Exhibit 1.1
2,200,000 Shares
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DATA PROCESSING RESOURCES CORPORATION
Common Stock
UNDERWRITING AGREEMENT
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January ___, 1997
XXXXXXXXXX SECURITIES
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX BROTHERS
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Data Processing Resources Corporation, a
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California corporation (the "Company"), proposes to issue and sell 2,000,000
shares of its authorized but unissued Common Stock (the "Common Stock") and
a shareholder of the Company named in Schedule B annexed hereto (the
"Selling Shareholder"), propose to sell an aggregate of 200,000 shares of the
Company's issued and outstanding Common Stock to you, as underwriters (sometimes
referred to as the "Underwriters"). Said aggregate of 2,200,000 shares are
herein called the "Firm Common Shares." In addition, the Company proposes to
grant to you an option to purchase up to 280,000 additional shares of Common
Stock and the Selling Shareholder proposes to grant to you an option to
purchase up to 50,000 additional shares of Common Stock (said aggregate of
330,000 shares are herein called the "Optional Common Shares"), as provided
in Section 5 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
You have advised the Company and the Selling Shareholder that you propose
to make a public offering of your respective portions of the Common Shares on
the effective date of the registration statement hereinafter referred to, or as
soon thereafter as in your judgment is advisable.
The Company and the Selling Shareholder hereby confirm their respective
agreements with respect to the purchase of the Common Shares by you as follows:
SECTION 2. Representations and Warranties of the Company. The Company
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represents and warrants to you that:
(a) A registration statement on Form S-1 (File No. 333-__________)
with respect to the Common Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder, and
has been filed with the Commission. The Company has prepared and has filed
or proposes to file prior to the effective date of such registration
statement an amendment or amendments to such registration statement, which
amendment or amendments have been or will be similarly prepared. There
have been delivered to you two signed copies of such registration statement
and amendments, together with two copies of each exhibit filed therewith.
Conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus have been delivered to
you in such reasonable quantities as you have requested for each of you.
The Company will next file with the Commission one of the following: (i)
prior to effectiveness of such registration statement, a further amendment
thereto, including the form of final prospectus, (ii) a final prospectus in
accordance with Rules 430A and 424(b) of the Rules and Regulations or (iii)
a term sheet (the "Term Sheet") as described in and in accordance with
Rules 434 and 424(b) of the Rules and Regulations. As filed, the final
prospectus, if one is used, or the Term Sheet and Preliminary Prospectus,
if a final prospectus is not used, shall include all Rule 430A Information
and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to
you prior to the date and time that this Agreement was executed and
delivered by the parties hereto, or, to the extent not completed at such
date and time, shall contain only such specific additional information and
other changes (beyond that contained in the latest Preliminary Prospectus)
as the Company shall have previously advised you in writing would be
included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended; provided, however,
that such term shall also include (i) all Rule 430A Information deemed to
be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and (ii) any registration statement filed pursuant to Rule
462(b) of the Rules and Regulations relating to the Common Shares. 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 either (i) the prospectus relating to the Common
Shares in the form in which it is first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations or, (ii) if no filing pursuant
to Rule 424(b) of the Rules and Regulations is required, shall mean the
form of final prospectus included in the Registration Statement at the time
such registration statement becomes effective or (iii) if a Term Sheet is
used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together
with the Preliminary Prospectus included in the Registration Statement at
the time it becomes effective. The term "Rule 430A Information" means
information with respect to the Common Shares and the
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offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A of the Rules and
Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus nor
any amendment or supplement thereto, as of its respective date, did or will
include any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, no representation or warranty
contained in this subsection 2(b) shall be applicable to information
contained in or omitted from any Preliminary Prospectus, the Registration
Statement, the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
or on behalf of any Underwriter specifically for use in the preparation
thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed
in Exhibit 21 to the Registration Statement. 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 and lease their respective properties and conduct their
respective businesses as described in the Prospectus; the Company and each
of its subsidiaries are in possession of and operating in compliance with
all authorizations, licenses, permits, consents, certificates and orders
material to the conduct of their respective businesses, all of which are
valid and in full force and effect. The Company and each of its
subsidiaries are duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the ownership or leasing
of properties or the conduct of their respective businesses requires such
qualification, except for jurisdictions in which the failure to so qualify
would not have a material adverse effect upon the Company and its
subsidiaries, considered as one entity; and no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or
qualification. All of the issued and outstanding capital stock of each
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or claim.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of
or subject to any preemptive rights or other rights to subscribe for or
purchase securities, and conform to the description thereof contained in
the Prospectus.
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Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company, and the related notes thereto, included in the
Prospectus, neither the Company nor any of its subsidiaries has outstanding
any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus
and other stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth in the Prospectus accurately
and fairly presents the information required to be shown with respect to
such plans, arrangements, options and rights.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Common Shares
by the Company pursuant to this Agreement. No shareholder of the Company
has any right which has not been waived to require the Company to register
the sale of any shares owned by such shareholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the shareholders or the Board of Directors of the Company will
be required for the transfer and sale of the Common Shares to be sold by
the Selling Shareholders or the issuance and sale of the Common Shares to
be sold by the Company as contemplated herein.
(f) The Company has full legal right, and corporate power and
authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company in accordance with its terms, except as enforceability may be
limited by general principles of equity, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights and
except for provisions relating to indemnity or contribution for liabilities
arising under the Act. The execution and performance of this Agreement by
the Company and the consummation of the transactions herein contemplated
(i) will not violate any provisions of the articles of incorporation or
bylaws of the Company or any of its subsidiaries and (ii) will not conflict
with, result in the breach or violation of, or constitute, either by itself
or upon notice or the passage of time or both, a default under any material
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company, any of its subsidiaries
or any of the property or assets of the Company or any of its subsidiaries.
No consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance with the
Act, the Blue Sky laws applicable to the public offering of the Common
Shares by you and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
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(g) Deloitte & Touche LLP and Xxxxxx Xxxxxxxx LLP, who have expressed
their opinion with respect to certain financial statements and schedules
filed with the Commission as a part of the Registration Statement and
included in the Prospectus and in the Registration Statement, are
independent accountants as required by the Act and the Rules and
Regulations.
(h) The historical and pro forma financial statements and schedules of
the Company and the related notes thereto filed as a part of the
Registration Statement or included in the Prospectus comply as to form in
all material respects with the requirements of the Securities Act and
present fairly the financial position of the Company and its subsidiaries
as of the respective dates of such financial statements and schedules, and
the results of operations and changes in financial position of the Company
and its subsidiaries for the respective periods covered thereby. Such
statements, schedules and related notes have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
as certified by Deloitte & Touche LLP. The pro forma financial statements
have been prepared on a basis consistent with the historical statements,
except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis and present fairly the historical
and proposed transactions contemplated by the Prospectus and this
Agreement. The other financial statements and schedules and the related
notes thereto filed as a part of the Registration Statement or included in
the Prospectus comply as to form in all material respects with the
requirements of the Securities Act and present fairly the financial
position of the entities purported to be shown thereby as of the respective
dates of such financial statements and schedules, and the results of
operations and changes in financial position of the entities purported to
be shown thereby for the respective periods covered thereby. No additional
financial statements or schedules are required to be included in the
Registration Statement. The historical selected financial data and pro
forma financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Financial Data," fairly present the
information set forth therein on the basis stated in the Registration
Statement.
(i) Neither the Company nor any of its subsidiaries is in violation or
default of any provision of its articles of incorporation or bylaws or in
breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties may be bound or affected, nor any
provision of any judgment, decree or order against the Company or any of
its subsidiaries, except where such breach or default would not materially
adversely affect the Company and its subsidiaries, considered as one
entity.
(j) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The descriptions of the
contracts described in the Prospectus are accurate and complete; all such
contracts are in full force and effect on the date hereof, and none of the
Company, its subsidiaries or, to the best of the Company's knowledge, any
other party is in breach of or default under any of such contracts.
(k) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its subsidiaries is or
may be the subject, or related to environmental or discrimination
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matters, which actions, suits or proceedings might, individually or in the
aggregate, prevent or adversely affect the transactions contemplated by
this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
prospects of the Company and its subsidiaries, considered as one entity,
and no labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the best of the Company's knowledge, is imminent
which might be expected to affect adversely such condition, properties,
business, results of operations or prospects. Neither the Company nor any
of its subsidiaries is a party or subject to the provisions of any
injunction, judgment, decree or order of any court regulatory body,
administrative agency or other governmental body.
(l) The Company and each of its subsidiaries have good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are in the aggregate not material in
amount to the Company and its subsidiaries, considered as one entity, and
do not adversely affect the use made and proposed to be made of such
property by the Company or such subsidiary. The Company and each of its
subsidiaries hold their respective leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company and its subsidiaries, considered as
one entity. Except as disclosed in the Prospectus, the Company and each of
its subsidiaries own or lease all such properties as are necessary to the
operations of the Company and its subsidiaries as now conducted or as
proposed to be conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, indirect, direct or contingent, or entered into any material
verbal or written agreement or other transaction which is not in the
ordinary course of business or which could result in a material reduction
in the future earnings of the Company and its subsidiaries, considered as
one entity; (ii) neither the Company nor any of its subsidiaries has
sustained any material loss or interference with its business or properties
from fire, flood, windstorm, accident or other calamity, whether or not
covered by insurance; (iii) neither the Company nor any of its subsidiaries
has paid or declared any dividends or other distributions with respect to
its capital stock and neither the Company nor any of its subsidiaries is in
default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock (other
than upon the sale of the Common Shares hereunder and upon the exercise of
options described in the Registration Statement) or indebtedness material
to the Company and its subsidiaries (other than in the ordinary course of
business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties, results of
operations or prospects of the Company and its subsidiaries, considered as
one entity.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, (i) the Company and each of its subsidiaries have sufficient
trademarks, trade names, patent rights, mask works, copyrights, licenses,
approvals and governmental authorizations to conduct their respective
businesses as now conducted; (ii) the expiration of any trademarks, trade
names, patent rights, mask works, copyrights, licenses, approvals or
governmental authorizations
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would not have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company and
its subsidiaries, considered as one entity; and (iii) the Company has no
knowledge of any material infringement by it or any of its subsidiaries of
trademark, trade name rights, patent rights, mask works, copyrights,
licenses, trade secret or other similar rights of others, and there is no
claim being made against the Company or any of its subsidiaries regarding
trademark, trade name, patent, mask work, copyright, license, trade secret
or other infringement which could have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company or any of its subsidiaries.
(o) Neither the Company nor any of its subsidiaries has been advised,
or has any reason to believe, that it is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business (whether U.S. or foreign),
including, without limitation, all applicable local, state, federal and
foreign environmental laws and regulations; except where failure to be so
in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of
the Company and its subsidiaries, considered as one entity.
(p) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes
shown as due thereon, and, except as disclosed in a disclosure schedule
provided by the Company to you, the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the
Company or any of its subsidiaries which could materially and adversely
affect the business, operations or properties of the Company and its
subsidiaries, considered as one entity.
(q) The Company is not, and upon receipt and pending application of
the net proceeds from the sale of the Common Stock in the manner described
in the Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Prospectus, the
Registration Statement and the other materials permitted by the Act.
(s) The Company and each of its subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their respective
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.
(t) To the best of the Company's knowledge after due inquiry, neither
the Company nor any of its subsidiaries has at any time during the last
five years (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law,
or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
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(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Common Shares.
(v) The Common Shares have been approved for listing on the Nasdaq
National Market, subject to notice of issuance.
(w) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba in
violation of Section 517.075 of the Florida Statutes.
SECTION 3. Representations, Warranties and Covenants of the Selling
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Shareholder.
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(a) The Selling Shareholder represents and warrants to, and agrees
with, you that:
(i) Such Selling Shareholder has, and on the First Closing Date
hereinafter mentioned will have, good and marketable title to the
Common Shares proposed to be sold by such Selling Shareholder
hereunder on such Closing Date and full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver
such Common Shares hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, equities, security interests,
restrictions and claims whatsoever; and upon delivery of and payment
for such Common Shares hereunder, the Underwriters will acquire good
and marketable title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever.
(ii) Such Selling Shareholder has executed and delivered a Power
of Attorney and caused to be executed and delivered on its behalf a
Custody Agreement (hereinafter collectively referred to as the
"Shareholders Agreement"), and in connection herewith such Selling
Shareholder further represents, warrants and agrees that such Selling
Shareholder has deposited in custody, under the Shareholders
Agreement, with the agent named therein (the "Agent") as custodian,
certificates in negotiable form for the Common Shares to be sold
hereunder by such Selling Shareholder, for the purpose of further
delivery pursuant to this Agreement. Such Selling Shareholder agrees
that the Common Shares to be sold by such Selling Shareholder on
deposit with the Agent are subject to the interests of the Company and
the Underwriters, that the arrangements made for such custody are to
that extent irrevocable, and that the obligations of such Selling
Shareholder hereunder shall not be terminated, except as provided in
this Agreement or in the Shareholders Agreement, by any act of such
Selling Shareholder, by operation of law, by the death or incapacity
of such Selling Shareholder or by the occurrence of any other event.
If the Selling Shareholder should die or become incapacitated, or if
any other event should occur, before the delivery of the Common Shares
hereunder, the documents evidencing Common Shares then on deposit with
the Agent shall be delivered by the Agent in accordance with the terms
and conditions of this Agreement as if such death, incapacity or other
event had not occurred, regardless of whether or not the Agent shall
have received notice thereof. This Agreement and the Shareholders
Agreement
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have been duly executed and delivered by or on behalf of such Selling
Shareholder and the form of such Shareholders Agreement has been
delivered to you.
(iii) The performance of this Agreement and the Shareholders
Agreement and the consummation of the transactions contemplated hereby
and by the Shareholders Agreement will not result in a breach or
violation by such Selling Shareholder of any of the terms or
provisions of, or constitute a default by such Selling Shareholder
under, any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement
or instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder or any of its properties is bound, any
statute, or any judgment, decree, order, rule or regulation of any
court or governmental agency or body applicable to such Selling
Shareholder or any of its properties.
(iv) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Shares.
(v) Each Preliminary Prospectus and the Prospectus, insofar as it
has related to such Selling Shareholder, has conformed in all material
respects to the requirements of the Act and the Rules and Regulations
and has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein not misleading in light of the circumstances under which they
were made; and neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, in each case as it relates to
such Selling Shareholder, will include any untrue statement of a
material fact or to omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. Should such Selling Shareholder become aware that either
the Registration Statement or the Prospectus or any amendment or
supplement thereto, as it relates to the Selling Shareholder, contains
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, the Selling Shareholder will promptly advise
you thereof.
(vi) Such Selling Shareholder is not aware that any of the
representations or warranties made by the Company and set forth in
Section 2 above is untrue or inaccurate.
(b) The Selling Shareholder agrees with the Company and the
Underwriters not to offer to directly or indirectly sell, sell, contract to
sell, pledge, grant any rights with respect to or otherwise dispose of any
shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock, for a period of 90 days after the first date
that any of the Common Shares are released by you for sale to the public,
without the prior written consent of Xxxxxxxxxx Securities, which consent
may be withheld at the sole discretion of Xxxxxxxxxx Securities.
SECTION 4. Representations and Warranties of the Underwriters. The
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Underwriters represent and warrant to the Company that the information set forth
(i) on the cover page of the
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Prospectus with respect to price, underwriting discounts and commissions and
terms of offering, (ii) with respect to stabilization and overallotment set
forth on the inside cover page of the Prospectus and (iii) under "Underwriting"
in the Prospectus was furnished to the Company by and on behalf of the
Underwriters for use in connection with the preparation of the Registration
Statement and the Prospectus and is correct in all material respects.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
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the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, (i) the Company agrees to issue and
sell to the Underwriters 2,000,000 of the Firm Common Shares and (ii) the
Selling Shareholder agrees to sell to the Underwriters an aggregate of 200,000
of the Firm Common Shares. The Underwriters agree, severally and not jointly, to
purchase from the Company and the Selling Shareholder, respectively, the number
of Firm Common Shares described below. The purchase price per share to be paid
by the Underwriters to the Company and to the Selling Shareholder,
respectively, shall be $_________ per share.
The obligation of each Underwriter to the Company shall be to purchase from
the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 2,000,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Shareholder shall be to purchase from the Selling
Shareholder that number of full shares which (as nearly as practicable, as
determined by you) bears to 200,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) under the Securities Exchange Act of 1934, after
4:30 p.m. Washington D.C. time, the fourth) full business day following the
first date that any of the Common Shares are released by you for sale to the
public, as you shall designate by at least 48 hours prior notice to the Company
(the "First Closing Date"); provided, however, that if the Prospectus is at any
time prior to the First Closing Date recirculated to the public, the First
Closing Date shall occur upon the later of the third or fourth, as the case may
be, full business day following the first date that any of the Common Shares are
released by you for sale to the public or the date that is 48 hours after the
date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Shareholder to you, for your respective
accounts with respect to the Firm Common Shares to be sold by the Company and by
the Selling Shareholder against payment by you, for your respective accounts of
the purchase price therefor by certified or official bank checks payable in
immediately available funds to the order of the Company and of the Agent in
proportion to the number of Firm Common Shares to be sold by the Company and the
Selling Shareholder, respectively. The certificates for the Firm Common Shares
shall be registered in such names and denominations as you shall have requested
at least two full business days prior to the First Closing Date, and shall be
made available for checking and packaging on the business day preceding the
First Closing Date at such location in New York, New York as may be designated
by you. Time shall be
10
of the essence, and delivery at the time and place specified in this Agreement
is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company and the Selling Shareholder hereby grant an option to the Underwriters
to purchase, severally and not jointly, up to an aggregate of 280,000 and
50,000 Optional Common Shares, respectively, at the purchase price per
share to be paid for the Firm Common Shares, for use solely in covering any
over-allotments made by you for the account of the Underwriters in the sale and
distribution of the Firm Common Shares. If the Underwriters exercise such
option, the Company agrees to sell to the Underwriters an aggregate of
280,000 Optional Common Shares and the Selling Shareholder agrees to sell to the
Underwriters in the respective amounts set forth in Schedule B attached hereto,
an aggregate of 50,000 Optional Common Shares. If the option granted
hereby is exercised in part, the respective number of Optional Common Shares to
be sold by the Company and the Selling Shareholder shall be determined on a
pro rata basis in the same proportion as (x) the number of Optional Common
Shares that the Company or such Selling Shareholder would have sold had the
option been exercised in whole bears to (y) the total number of Optional Common
Shares that would have been sold had the option been exercised in whole, with
such adjustments made by you as are necessary to avoid fractional shares. The
option granted hereunder may be exercised at any time (but not more than once)
within 30 days after the first date that any of the Common Shares are released
by you for sale to the public, upon notice by you to the Company and the Selling
Shareholder setting forth the aggregate number of Optional Common Shares as to
which the Underwriters are exercising the option, the names and denominations in
which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date shall not be earlier than three nor later than four full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Company and
the Selling Shareholder pursuant to such notice of exercise by a fraction, the
numerator of which is the number of Firm Common Shares to be purchased by such
Underwriter as set forth opposite its name in Schedule A and the denominator of
which is the total number of Firm Common Shares (subject to such adjustments to
eliminate any fractional share purchases as you in your discretion may make).
Certificates for the Optional Common Shares will be made available for checking
and packaging on the business day preceding the Second Closing Date at such
location in New York, New York as may be designated by you. The manner of
payment for and delivery of the Optional Common Shares shall be the same as for
the Firm Common Shares purchased from the Company and the Selling Shareholder as
specified in the two preceding paragraphs. At any time before lapse of the
option, you may cancel such option by giving written notice of such cancellation
to the Company and the Selling Shareholder. If the option is cancelled or
expires unexercised in whole or in part, the Company will deregister under the
Act the number of Optional Common Shares as to which the option has not been
exercised.
Subject to the terms and conditions hereof, you propose to make a public
offering of their respective portions of the Common Shares as soon after the
effective date of the Registration Statement as in your judgment is advisable
and at the public offering price set forth on the cover page of and on the terms
set forth in the final prospectus, if one is used, or on the first page of the
Term Sheet, if one is used.
11
Not later than 4:00 p.m. on the business day following the date the Common
Shares are released by you for sale to the public, the Company shall deliver or
cause to be delivered copies of the Prospectus in such quantities and at such
places as you shall request.
SECTION 6. Covenants of the Company. The Company covenants and agrees
------------------------
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly
advise you in writing (i) of the receipt of any comments of the Commission,
(ii) of any request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information,
(iii) when the Registration Statement shall have become effective, and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose. If the Commission shall enter any such stop
order at any time, the Company will use its best efforts to obtain the
lifting of such order as soon as practicable. The Company will not file
any amendment or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus
of which you have not been furnished with a copy a reasonable time prior to
such filing or to which you reasonably object or which is not in compliance
with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable you to continue the distribution of the Common Shares
and will use its best efforts to cause the same to become effective as
promptly as possible. The Company will fully and completely comply with
the provisions of Rule 430A of the Rules and Regulations with respect to
information omitted from the Registration Statement in reliance upon such
Rule.
(c) Within the time during which a prospectus relating to the Common
Shares is, in the opinion of counsel for the Underwriters or counsel for
the Company, required under the Act to be delivered in connection with
sales by an Underwriter or dealer, the Company will comply as far as it is
able with all requirements imposed upon it by the Act and by the Rules and
Regulations, as from time to time are in force, so far as necessary to
permit the continuance of sales of or dealings in the Common Stock as
contemplated by the provisions hereof and the Prospectus. If during such
period any event occurs, as a result of which the Prospectus, as then
amended or supplemented would include an untrue statement of a material
fact, or omit to state a material fact necessary to make the statements
therein, in light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend or supplement the Registration
Statement or Prospectus to comply with the Act, the Company will promptly
notify you and will amend or supplement the Registration Statement or
Prospectus (at the expense of the Company) so as to correct such statement
or omission or effect such statement or omission or effect such compliance.
12
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you or mail to your order
copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents in each
case as soon as available and in such quantities as you and the Selling
Shareholder may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the Blue Sky laws of such jurisdictions as you
designate, will comply with such laws and will continue such
qualifications, registrations and exemptions in effect so long as
reasonably required for the distribution of the Common Shares. The Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise you promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public
accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Xxxxxxxxxx Securities or each of you, acting jointly,
(which consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities or you, as the case may be), the Company will not, other than in
connection with an acquisition by the Company (provided that any securities
issued in connection therewith are subject to the restrictions provided in
Section 8(c)(vii) hereof for the remainder of such 90 day period) or
pursuant to an exercise of outstanding stock options or the grant or
issuance of options or shares pursuant to stock plans disclosed in the
Prospectus, issue, offer, sell, grant options to purchase or otherwise
dispose of any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity
security.
13
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with such
Blue Sky laws, and will continue such qualifications, registrations and
exemptions in effect for a period of five years after the date hereof.
(k) The Company will use its best efforts to list the Common Stock as
a national market system security on the Nasdaq National Market.
You may, in your sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and, unless otherwise paid by the Company, the Selling
Shareholder, agree to pay in such proportions as they may agree among
themselves all costs, fees and expenses incurred in connection with the
performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each Preliminary Prospectus and the Prospectus, and
all amendments and supplements thereto, this Agreement, the Agreement Among
UnderwriterS, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the Blue Sky laws, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in connection with,
the NASD's review and approval of the Underwriters' participation in the
offering and distribution of the Common Shares, (viii) the fees and expenses
associated with listing the Common Shares on the Nasdaq National Market, and
(ix) all other fees, costs and expenses referred to in Item 13 of Part II of the
Registration Statement. The Underwriters may deem the Company to be the primary
obligor with respect to all costs, fees and expenses to be paid by the Company
and by the Selling Shareholder. Except as provided in this Section 7, Section 9
and Section 11 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification registration or exemption under the Blue Sky laws and the Blue
Sky memorandum referred to above). This Section 7 shall not affect any
agreements relating to the payment of expenses between the Company and the
Selling Shareholder.
14
SECTION 8. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase and pay for the Firm Common Shares
on the First Closing Date and the Optional Common Shares on the Second Closing
Date shall be subject to the accuracy of the representations and warranties on
the part of the Company and the Selling Shareholder herein set forth as of the
date hereof and as of the First Closing Date or the Second Closing Date, as the
case may be, to the accuracy of the statements of Company officers and the
Selling Shareholder made pursuant to the provisions hereof, to the performance
by the Company and the Selling Shareholder of their respective obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m. (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares,
not later than 10 p.m.), Washington, D.C. Time, on the date of this
Agreement, or at such later time as shall have been consented to by you; if
the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and Regulations; and prior to such Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company, the
Selling Shareholder or you, shall be contemplated by the Commission; and
any request of the Commission for inclusion of additional information in
the Registration Statement, or otherwise, shall have been complied with to
your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i)
there shall not have been any change in the capital stock (other than
pursuant to the exercise of outstanding options or the grant or issuance of
options or shares pursuant to stock plans disclosed in the Prospectus) of
the Company or any of its subsidiaries or any material change in the
indebtedness (other than in the ordinary course of business) of the Company
or any of its subsidiaries, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material verbal or written
agreement or other transaction shall have been entered into by the Company
or any of its subsidiaries, which is not in the ordinary course of business
or which could result in a material reduction in the future earnings of the
Company and its subsidiaries, considered as one entity, (iii) no loss or
damage (whether or not insured) to the property of the Company or any of
its subsidiaries shall have been sustained which materially and adversely
affects the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries, considered as
one entity, (iv) no legal or governmental action, suit or proceeding
affecting the Company or any of its subsidiaries which is material to the
Company and its subsidiaries, considered as one entity, or which affects or
may affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material
change in the condition (financial or otherwise), business, management,
results of operations or prospects of the Company and its subsidiaries,
considered as one entity, which makes it impractical or inadvisable in your
judgment to proceed with the public offering or purchase the Common Shares
as contemplated hereby.
15
(c) There shall have been furnished to you, as Underwriters, on
each Closing Date, in form and substance satisfactory to you, except as
otherwise expressly provided below:
(i) An opinion of Xxxxxxx & XxXxxxxx, counsel for the Company and
the Selling Shareholder, addressed to you and dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect
that:
(1) 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, are duly qualified to do business as a foreign
corporation and are in good standing in all other jurisdictions
where the ownership or leasing of their respective properties or
the conduct of their respective businesses requires such
qualification, except for jurisdictions in which the failure to
so qualify would not have a material adverse effect on the
Company and its subsidiaries, considered as one entity, and have
full corporate power and authority to own their respective
properties and conduct their respective businesses as described
in the Registration Statement;
(2) The Common Shares have been approved for listing on the
Nasdaq National Market, subject to notice of issuance;
(3) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under California
law, and when duly countersigned by the Company's transfer agent
and registrar, and delivered to you or upon your order against
payment of the agreed consideration therefor in accordance with
the provisions of this Agreement, the Common Shares delivered by
the Company represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, and will conform in
all respects to the description thereof contained in the
Prospectus;
(4) (a) The Registration Statement has become effective
under the Act, and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been instituted or are
pending or contemplated by the Commission; any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b);
(b) The Registration Statement as of its effective
date, the Prospectus and each amendment or supplement thereto at
the time it became effective (except for the financial
statements, schedules, pro forma and other financial and
statistical data included therein and the exhibits to the
Registration Statement as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations;
16
(c) To the best of such counsel's knowledge, there are
no franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration
Statement which are not disclosed or filed, as required;
(5) The Company has full corporate right, power and
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the several Underwriters;
this Agreement has been duly and validly authorized by all
necessary corporate action by the Company, has been duly and
validly executed and delivered by and on behalf of the Company,
and is a valid and binding agreement of the Company enforceable
in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and except as to those provisions relating to
indemnity or contribution for liabilities arising under the Act,
as to which no opinion need be expressed; and no approval,
authorization, order, consent, registration, filing,
qualification, license or permit of or with any court,
regulatory, administrative or other governmental body is required
for the execution and delivery of this Agreement by the Company
or the consummation of the transactions contemplated by this
Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required under
applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the
clearance of such offering with the NASD;
(6) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with, result in the breach of, or constitute, either by
itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such
counsel to which the Company or any of its subsidiaries is a
party or may be bound or by which any of the property of the
Company or any of its subsidiaries may be subject and which is
material to the Company and its subsidiaries, considered as one
entity, or violate any of the provisions of the articles of
incorporation or bylaws, or other organizational documents, of
the Company or any of its subsidiaries or, so far as is known to
such counsel, violate any statute, judgment, decree, order, rule
or regulation of any court or governmental body having
jurisdiction over the Company or any of its subsidiaries or any
of the property of the Company or any of its subsidiaries;
(7) To the best of such counsel's knowledge, no holders of
securities of the Company have rights which have not been waived
to the registration of shares of Common Stock or other
securities, because of the filing of the Registration Statement
by the Company or the offering contemplated hereby;
17
(8) To the best of such counsel's knowledge, this Agreement
and the Shareholders Agreement have been duly authorized,
executed and delivered by or on behalf of the Selling
Shareholder; the Agent has been duly and validly authorized to
act as the custodian of the Common Shares to be sold by each such
Selling Shareholder; and the performance of this Agreement and
the Shareholders Agreement and the consummation of the
transactions herein contemplated by the Selling Shareholder will
not result in a breach of, or constitute a default under, any
indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other
agreement or instrument known to such counsel to which the
Selling Shareholder is a party or by which the Selling
Shareholder or any of properties may be bound, or violate any
statute, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental body having
jurisdiction over the Selling Shareholder or any of their
properties; and to the best of such counsel's knowledge, no
approval, authorization, order or consent of any court,
regulatory body, administrative agency or other governmental body
is required for the execution and delivery of this Agreement or
the Shareholders Agreement or the consummation by the Selling
Shareholder of the transactions contemplated by this Agreement
or the Shareholders Agreement, except such as have been obtained
and are in full force and effect under the Act and such as may be
required under the rules of the NASD and applicable Blue Sky
laws;
(9) To the best of such counsel's knowledge, the Selling
Shareholder has full right, power, and authority to enter into
this Agreement and the Shareholder Agreement and to sell,
transfer and deliver the Common Shares to be sold on such Closing
Date by the Selling Shareholder hereunder and good and
marketable title to such Common Shares so sold, free and clear of
all liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts, or other defects of title whatsoever,
has been transferred to the Underwriters (whom counsel may assume
to be bona fide purchasers) who have purchased such Common Shares
hereunder; and
(10) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement are valid and binding
agreements of the Selling Shareholder enforceable in accordance
with their terms except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and except with respect to those provisions
relating to indemnities or contributions for liabilities under
the Act, as to which no opinion need be expressed.
(11) The authorized, issued and outstanding capital stock
of the Company is as set forth under the caption "Capitalization"
in the Prospectus as of the date set forth therein; all necessary
and proper corporate proceedings have been taken in order to
authorize validly such authorized Common Stock; all outstanding
shares of Common Stock (including the Firm Common Shares and any
Optional Common Shares) have been duly and validly issued, are
18
fully paid and nonassessable, have been issued in compliance with
federal and state securities laws, were not issued in violation
of or subject to any preemptive rights or, to the best of such
counsel's knowledge, other rights to subscribe for or purchase
any securities and conform to the description thereof contained
in the Prospectus; except as described in the Prospectus, there
are no preemptive or, to the best of such counsel's knowledge,
other rights to subscribe for or purchase any of the Common
Shares to be sold by the Company hereunder;
(12) When the certificates representing the Common Shares
have been duly countersigned by the Company's transfer agent and
registrar, and delivered to the Underwriters or upon the order of
the Underwriters against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement, the
Common Shares delivered by the Company represented thereby, to
the best of such counsel's knowledge, will not have been issued
in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities.
(13) Except as disclosed in or specifically contemplated by
the Prospectus, to the best of such counsel's knowledge, there
are no outstanding options, warrants or other rights calling for
the issuance of, and no commitments, plans or arrangements to
issue, any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;
(14) To the best of such counsel's knowledge, there are no
legal or governmental actions, suits or proceedings pending or
threatened against the Company or any of its subsidiaries which
are required to be described in the Prospectus which are not
described as required; and
(15) Neither the Company nor any of its subsidiaries is in
violation or default of any provision of its articles of
incorporation or bylaws or, to the best of such counsel's
knowledge, in breach of or default with respect to any provision
of any agreement, judgment, decree, order, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other
instrument known to such counsel to which the Company or any of
its subsidiaries is a party or by which it or any of them may be
bound or any of the property of the Company or any of its
subsidiaries may be subject and which is material to the Company
and its subsidiaries, considered as one entity, nor any provision
of any judgment, decree or order against the Company or any of
its subsidiaries known to such counsel, except where such breach
or default would not materially adversely affect the Company and
its subsidiaries, considered as one entity; and, to the best of
such counsel's knowledge, the Company and each of its
subsidiaries are in compliance with all laws, rules, regulations
and statutes of any court or jurisdiction to which they are
subject except where noncompliance would not materially adversely
affect the Company and its subsidiaries, considered as one
entity.
19
In rendering such opinion, such counsel may rely on opinions of
counsel to the Selling Shareholder and as to matters of fact, on
certificates of the Selling Shareholder and of officers of the Company and
of governmental officials, in which case their opinion is to state that
they are so doing and that the Underwriters are justified in relying on
such opinions or certificates and copies of said opinions or certificates
are to be attached to the opinion. Such counsel shall also include a
statement to the effect that no facts have come to such counsel's attention
that would lead such counsel to believe that either at the effective date
of the Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus, or any such amendment or
supplement, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading (excluding financial statements,
schedules, pro forma and other financial and statistical data contained
therein).
(ii) Such opinion or opinions of Xxxxxx & Xxxxxxx, counsel for
the Underwriters, dated the First Closing Date or the Second Closing
Date, as the case may be, with respect to the incorporation of the
Company, the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Common Shares,
the Registration Statement and the Prospectus and other related
matters as you may reasonably require, and the Company and the Selling
Shareholder shall have furnished to such counsel such documents and
shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such
matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the Chairman of
the Board or President and the chief financial or accounting officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied on or prior to such
Closing Date;
(2) To the best of such officers' knowledge, the Commission
has not issued any order preventing or suspending the use of the
Prospectus or any Preliminary Prospectus filed as a part of the
Registration Statement or any amendment thereto; to the best of
such officers' knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued; and
to the best of such officers' knowledge, no proceedings for that
purpose have been instituted or are pending or contemplated under
the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus;
in such officers' opinion and to the best of such officers'
knowledge, the Registration Statement and the Prospectus and any
amendments or supplements thereto contain all statements required
to be stated therein regarding the Company; and neither
20
the Registration Statement nor the Prospectus nor any amendment
or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which should have been set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed in such
a supplement or amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, there
has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), business, properties, results of operations,
management or prospects of the Company and its subsidiaries,
considered as one entity; and no legal or governmental action,
suit or proceeding is pending or, to the best of such officers'
knowledge, threatened against the Company or any of its
subsidiaries which is material to the Company and its
subsidiaries, considered as one entity, whether or not arising
from transactions in the ordinary course of business, or which
may adversely affect the transactions contemplated by this
Agreement; since such dates and except as so disclosed, neither
the Company nor any of its subsidiaries has entered into any
verbal or written agreement or other transaction which is not in
the ordinary course of business or which could result in a
material reduction in the future earnings of the Company and its
subsidiaries, considered as one entity, or incurred any material
liability or obligation, direct, contingent or indirect, made any
change in its capital stock, made any material change in its
short-term debt or funded debt or repurchased or otherwise
acquired any of the Company's capital stock; and the Company has
not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the First Closing Date
or Second Closing Date; and
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, neither the
Company nor its subsidiaries has sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(iv) On the First Closing Date or the Second Closing Date, as the
case may be, a certificate, dated the First Closing Date or the Second
Closing Date, as the case may be, and addressed to you, signed by or
on behalf of the Selling Shareholder to the effect that the
representations and warranties of the Selling Shareholder in this
Agreement are true and correct, as if made at and as of such First
Closing Date or Second Closing Date, as the case may be, and the
Selling Shareholder has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied prior to
the First Closing Date or Second Closing Date, as the case may be.
21
(v) On the date of execution of this Agreement, and also on the
First Closing Date and the Second Closing Date, a letter addressed to
you, as the Underwriters, from Deloitte & Touche LLP, independent
accountants, the first one to be dated the date of execution of this
Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a Second Closing) to be dated the Second
Closing Date, in form and substance satisfactory to you.
(vi) On the date of execution of this Agreement, and also on the
First Closing Date and the Second Closing Date, a letter addressed to
you, as the Underwriters, from Xxxxxx Xxxxxxxx LLP, independent
accountants, the first one to be dated the date of execution of this
Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a Second Closing) to be dated the Second
Closing Date, in form and substance satisfactory to you.
(vii) On or before the First Closing Date, letters from the
Selling Shareholder, each holder of 5% or more of the Company's Common
Stock, and each director and officer of the Company, in form and
substance satisfactory to you, confirming that for a period of 90 days
after the first date that any of the Common Shares are released by you
for sale to the public, such holder, officer or director, as the case
may be, will not offer to directly or indirectly sell, offer to sell,
contract to sell, pledge, grant any rights with respect to or
otherwise dispose of any shares of Common Stock (or rights to acquire
such stock, including options, warrants or any other securities
convertible into or exchangeable for Common Stock), without the prior
written consent of Xxxxxxxxxx Securities, which consent may be
withheld at the sole discretion of Xxxxxxxxxx Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxx & Xxxxxxx, counsel for the Underwriters. The Company shall furnish
you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request. Any certificate signed by
any officer of the Company and delivered to you or to your counsel shall be
deemed to be a representation and warranty by the Company to you as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you, as Underwriters to the
Company and the Selling Shareholder without liability on the part of any
Underwriter, the Company or the Selling Shareholder, except for the expenses to
be paid or reimbursed by the Company, and the Selling Shareholder pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding any
---------------------------------------
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 8, or if the sale to the Underwriters of the Common Shares at the
First Closing is not consummated because of any refusal, inability or failure on
the part of the Company or the Selling Shareholder to perform any agreement
herein or to comply with any provision hereof, the Company agrees to reimburse
you upon demand for all out-of-pocket expenses that shall have been reasonably
incurred by you in connection with the proposed purchase and the sale of the
Common Shares, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, telegraph charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such
22
termination shall be without liability of any party to any other party except
that the provisions of this Section 9, Section 7 and Section 11 shall at all
times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You, the Company
---------------------------------------
and the Selling Shareholder will use your, its and their respective best
efforts to cause the Registration Statement to become effective, to prevent the
issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 11. Indemnification.
---------------
(a) The Company and the Selling Shareholder, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act against any
losses, claims, damages, liabilities or expenses, joint or several, to
which such Underwriter or such controlling person may become subject, under
the Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company or the
Selling Shareholder, as the case may be), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading (in the case of a Preliminary Prospectus or the Prospectus, in
light of the circumstances in which they are made); and will reimburse each
Underwriter and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending,
settling (only with the indemnifying party's written approval, as provided
above), compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that neither the Company nor the
Selling Shareholder will be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto (i) in reliance upon
and in conformity with the information furnished to the Company by the
Underwriters pursuant to Section 4 hereof or (ii) with respect to the
Underwriter from whom the person asserting the loss, claim, damage or
liability purchased securities, made in any Preliminary Prospectus if a
copy of the Prospectus (as amended or supplemented, if the Company shall
have furnished the Underwriters with such amendments or supplements thereto
on a timely basis) was not delivered by or on behalf of any of the
Underwriters to the person asserting the claim or action, if required by
law to have been so delivered by the Underwriter seeking indemnification,
at or prior to the written confirmation of the sale of the Common Shares,
and it shall be finally determined by a court of competent jurisdiction, by
a judgment not subject to appeal or review, that the Prospectus (as amended
or supplemented) would have corrected such untrue statement or omission;
and provided further that, under this Agreement, the liability of the
Selling Shareholder shall not exceed the aggregate gross proceeds received
by the Selling Shareholder upon the sale of the Common Shares by the
Selling Shareholder to the Underwriters. The Company and the
23
Selling Shareholder may agree, as among themselves and without limiting
the rights of the Underwriters under this Agreement, as to the respective
amounts of such liability for which they each shall be responsible.
In addition to their other obligations under this Section 11(a), the
Company and the Selling Shareholder agree that as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement, all as described in
this Section 11(a), they will reimburse in the manner set forth above each
Underwriter and each such controlling person on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's or
the Selling Shareholder's obligation to reimburse each Underwriter and each
such controlling person for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, each Underwriter and each such controlling
person shall promptly return it to the Company and the Selling
Shareholder, as the case may be, together with interest compounded daily,
determined on the basis of the prime rate (or other commercial lending rate
for borrowers of the highest credit standing) announced from time to time
by Bank of America NT&SA, San Francisco, California (the "Prime Rate").
Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Company or the
Selling Shareholder may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Shareholder and each person, if any,
who controls the Company or the Selling Shareholder within the meaning of
the Act against any losses, claims, damages, liabilities or expenses to
which the Company, or any such director, officer, Selling Shareholder or
controlling person may become subject, under the Act, the Exchange Act, or
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, (i) in reliance upon and in conformity
with the information furnished to the Company by the Underwriters pursuant
to Section 4 hereof or (ii) with respect to the Underwriter from whom the
person asserting the loss, claim, damage or liability purchased securities,
made in any Preliminary Prospectus if a copy of the Prospectus (as amended
or supplemented, if the Company shall have furnished the Underwriters with
such amendments or supplements thereto on a timely basis) was not delivered
by or on behalf of any of the Underwriters to the person asserting the
claim or action, if required by law to have been so delivered by the
Underwriter seeking indemnification, at or prior to the written
24
confirmation of the sale of the Common Shares, and it shall be finally
determined by a court of competent jurisdiction, by a judgment not subject
to appeal or review, that the Prospectus (as amended or supplemented) would
have corrected such untrue statement or omission, and will reimburse the
Company, or any such director, officer, Selling Shareholder or controlling
person for any legal and other expense as such expenses are reasonably
incurred by the Company, or any such director, officer, Selling Shareholder
or controlling person in connection with investigating, defending, settling
(only with the indemnifying party's written approval, as provided above),
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(b),
each Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 11(b) which relates to
information furnished to the Company by the Underwriters pursuant to
Section 4 hereof, it will reimburse the Company (and, to the extent
applicable, each officer, director, Selling Shareholder or controlling
person) on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability
of the Underwriters' obligation to reimburse the Company (and, to the
extent applicable, each officer, director, Selling Shareholder or
controlling person) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Company (and, to the extent applicable,
each officer, director, Selling Shareholder or controlling person) shall
promptly return it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within 30 days of
a request for reimbursement shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement
contained in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends
to seek indemnity from an indemnifying party, the indemnifying party will
be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting
the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the
25
defense of such action and approval by the indemnified party of counsel,
the indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate
counsel, approved by the Underwriters in the case of paragraph (a), and
approved by the indemnified parties in the case of paragraph (b),
representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is required
by its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a),
(b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Selling Shareholder and the
Underwriters from the offering of the Common Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the Selling Shareholder and the Underwriters in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company,
the Selling Shareholder and the Underwriters shall be deemed to be in the
same proportion in the case of the Company and the Selling Shareholder as
the proceeds received by the Company and by the Selling Shareholder,
respectively, for the Common Shares sold by them to the Underwriters (net
of underwriting commissions but before deducting expenses), and in the case
of the Underwriters as the underwriting commissions received by them bears
to the total of such amounts paid to the Company and to the Selling
Shareholder and received by the Underwriters as underwriting commissions.
The relative fault of the Company, the Selling Shareholder and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or
the alleged inaccurate representation and/or warranty relates to
information supplied by the Company, the Selling Shareholder or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subparagraph (c) of
this Section 11, any legal or other reasonable fees or expenses reasonably
incurred by such party in connection with investigating or defending any
action or claim. The provisions set forth in subparagraph (c) of this
Section 11 with respect to notice of commencement of any action shall apply
if a claim for contribution is to be made under this subparagraph (d);
provided, however, that no additional notice shall be required with respect
to any action for which notice has been given under subparagraph (c) for
purposes of
26
indemnification. The Company, the Selling Shareholder and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 11 were determined solely by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter
in connection with the Common Shares underwritten by it and distributed to
the public. The Selling Shareholder shall not be required to contribute any
amount in excess of the aggregate gross proceeds received by the Selling
Shareholder upon the sale of the Common Shares by the Selling Shareholder
to the Underwriters. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 11(a) and
11(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board
of Governors of the New York Stock Exchange, Inc. or pursuant to the Code
of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice
of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding
to said demand or notice is authorized to do so. Such an arbitration would
be limited to the operation of the interim reimbursement provisions
contained in Sections 11(a) and 11(b) hereof and would not resolve the
ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of such Sections 11(a) and
11(b) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and the obligation of the Company and the Selling Shareholder to sell
and deliver the Common Shares hereunder that, except as hereinafter in this
paragraph provided each of you shall purchase and pay for all the Common Shares
agreed to be purchased by you hereunder upon tender to you of all such shares in
accordance with the terms hereof. If any Underwriter or Underwriters default in
their obligations to purchase Common Shares hereunder on either the First or
Second Closing Date and the aggregate number of Common Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Closing Date does not exceed 10% of the total number of Common Shares which the
Underwriters are obligated to purchase on such Closing Date, the nondefaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Common Shares which such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and arrangements satisfactory to the
Underwriters and the Company for the purchase of such Common Shares by other
persons are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company or the Selling Shareholder, except for the expenses to be paid by the
Company pursuant to Section 7 hereof and except to the extent provided in
Section 11 hereof.
27
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the Company shall have the right to postpone the First or Second
Closing Date, as the case may be, for not more than five business days in order
that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
--------------
immediately as to Sections 7, 9, 12, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 p.m., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 p.m., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 14. Termination. Without limiting the right to terminate this
-----------
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Shareholder or by you by notice to the Company and the
Selling Shareholder at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling Shareholder
to any Underwriter (except for the expenses to be paid or reimbursed by the
Company and the Selling Shareholder pursuant to Sections 7 and 9 hereof
and except to the extent provided in Section 11 hereof) or of any
Underwriter to the Company or the Selling Shareholder (except to the
extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred
or shall have accelerated or escalated to such an extent, as, in your
judgment, to affect adversely the marketability of the Common Shares, (iii)
if any adverse event shall have occurred or shall exist which makes untrue
or incorrect in any material respect any statement or information contained
in the Registration Statement or Prospectus or which is not reflected in
the Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained
28
therein not misleading in any material respect, or (iv) if there shall have
been any development or prospective development involving particularly the
business or properties or securities of the Company or the transactions
contemplated by this Agreement, which, in your reasonable judgment, may
materially and adversely affect the Company's business or earnings and
makes it impracticable or inadvisable to offer or sell the Common Shares.
Any termination pursuant to this subsection (b) shall be without liability
on the part of any Underwriter to the Company or the Selling Shareholder
or on the part of the Company or the Selling Shareholder to any
Underwriter (except for expenses to be paid or reimbursed by the Company
and the Selling Shareholder pursuant to Sections 7 and 9 hereof and except
to the extent provided in Section 11 hereof).
SECTION 15. Failure of the Selling Shareholder to Sell and Deliver. If
-------------------------------------------------------
the Selling Shareholder shall fail to sell and deliver to the
Underwriter the Common Shares to be sold and delivered by the Selling
Shareholder at the First Closing Date under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the Selling Shareholder, either (i) terminate this Agreement without any
liability on the part of any Underwriter or, except as provided in Sections 7, 9
and 11 hereof, the Company or the Selling Shareholder, or (ii) purchase the
shares which the Company has agreed to sell and deliver in accordance with the
terms hereof. In the event of a failure by the Selling Shareholder to sell and
deliver as referred to in this Section, either you or the Company shall have the
right to postpone the First Closing Date for a period not exceeding seven
business days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected.
SECTION 16. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholder and of
the Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of its or their partners, officers or
directors or any controlling person or the Selling Shareholder, as the case may
be, and will survive delivery of and payment for the Common Shares sold
hereunder and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you at 000 Xxxxxxxxxx Xxxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: [Xxxxx Xxxxxxx], with a copy to Xxxxxx & Xxxxxxx, 000 Xxxx 0xx
Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxx Xxxxx
Xxxxxx, Esq.; and if sent to the Company or the Selling Shareholder shall be
mailed, delivered or telegraphed and confirmed to the Company at 0000 XxxXxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxxx X.
Xxxxxxx, with a copy to Xxxxxxx & XxXxxxxx, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Loss, Esq. The Company, the
Selling Shareholder or you may change the address for receipt of communications
hereunder by giving notice to the others.
SECTION 18. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations
29
hereunder. The term "successors" shall not include any purchaser of the Common
Shares as such from any of the Underwriters merely by reason of such purchase.
SECTION 19. Partial Unenforceability. The invalidity or
------------------------
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 21. General. This Agreement constitutes the entire agreement of
-------
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original and all of which shall
constitute one and the same document.
In this Agreement the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholder and you.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Shareholder represents by doing so that he has been duly appointed
as Attorney-in-fact by the Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by the Attorney-in-fact on
behalf of the Selling Shareholder will be binding on the Selling Shareholder.
30
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholder and you,
all in accordance with its terms.
Very truly yours,
DATA PROCESSING RESOURCES
CORPORATION
By:
____________________________
Xxxx Xxxxx Xxxxxx
Chief Executive Officer
SELLING SHAREHOLDER
By:
____________________________
Xxxx Xxxxx Xxxxxx
31
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written
XXXXXXXXXX SECURITIES
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX BROTHERS
By: XXXXXXXXXX SECURITIES
By:_________________________
Managing Director
By: XXXXXX X. XXXXX & CO. INCORPORATED
By:_________________________
Managing Director
By: XXXXXX BROTHERS
By:_________________________
Managing Director
32
SCHEDULE A
Number of Firm Number of Optional
Common Shares Common Shares
Name of Underwriter to be Purchased to be Sold
------------------- --------------- ------------------
Xxxxxxxxxx Securities................................
--------- ----------
Xxxxxx X. Xxxxx & Co. Incorporated...................
--------- ----------
Xxxxxx Brothers......................................
--------- ----------
TOTAL.............................................. 2,000,000 280,000
========= ==========
33
SCHEDULE B
Number of Firm Number of
Common Shares Optional Common Shares
Name of Selling Shareholder to be Sold to Be Sold
------------------------------ -------------- ----------------------
Xxxx Xxxxx Xxxxxx 200,000 50,000
TOTAL
34
