the agreement of each Underwriter is to purchase only
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the respective principal amount of the Underwritten Notes specified in Schedule
I.
(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 7 or 8 hereof) to purchase and pay for
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the aggregate principal amount of Notes agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any portion of the aggregate principal amount of Notes
which such defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail so to make such arrangements with respect to
all such Notes and portion, the aggregate principal amount of Notes which each
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining Notes and portion which the defaulting Underwriter or Underwriters
agreed to purchase; provided, however, that the non-defaulting Underwriters
shall not be obligated to purchase the Notes and portion which the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate principal amount
of such Notes exceeds 10% of the total aggregate principal amount of the Notes
which all Underwriters agreed to purchase hereunder. If the aggregate principal
amount of the Notes which the defaulting Underwriter or Underwriters agreed to
purchase shall not be purchased or absorbed in accordance with the two preceding
sentences, the Company shall have the right, within 24 hours next succeeding the
24-hour period above referred to, to make arrangements with other underwriters
or purchasers satisfactory to you for purchase of such Notes and portion on the
terms herein set forth. In any such case, either you or the Company shall have
the right to postpone the Closing Date determined as provided in Section 4
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hereof for not more than seven business days after the date originally fixed as
the Closing Date pursuant to said Section 4 in order that any
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necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made. If neither the non-defaulting
Underwriters nor the Company shall make arrangements within the 24-hour periods
stated above for the purchase of all of the Notes which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the several Underwriters to purchase, severally and not
jointly, up to $15,000,000 aggregate principal amount of Option Notes from the
Company at the same price per Note as the Underwriters shall pay for the
Underwritten Notes. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Notes by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate principal amount of
Option Notes as to which the several Underwriters are exercising the option.
Delivery of certificates for the Option Notes, and payment therefor, shall be
made as provided in Section 4 hereof. The aggregate principal amount of Option
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Notes to be purchased by each Underwriter shall be the same percentage of the
aggregate principal amount of Option Notes to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Notes, as
adjusted by you in such manner as you deem advisable to avoid fractional Notes.
3. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the Notes
to be purchased by them shall be as set forth in the Prospectus. The Firm Notes
are to be initially offered to the public at 100% of their principal amount,
plus interest, if any. The Underwriters may from time to time change the public
offering price after the closing of the initial public offering and increase or
decrease the concessions and discounts to dealers as they may determine. To the
extent, if at all, that any Option Notes are purchased pursuant to Section 2
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hereof, the Underwriters will offer them to the public on the foregoing terms.
(b) The information set forth in the last paragraph on the front cover page and
under "Underwriting" in the Registration Statement, any Preliminary Prospectus
and the Prospectus relating to the Notes filed by the Company (insofar as such
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf of
the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
4. DELIVERY OF AND PAYMENT FOR THE NOTES.
(a) Delivery of the aggregate principal amount of the Underwritten Notes and
the Option Notes (if the option granted by Section 2(c) hereof shall have been
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exercised not later than 9:00 A.M., Chicago time, on the business day preceding
the Closing Date), and payment therefor, shall be made at the offices of
Xxxxxxxx & Xxxxxx, Ltd., 00 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx
00000-0000, at 9:00 a.m., Chicago time, on the third business day after the date
of this Agreement, or at such time on such other day, not later than seven full
business days after such third business day, as shall be agreed upon in writing
by the Company and you. The date and hour of such delivery and payment (which
may be postponed as provided in Section 2(b) hereof) are herein called the
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"Closing Date". (As used herein, "business day" means a day on which the New
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York Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed).
(b) If the option granted by Section 2(c) hereof shall be exercised after 9:00
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a.m., Chicago time, on the business day preceding the Closing Date, delivery of
certificates for the Option Notes, and payment therefor, shall be made at the
office Xxxxxxxx & Xxxxxx, Ltd., 00 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000-0000, at 9:00 a.m., Chicago time, on the third business day after
the exercise of such option (the "Option Closing Date" ).
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(c) Payment for the Notes purchased from the Company shall be made by wire
transfer of immediately available funds to an account or accounts designated by
the Company to the Representative within two business days prior to the Closing
Date. Such payment shall be made upon delivery of the Notes to you for the
respective accounts of the several Underwriters against receipt therefor signed
by you. The Notes to be delivered to you shall be registered in the name of Cede
& Co., as nominee of The Depository Trust Company, or at the request of you,
delivered in such denominations and in such registrations as the Representative
requests in writing not later than the second full business day prior to the
Closing Date in the case of Underwritten Notes, and at least one business day
prior to the purchase thereof, in the case of the Option Notes. Such Notes will
be made available for inspection by the Company at the offices of Xxxxxxxx &
Xxxxxx, Ltd., 00 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 at
least one business day prior to the Closing Date or, in the case of the Option
Notes, by 3:00 p.m., New York time, on the business day preceding the date of
purchase.
It is understood that you, individually and not on behalf of the Underwriters,
may (but shall not be obligated to) make payment to the Company for Notes to be
purchased by any Underwriter whose wire shall not have been received by you on
the Closing Date or any later date on which Option Notes are purchased for the
account of such Underwriter. Any such payment by you shall not relieve such
Underwriter from any of its obligations hereunder.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule
430A and
(ii) not file any amendment to the Registration Statement or supplement to
the Prospectus of which you shall not previously have been advised and
furnished with a copy or to which you shall have reasonably objected in
writing or which is not in compliance with the Act or the Rules and
Regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the event of (i)
the request by the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, (ii)
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, (iii) the institution or
notice of intended institution of any action or proceeding for that
purpose, (iv) the receipt by the Company of any notification with respect
to the suspension of the qualification of the Notes for sale in any
jurisdiction, or (v) the receipt by it of notice of the initiation or
threatening of any proceeding for such purpose. The Company will make every
reasonable effort to prevent the issuance of such a stop order and, if such
an order shall at any time be issued, to obtain the withdrawal thereof at
the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of
each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless previously
furnished to you) and will also deliver to you, for distribution to the
Underwriters, a sufficient number of additional conformed copies of each of
the foregoing (but without exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to
you and send to the several Underwriters, at such office or offices as you
may designate, as many copies of the Prospectus as you may reasonably
request, and (iii) thereafter from time to time during the period in which
a prospectus is required by law to be delivered by an Underwriter or
dealer, likewise send to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the Prospectus and of
any amended prospectus, filed by the
Company with the Commission, as you may reasonably request for the purposes
contemplated by the Act.
(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement
or amend the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser of the Notes, the Company will forthwith prepare and file with
the Commission a supplement to the Prospectus or an amended prospectus so
that the Prospectus as so supplemented or amended will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the
Notes by the Underwriters and during such period, the Underwriters shall
propose to vary the terms of offering thereof by reason of changes in
general market conditions or otherwise, you will advise the Company in
writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The
Company authorizes the Underwriters and all dealers to whom any of the
Notes may be sold by the several Underwriters to use the Prospectus, as
from time to time amended or supplemented, in connection with the sale of
the Notes in accordance with the applicable provisions of the Act and the
applicable rules and regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
16
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Notes for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period
in which a prospectus is required by law to be delivered by an Underwriter
or dealer, in keeping such qualifications in good standing under said
securities or blue sky laws; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to
continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the Notes.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports
filed with the Commission.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the date hereof, the Company
will make generally available to its security holders an earnings statement
in accordance with Section 11(a) of the Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs
and expenses incident to (i) the preparation, printing and filing with the
Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus, (ii) the furnishing to the Underwriters of
copies of any Preliminary Prospectus and of the several documents required
by paragraph (c) of this Section 5 to be so furnished, (iii) the printing
---------
of this Agreement and related documents delivered to the Underwriters, (iv)
the preparation, printing and filing of all supplements and amendments to
the Prospectus referred to in paragraph (d) of this Section 5, (v) the
---------
furnishing to you and the Underwriters of the reports and information
referred to in paragraph (g) of this Section 5 and (vi) the
17
printing and issuance of the Notes, including the Trustee's fees.
(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including
counsel fees and disbursements and cost of printing memoranda for the
Underwriters) paid by or for the account of the Underwriters or their
counsel in qualifying the Notes under state securities or blue sky laws and
in the review of the offering by the NASD.
(k) No offering, sale, short sale or other disposition of any Common
Stock of the Company or other securities convertible into or exchangeable
for Common Stock or derivative of Common Stock will be made for a period of
90 days after the date of this Agreement, directly or indirectly, by the
Company otherwise than hereunder or with the prior written consent of
Xxxxxxxxx & Xxxxx LLC, except that the Company may, without such consent,
(i) issue shares to directors pursuant to the Company's restricted stock
plan, (ii) grant options pursuant to the Company's existing stock option
plans, and (iii) issue shares upon the exercise of options and warrants or
the conversion of securities outstanding on the date of this Agreement.
(l) The Company will use its best efforts to list, subject to notice of
issuance, the Notes on The Nasdaq SmallCap Market and the Common Stock
issuable upon conversion of the Notes on The Nasdaq National Market.
(m) The Company has caused each executive officer and director of the
Company and the holder of the Existing Subordinated Note to furnish to you,
on or prior to the date of this Agreement, a letter or letters, in form and
substance satisfactory to the Representative, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose of
any shares of Common Stock or other capital stock of the Company, or any
other securities convertible, exchangeable or exercisable for shares of
Common Stock or derivative of shares of Common Stock owned by such person
or request the registration for the offer or sale of any of the foregoing
(or as to which such person has the right to direct the disposition of) for
a period of 90 days after the date of this Agreement, directly or
18
indirectly, except with the prior written consent of Xxxxxxxxx & Xxxxx LLC
("Lockup Agreements").
-----------------
(n) The Company will apply the net proceeds from the sale of the Notes
for the purposes set forth in the Prospectus.
(o) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not
and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Act from and against any and
all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the common
------------
law or otherwise, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement), or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus or the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged
19
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (iii) any pre-existing agreement, understanding or
relationship between the Company and any other third party relating to the
public offering of securities pursuant to the Registration Statement; provided,
however, that (1) the indemnity agreements of the Company contained in this
paragraph (a) shall not apply to any such losses, claims, damages, liabilities
or expenses if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished in
writing to the Company by or on behalf of any Underwriter for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto and (2) the indemnity agreements
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Notes which
is the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Notes a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person (excluding the documents incorporated
therein by reference) and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
noncompliance by the Company with paragraph (c) of Section 5 hereof. The
---------
indemnity agreements of the Company contained in this paragraph (a) and the
representations and warranties of the Company contained in Section 1 hereof
---------
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Notes.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Act, from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Act, the Exchange Act, or the common law or
otherwise
20
and to reimburse each of them for any legal or other expenses (including, except
as otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of such
indemnifying Underwriter for use in the Registration Statement or the Prospectus
or any such amendment thereof or supplement thereto. The indemnity agreement of
each Underwriter contained in this paragraph (b) shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the delivery of and payment for the
Notes.
(c) Each party indemnified under the provision of paragraphs (a) and (b) of
this Section 6 agrees that, upon the service of a summons or other initial legal
---------
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against, it in respect of which indemnity may be sought on account
of any indemnity agreement contained in such paragraphs, it will promptly give
written notice (the "Notice") of such service or notification to the party or
------
parties from whom indemnification may be sought hereunder. No indemnification
provided for in such paragraphs shall be available to any party who shall fail
so to give the Notice if the party to whom such Notice was not given was unaware
of the action, suit,
21
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (the "Notice of Defense") to the indemnified
-----------------
party, to assume (alone or in conjunction with any other indemnifying party or
parties) the entire defense of such action, suit, investigation, inquiry or
proceeding, in which event such defense shall be conducted, at the expense of
the indemnifying party or parties, by counsel chosen by such indemnifying party
or parties and reasonably satisfactory to the indemnified party or parties;
provided, however, that (i) if the indemnified party or parties reasonably
determine that there may be a conflict between the positions of the indemnifying
party or parties and of the indemnified party or parties in conducting the
defense of such action, suit, investigation, inquiry or proceeding or that there
may be legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then counsel for the indemnified party or parties shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interests of the indemnified party or parties and (ii) in any
event, the indemnified party or parties shall be entitled to have counsel chosen
by such indemnified party or parties participate in, but not conduct, the
defense. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 6 for any legal or other expenses
---------
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying
22
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 6 is unavailable or
---------
insufficient to hold harmless an indemnified party under paragraph (a) or (b) of
this Section 6, then each indemnifying party, in lieu of indemnifying such
---------
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 6 (i) in such proportion as
---------
is appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each indemnifying party in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Notes received by the Company and
the total underwriting discount received by the Underwriters, as set forth in
the table on the cover page of the Prospectus, bear to the aggregate public
offering price of the Notes. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by each indemnifying party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this
23
paragraph (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof, referred
to in the first sentence of this paragraph (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigation, preparing to defend or defending against any
action or claim which is the subject of this paragraph (d). Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discount applicable to the Notes
purchased by such Underwriter. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a summons or
other initial legal process upon it in any action instituted against it in
respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 6).
---------
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
7. TERMINATION. This Agreement may be terminated by you at any time prior to
the Closing Date by giving written notice to the Company if after the date of
this Agreement trading in the Company's Common Stock shall have been suspended,
or if there
24
shall have occurred (i) the engagement in hostilities or an
escalation of major hostilities by the United States or the declaration of war
or a national emergency by the United States on or after the date hereof, (ii)
any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, calamity, crisis or change in economic or political conditions in the
financial markets of the United States would, in the Underwriters' judgment,
make the offering or delivery of the Notes impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, Nasdaq, or limitations on prices (other than limitations on hours or
numbers of days of trading) for securities on either such exchange or system,
(iv) the enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of, or the commencement of any legal
proceeding or investigation by any governmental or third party before any court,
legislative body, agency or other governmental authority which in the
Underwriters' opinion materially and adversely affects or will materially or
adversely affect the business or operations of the Company or the offering of
the Notes, (v) declaration of a banking moratorium by either federal or New York
State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
the Underwriters' opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 7, there shall be no liability of the Company to the Underwriters
---------
and no liability of the Underwriters to the Company; provided, however, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the performance
of the obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 5 hereof.
---------
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several
Underwriters to purchase and pay for the Notes shall be subject to the
performance by the Company of all its obligations to be performed hereunder at
or prior to the Closing Date, or any later date on which Option Notes are to be
purchased, as the case may be, and to the following further conditions:
25
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Notes hereunder and
the validity and form of the security representing the Notes, all corporate
proceedings and other legal matters incident to the foregoing, and the form
of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or
prior to the Closing Date by Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the
Underwriters.
(c) The Representatives shall have received on the Closing Date and on
the Option Closing Date, if any, the opinion of Xxxxxxxx & Xxxxxx, Ltd.,
counsel for the Company, dated the Closing Date or the Option Closing Date,
as the case may be, addressed to the Underwriters and with reproduced
copies or signed counterparts thereof for each of the Underwriters, to the
effect that:
(i)++Each of the Company and its subsidiaries incorporated in the
United States that are identified on Schedule II hereto (the "U.S.
----
Subsidiaries") is validly existing as a corporation in good standing under
------------
the laws of its respective jurisdiction of incorporation;
(ii)++The Company and each of its U.S. Subsidiaries have the requisite
corporate power to own, lease and operate their respective businesses as
described in the Prospectus; and the Company and each of its U.S.
Subsidiaries are duly qualified to do business as a foreign corporation and
are in good standing in all jurisdictions in the United States in which the
Company and its U.S. Subsidiaries are required to be qualified, except
where the failure so to qualify would not reasonably be expected to have a
Material Adverse Effect;
(iii)++The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein; and the issued and
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and nonassessable, and have
not, to
26
such counsel's knowledge, been issued in violation of any preemptive right
granted by the Company or any right of first refusal granted by the
Company;
(iv) Except as described in or contemplated by the Prospectus or in
this Agreement, to the knowledge of such counsel, 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 and there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of such stock;
and except as described in the Prospectus or in this Agreement, to the
knowledge of such counsel, no holder of any securities of the Company or
any other person has the right, contractual or otherwise, which has not
been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of,
shares of Common Stock or other securities of the Company or the right to
have any shares of Common Stock or other securities of the Company included
in the Registration Statement or the right, as a result of the filing of
the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company;
(v) The Registration Statement, the Prospectus and each amendment or
supplement thereto and document incorporated by reference therein comply as
to form in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the
financial statements and related schedules therein);
(vi) Such counsel does not know of any contracts or documents
required to be filed as exhibits to or incorporated by reference in the
Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed, incorporated by reference or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the
27
Prospectus are accurately summarized in all material respects;
(vii) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the Investment Company
Act of 1940, as amended;
(viii)++The Indenture (i)+has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company, and, assuming due authorization, execution and
delivery by the Trustee, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except (y) as
may be limited by the effects of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights and
remedies of creditors generally and (z) as may be limited by general
principles of equity, whether applied by a court of law or equity and
(ii)+has been duly qualified under, and conforms to the requirements of,
the Trust Indenture Act of 1939, as amended, in all material respects;
(ix)++The Company has all requisite corporate power and authority to
enter into this Agreement and the Indenture and to issue, sell and deliver
to the Underwriters the Notes to be issued and sold by it hereunder;
(x)++This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery by you, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
insofar as indemnification and contribution provisions may be limited by
applicable law or equitable principles, and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting the rights and remedies of creditors
generally and by general principles of equity, whether applied by a court
of law or equity;
28
(xi)++The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or, to
such counsel's knowledge, are contemplated under the Act;
(xii)++The terms and provisions of the Notes and capital stock of the
Company conform in all material respects to the descriptions thereof
contained in the Registration Statement and Prospectus, and the information
in the Prospectus under the captions "Description of Notes," "Description
of the Private Offering" and "Description of Common Stock," has been
reviewed by such counsel and accurately summarizes the matters described
therein in all material respects;
(xiii)++Assuming the application of the net proceeds of the offering
as contemplated by the Prospectus, the performance of the Company's
obligations under the Indenture and this Agreement and the consummation of
the transactions contemplated herein will not result in the breach or
violation of any of the terms and provisions, or constitute a default
under, (a) any indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, or any
material lease, contract, joint venture or other agreement or instrument to
which the Company or any of its U.S. Subsidiaries is a party or by which
the property of the Company or any of its U.S. Subsidiaries is bound, other
than such breaches or violations that would not, singularly or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (b)
the Company's or any of its U.S. Subsidiaries' charter or by-laws, (c) any
applicable statute, rule or regulation, other than such breaches or
violations that would not, singularly or in the aggregate, reasonably be
expected to have a Material Adverse Effect, or (d) to such counsel's
knowledge, any order, writ or decree of any court or governmental agency or
body having jurisdiction over the Company, any of its U.S. Subsidiaries or
over any of their respective properties or operations;
(xiv)++No authorization, approval or consent of any governmental
authority or agency is necessary in connection with consummation of the
transactions herein contemplated,
29
except such as have been obtained under the Act or such as may be required
under state or other securities or Blue Sky laws or by the NASD in
connection with the purchase and distribution of the Notes by the
Underwriters;
(xv)++To such counsel's knowledge, except as described in the
Prospectus, there are no legal or governmental proceedings pending or
threatened of a character that are required to be disclosed in the
Registration Statement by the Act or the applicable Rules and Regulations,
other than those disclosed therein;
(xvi)++To such counsel's knowledge, neither the Company nor any of its
U.S. Subsidiaries is presently in breach of, or in default under, any
indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness or any other material lease,
joint venture, contract, agreement or instrument to which the Company or
any of its U.S. Subsidiaries is a party or by which any of their respective
properties is bound, other than such breaches or defaults that would not,
singularly or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(xvii)++The Notes, assuming they are in the form of the specimen
received by such counsel, are in due and proper form; the Notes, including
the Option Notes, if any, to be sold by the Company pursuant to this
Agreement have been duly authorized and when executed and authenticated in
accordance with the provisions of the Indenture and delivered and paid for
as contemplated by this Agreement will be validly issued and outstanding,
and valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and will be entitled to the benefits
of the Indenture, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights of creditors generally and as may be
limited by general principals of equity, whether applied by a court of law
or equity; the shares of Common Stock of the Company issuable upon
conversion of the Notes in accordance with the terms of the Indenture will
have been validly issued and will be fully paid and non-assessable; and no
preemptive rights of shareholders granted by the Company exist with respect
to any of the Notes (including
30
the shares of Common Stock issuable upon conversion thereof) or the issue
and sale thereof; and
(xviii) Upon delivery of certificates for the Notes to be sold by the
Company under this Agreement and the payment therefor as contemplated by
this Agreement, valid marketable title to the Notes represented thereby
will have been acquired by the Underwriters, free and clear of all security
interests, liens, encumbrances, claims or equities whatsoever, assuming for
the purpose that the Underwriters purchased the same in good faith without
notice of any adverse claims.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that the Registration Statement,
as of the time it became effective under the Act (but after giving effect
to changes incorporated pursuant to Rule 430A under the Act), contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus or any amendment or supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and
the Registration Statement and the Prospectus, or any amendment or
supplement thereto, as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading (except that such counsel need express
no view as to financial statements, schedules and other financial
information included therein).
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or the States of Illinois
or the General Corporation Law of the State of Delaware upon opinions of
local counsel, and as to questions of fact upon representations or
certificates of officers of the Company and of government officials, in
which case their opinion is to state that they are so doing and that they
have no knowledge of any material misstatement or inaccuracy in such
opinions, representations or certificate. Copies of any opinion,
representation or
31
certificate so relied upon shall be delivered to you, as
Representative of the Underwriters, and to Underwriters' counsel.
(d) The Representatives shall have received from Xxxxxxx Xxxx &
Xxxxxxxxx, counsel for the Underwriters, an opinion dated the Closing Date
or the Option Closing Date, as the case may be, substantially to the effect
specified in subparagraphs (v), (viii), (x), (xi) and (xvii) of Paragraph
(c) of this Section 8. In addition to the matters set forth above, such
---------
opinion shall also include a statement to the effect that nothing has come
to the attention of such counsel which leads them to believe that the
Registration Statement, as of the time it became effective under the Act
(but after giving effect to changes incorporated pursuant to Rule 430A
under the Act), contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus or any
amendment or supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and the Registration Statement and the Prospectus, or
any amendment or supplement thereto, as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
other financial information included therein). With respect to such
statement, Xxxxxxx Xxxx & Xxxxxxxxx may state that their belief is based
upon the procedures set forth therein, but is without independent check and
verification.
(e) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, as the case may be, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may
be, in form and substance satisfactory to you, of KPMG Peat Marwick LLP and
Price Waterhouse LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
32
applicable accounting requirements of the Act and the related published
Rules and Regulations; and containing such other statements and information
as is ordinarily included in accountants' "comfort letters" to Underwriters
with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and
Prospectus.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Principal Financial and Accounting
Officer of the Company to the effect that, as of the Closing Date or the
Option Closing Date, as the case may be, each of them severally represents
as follows:
(i)++The Registration Statement has become effective under the Act and
no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for such purpose have been taken or
are, to such officer's knowledge, contemplated by the Commission.
(ii)++Such officer does not know of any litigation instituted or
threatened against the Company of a character required to be disclosed in
the Registration Statement which is not so disclosed; such officer does not
know of any material contract required to be filed as an exhibit to the
Registration Statement which is not so filed; and the representations and
warranties of the Company contained in Section 1 hereof are true and
---------
correct as of the Closing Date or the Option Closing Date, as the case may
be, in all material respects (or in all respects in the case of those
representations and warranties that are already qualified as to
materiality).
(iii)++Such officer has examined the Registration Statement and the
Prospectus and, in such officer's opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration
Statement, including any document incorporated by reference therein, were
true and correct in all material respects, and such Registration Statement
and Prospectus or any document incorporated by reference therein did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and, in
such officer's opinion, since the effective date of the Registration
Statement, no event has occurred which should have been set forth in a
supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment.
(g) The Company shall have furnished to the Representative such further
certificates and documents confirming the representations and warranties
contained herein and related matters as the Representative may reasonably
have requested.
(h) The Firm Notes and Option Notes, if any, and the Common Stock
issuable upon conversion of the Notes, have been approved for designation
upon notice of issuance on The Nasdaq SmallCap Market and The Nasdaq
National Market, respectively.
(i) All filings required to have been made pursuant to the Rules and
Regulations under the Act have been made.
(j) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective adverse change in
or affecting the condition, financial or otherwise, of the Company or the
earnings, business affairs, properties, management or business prospects of
the Company whether or not arising in the ordinary course of business.
(k) The Company shall have delivered to you the Lockup Agreements.
The opinions and certificates mentioned in this Agreement shall be deemed to be
in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Representative and to Xxxxxxx Xxxx &
Xxxxxxxxx, counsel for the Underwriters.
In case any of the conditions specified in this Section 8 shall not be
---------
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 5 hereof, and (ii) if this Agreement is terminated by you
---------
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein, to fulfill any of the conditions herein, or to
comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
transactions contemplated hereby.
9. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other obligations
under Section 6 of this Agreement, the Company hereby agrees to reimburse on a
---------
quarterly basis the Underwriters for all reasonable legal and other expenses
incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 6 of this Agreement, notwithstanding the absence of a
---------
judicial determination as to the propriety and enforceability of the obligations
under this Section 9 and the possibility that such payments might later be held
---------
to be improper; provided, however, that (i) to the extent any such payment is
-----------------
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
10. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This agreement shall inure to the
benefit of the Company and the several Underwriters and, with respect to the
provisions of Section 6 hereof, the several parties (in addition to the Company
---------
and the several Underwriters) indemnified under the provisions of said
Section 6, and their respective personal representatives, successors and
---------
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Notes from any of the several Underwriters.
11. NOTICES. Except as otherwise provided herein, all communications hereunder
shall be in writing and, if to the Underwriters, shall be mailed, telecopied or
delivered to Xxxxxxxxx & Xxxxx LLC, Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000; and if to the Company, shall be mailed, telecopied or delivered to it at
its office, System Software Associates, Inc., 000 Xxxx Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Chief Executive
Officer. All notices given by telecopy shall be promptly confirmed by letter.
12. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or their respective directors or officers, and (c) delivery and
payment for the Notes under this Agreement; provided, however, that if this
-----------------
agreement is terminated prior to the Closing Date, the provisions of paragraphs
(k) and (l) of Section 5 hereof shall be of no further force or effect.
---------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
SYSTEM SOFTWARE ASSOCIATES, INC.
By:______________________________
Xxxxx X. Xxxxx
Chief Executive Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC,
XXXXXX FRERES & CO. LLC
As Representatives of the several Underwriters
By Xxxxxxxxx & Xxxxx LLC
By __________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
SCHEDULE I
UNDERWRITERS
PRINCIPAL AMOUNT
OF FIRM
NOTES
UNDERWRITER TO BE PURCHASED
----------- ------------------------
Xxxxxxxxx & Xxxxx LLC
Lazard Freres & Co. LLC
TOTAL.............................. $100,000,000
SCHEDULE II
U.S. SUBSIDIARIES
JURISDICTION OF
---------------
NAME INCORPORATION
---- -------------
Astral International Corporation Massachusetts
SSA Caribbean, Inc. Delaware
SSA Japan Corporation Delaware
SSA Pacific Rim Corporation Delaware
System Software Associates (Japan) LLC Delaware
SCHEDULE 1(C)
EXCEPTIONS TO SECTION 1(C) REPRESENTATION
INACTIVE SUBSIDIARIES
JURISDICTION OF
---------------
NAME INCORPORATION
---- -------------
SSA North Central Minnesota
NofTek, N.W., Inc. d/b/a SSA Oregon
Northwest, Inc.
Priority Systems, Inc. Texas
Knight Enterprises, Inc. Nevada
