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EXHIBIT 1.1
5,500,000 Shares
CREDENTIALS SERVICES INTERNATIONAL, INC.
Common Stock
UNDERWRITING AGREEMENT
December __, 1997
PAINEWEBBER INCORPORATED
XXXXXXXXX & XXXXX, LLC
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Credentials Services International, Inc., a Delaware
corporation (the "Company"), and the persons named in Schedule I (the "Selling
Stockholders") propose to sell an aggregate of 5,500,000 shares (the "Firm
Shares") of the Company's Common Stock, $.01 par value per share (the "Common
Stock"), of which 1,050,000 shares are to be issued and sold by the Company and
an aggregate of 4,450,000 shares are to be sold by the Selling Stockholders in
the respective amounts set forth opposite their respective names in Schedule I,
in each case to you and to the other underwriters named in Schedule II
(collectively, the "Underwriters"), for whom you are acting as representatives
(the "Representatives"). The Selling Stockholders have also agreed to grant to
you and the other Underwriters an option (the "Option") to purchase up to an
additional 825,000 shares of Common Stock (the "Option
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Shares") on the terms and for the purposes set forth in Section 1(b). The Firm
Shares and the Option Shares are hereinafter collectively referred to as the
"Shares."
The initial public offering price per share for the Shares and
the purchase price per share for the Shares to be paid by the several
Underwriters shall be agreed upon by the Company, the Selling Stockholders and
the Representatives, acting on behalf of the several Underwriters, and such
agreement shall be set forth in a separate written instrument substantially in
the form of Exhibit A hereto (the "Price Determination Agreement"). The Price
Determination Agreement may take the form of an exchange of any standard form
of written telecommunication among the Company, the Selling Stockholders and
the Representatives and shall specify such applicable information as is
indicated in Exhibit A hereto. The offering of the Shares will be governed by
this Agreement, as supplemented by the Price Determination Agreement. From and
after the date of the execution and delivery of the Price Determination
Agreement, this Agreement shall be deemed to incorporate, and, unless the
context otherwise indicates, all references contained herein to "this
Agreement" and to the phrase "herein" shall be deemed to include the Price
Determination Agreement.
Each Selling Stockholder has executed and delivered a Custody
Agreement and a Power of Attorney in the form attached hereto as Exhibit B
(collectively, the "Agreement and Power of Attorney") pursuant to which each
Selling Stockholder has placed his Firm Shares in custody and appointed the
persons designated therein as a committee (the "Committee") with authority to
execute and deliver this Agreement on behalf of such Selling Stockholder and to
take certain other actions with respect thereto and hereto.
The Company and the Selling Stockholders confirm as follows
their respective agreements with the Representatives and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the respective
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions of
this Agreement, (i) the Company and each of the Selling Stockholders, severally
and not jointly, agree to sell to the several Underwriters and (ii) each of the
Underwriters, severally and not jointly, agrees to purchase from the Company
and the Selling Stockholders, at the purchase price per share for the Firm
Shares to be agreed upon by the Representatives, the Company and the Selling
Stockholders in accordance with Section 1(c) or 1(d) hereof and set forth in
the Price Determination Agreement, the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule II, plus such additional number of
Firm Shares which such Underwriter may become obligated to purchase pursuant to
Section 9 hereof. Schedule II may be attached to the Price Determination
Agreement.
(b) Subject to all the terms and conditions of
this Agreement, the Selling Stockholders grant the Option to the several
Underwriters, on a pro rata basis based
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on the number of Firm Shares to be sold by such Selling Stockholders to
purchase, severally and not jointly, up to 825,000 Option Shares from the
Selling Stockholders at the same price per share as the Underwriters shall pay
for the Firm Shares. The Option may be exercised only to cover over-allotments
in the sale of the Firm Shares by the Underwriters and may be exercised in
whole or in part at any time (but not more than once) on or before the 45th day
after the date of this Agreement (or, if the Company has elected to rely on
Rule 430A, on or before the 45th day after the date of the Price Determination
Agreement), upon written or telegraphic notice (the "Option Shares Notice") by
the Representatives to the Committee no later than 12:00 noon, New York City
time, at least two and no more than five business days before the date
specified for closing in the Option Shares Notice (the "Option Closing Date")
setting forth the aggregate number of Option Shares to be purchased and the
time and date for such purchase. On the Option Closing Date, the Selling
Stockholders will sell to the Underwriters the number of Option Shares set
forth in the Option Shares Notice, and each Underwriter will purchase such
percentage of the Option Shares as is equal to the percentage of Firm Shares
that such Underwriter is purchasing, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional shares.
(c) The initial public offering price per share
for the Firm Shares and the purchase price per share for the Firm Shares to be
paid by the several Underwriters shall be agreed upon and set forth in the
Price Determination Agreement. If the Company has elected to rely on Rule 430A
(as hereinafter defined), in the event such price has not been agreed upon and
the Price Determination Agreement has not been executed by the close of
business on the fourteenth business day following the date on which the
Registration Statement (as hereinafter defined) becomes effective, this
Agreement shall terminate forthwith, without liability of any party to any
other party except that Section 5(i), Section 5(j) and Section 7 shall remain
in effect.
(d) If the Company has elected not to rely on Rule
430A, the initial public offering price per share for the Firm Shares and the
purchase price per share for the Firm Shares to be paid by the several
Underwriters shall be agreed upon and set forth in the Price Determination
Agreement, which shall be dated the date hereof, and an amendment to the
Registration Statement containing such per share price information shall be
filed before the Registration Statement becomes effective.
2. Delivery and Payment. Delivery of the Firm Shares
shall be made to the Representatives for the accounts of the Underwriters
against payment of the purchase price by wire transfer in immediately available
funds. Such payment shall be made at 10:00 a.m., New York City time, on the
third business day (or fourth business day, if the Price Determination
Agreement is executed after 4:30 p.m., New York City time) after the date on
which the first bona fide offering of the Shares to the public is made by the
Underwriters or at such time on such other date, not later than ten business
days after such date, as may be agreed upon by the Company and the
Representatives (such date is hereinafter referred to as the "Closing Date").
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To the extent the Option is exercised, delivery of the Option
Shares against payment by the Underwriters (in the manner specified above) will
take place at the time and date (which may be the Closing Date) specified in
the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form
and shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Firm Shares and Option Shares by the
Company to the respective Underwriters shall be borne by the Company. The cost
of tax stamps, if any, in connection with the sale of the Firm Shares by the
Selling Stockholders shall be borne by the Selling Stockholders. The Company
and the Selling Stockholders will pay and save each Underwriter and any
subsequent holder of the Shares harmless from any and all liabilities with
respect to or resulting from any failure or delay in paying Federal and state
stamp and other transfer taxes, if any, which may be payable or determined to
be payable in connection with the original issuance or sale to such Underwriter
of the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The
Company and CSI Investment Partners II, L.P. ("CSI II") represent, warrant and
covenant to each Underwriter that:
(a) A registration statement (Registration No.
333-37461) on Form S-1 relating to the Shares, including a preliminary
prospectus and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder, and
has been filed with the Commission. The term "preliminary prospectus" as used
herein means a preliminary prospectus as contemplated by Rule 430 or Rule 430A
("Rule 430A") of the Rules and Regulations included at any time as part of the
registration statement. Copies of such registration statement and amendments
and of each related preliminary prospectus have been delivered to the
Representatives. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including financial statements and all exhibits and any information
deemed to be included by Rule 430A or Rule 434 of the Rules and Regulations.
If the Company files a registration statement to register a portion of the
Shares and relies on Rule 462(b) of the Rules and Regulations for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to the "Registration
Statement" shall be deemed to include the Rule 462 Registration Statement, as
amended from time
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to time. The term "Prospectus" means the prospectus as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no such
filing is required, the form of final prospectus included in the Registration
Statement at the Effective Date.
(b) On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), at all times subsequent to and including the Closing Date and, if
later, the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did or will comply in all material
respects with all applicable provisions of the Act and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act and the Rules and Regulations. On the Effective Date
and when any post-effective amendment to the Registration Statement becomes
effective, no part of the Registration Statement or any such amendment did or
will contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the amounts of the selling concession and reallowance set forth in
the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the preliminary prospectus, the Registration Statement or the
Prospectus. The Company has not distributed (except through the Underwriters)
any offering material in connection with the offering or sale of the Shares
other than the Registration Statement, the preliminary prospectus, the
Prospectus or any other materials, if any, permitted by the Act.
(c) The Company is, and at the Closing Date will
be, duly incorporated and validly existing as a corporation in good standing
under the laws of the State of Delaware. The Company has, and at the Closing
Date will have, full corporate power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by
it and to conduct its business as described in the Registration Statement and
the Prospectus. The Company is, and at the Closing Date will be, duly licensed
or qualified to do business and in good standing as a foreign corporation in
all jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification necessary. The Company does not own, and at the Closing Date
will not own, directly or indirectly, any shares of stock or any other equity
or long-term
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debt securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and correct
copies of the certificate of incorporation and of the by-laws of the Company
and all amendments thereto have been delivered to the Representatives, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date or, if later, the Option Closing Date.
(d) The Company has an authorized capitalization
as set forth in the Registration Statement and the Prospectus and all of the
outstanding shares of Common Stock have been, and the Shares to be issued and
sold by the Company to the Underwriters hereunder upon such issuance will be,
duly authorized, validly issued, fully paid and nonassessable and will not be
subject to any preemptive or similar right. The description of the Common
Stock in the Registration Statement and the Prospectus is, and at the Closing
Date will be, complete and accurate in all respects. Except as set forth in
the Prospectus, the Company does not have outstanding, and at the Closing Date
will not have outstanding, any options to purchase, or any rights or warrants
to subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock or any
such warrants, convertible securities or obligations.
(e) The financial statements and schedules
included in the Registration Statement or the Prospectus present fairly the
financial condition of the Company as of the respective dates thereof and the
results of operations and cash flows of the Company for the respective periods
covered thereby, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the entire period involved,
except as otherwise disclosed in the Prospectus. No other financial statements
or schedules of the Company are required by the Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Coopers & Xxxxxxx LLP (the "Accountants"), who have reported on such financial
statements and schedules, are independent accountants with respect to the
Company as required by the Act and the Rules and Regulations. The statements
included in the Registration Statement with respect to the Accountants pursuant
to Rule 509 of Regulation S-K of the Rules and Regulations are true and correct
in all material respects.
(f) The Company maintains a system of internal
accountings control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences.
(g) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus and
prior to the Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (i) there has not been and will not
have been any change in the capitalization of the Company, or in the
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business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company, arising for any reason whatsoever, (ii)
the Company has not incurred nor will it incur any material liabilities or
obligations, direct or contingent, nor has it entered into nor will it enter
into any material transactions other than pursuant to this Agreement and the
transactions referred to herein and (iii) the Company has not and will not have
paid or declared any dividends or other distributions of any kind on any class
of its capital stock.
(h) The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(i) Except as set forth in the Registration
Statement and the Prospectus, there are no actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any of its officers in their capacity as such, before
or by any Federal or state court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, wherein an unfavorable
ruling, decision or finding might materially and adversely affect the Company
or its business, properties, business prospects, condition (financial or
otherwise) or results of operations.
(j) The Company has, and at the Closing Date will
have, (i) all material governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus, (ii) complied in all material respects with all
laws, regulations and orders applicable to it or its business and (iii)
performed in all material respects all its obligations required to be performed
by it, and is not, and at the Closing Date will not be, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to which it is a
party or by which its property is bound or affected. To the best knowledge of
the Company, no other party under any contract or other agreement to which it
is a party is in default in any material respect thereunder. The Company is
not, and at the Closing Date will not be, in violation of any provision of its
certificate of incorporation or bylaws.
(k) No consent, approval, authorization or order
of, or any filing or declaration with, any court or governmental agency or body
is required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in connection with
the taking by the Company of any action contemplated hereby, except such as
shall have been obtained under the Act or the Rules and Regulations and such as
may be required under state securities or Blue Sky laws or the by-laws and
rules of the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the purchase and distribution by the Underwriters of the Shares
to be sold by the Company.
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(l) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of the
net proceeds to be obtained by the Company from the offering and sale of the
Shares to be sold by the Company in the manner set forth in the Prospectus
under "Use of Proceeds" will not result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company pursuant to
the terms or provisions of, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or give any other party
a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, any contract or other agreement to which
the Company is a party or by which the Company or any of its properties is
bound or affected, or violate or conflict with any judgment, ruling, decree,
order, statute, rule or regulation of any court or other governmental agency or
body having jurisdiction over the Company or any of its properties, in each
case that is reasonably likely to have a material adverse affect on the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company, or the validity, performance or
consummation of the transactions contemplated hereby; nor will such action
result in a breach or violation of any of the terms or provisions of the
certificate of incorporation or bylaws of the Company.
(m) The Company owns no real property and has
good and marketable title to all personal property and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances
or restrictions, except such as are described in the Prospectus or are not
material to the business of the Company. The Company has valid, subsisting and
enforceable leases or subleases for the properties described in the Prospectus
as leased by it, with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such properties by the
Company.
(n) There is no document or contract of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which is
not described or filed as required. All such contracts to which the Company is
a party have been duly authorized, executed and delivered by the Company,
constitute valid and binding agreements of the Company and are enforceable
against the Company in accordance with the terms thereof.
(o) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representatives was
or will be, when made, inaccurate, untrue or incorrect in any material respect.
(p) Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in, or which has
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constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(q) No holder of securities of the Company has
the right to require the Company to include such securities in the Registration
Statement being used to register the Shares.
(r) Prior to the Closing Date, the Shares will be
duly authorized for quotation on the Nasdaq National Market ("NNM") upon
official notice of issuance.
(s) The Company is in compliance with all federal,
state and local employment and labor laws, including, but not limited to, laws
relating to non-discrimination in hiring, promotion and pay of employees; no
labor dispute with the employees of the Company exists or, to the knowledge of
the Company, is imminent or threatened; and the Company is not aware of any
existing, imminent or threatened labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could result in a
material adverse effect on the condition (financial or otherwise) or on the
earnings, business, properties, business prospects or operations of the
Company.
(t) The Company owns, or is licensed or otherwise
has the full exclusive right to use, the material trademarks, service marks and
trade names (collectively, "proprietary rights") presently employed by them or
which are necessary in connection with the conduct of the business now operated
by them, and the Company has not received any written notice or does not
otherwise have actual knowledge of any material infringement of or conflict
with asserted rights of others or any other claims with respect to any
proprietary rights, or of any basis for rendering any patent and proprietary
rights invalid or inadequate to protect the interest of the Company.
(u) Neither the Company nor, to the Company's
knowledge, any employee or agent of the Company has made any payment of funds
of the Company or received or retained any funds in violation of any law, rule
or regulation of a character required to be disclosed in the Prospectus.
(v) Neither the Company nor, to the Company's
knowledge, any employee or agent of the Company has violated any of the rules
or regulations of the Federal Trade Commission applicable to tele-marketing or
direct mail solicitations the violation of which could reasonably be expected
to have a material adverse effect on the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company.
(w) The Company and, to the Company's knowledge,
each employee and agent of the Company has acted in compliance with all
applicable provisions of the Federal Fair Credit Reporting Act or any similar
act of any state, the violation of which could
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reasonably be expected to have a material adverse effect on the business,
properties, business prospects, condition (financial or otherwise) or results
of operations of the Company.
(x) The Company is not a "credit repair
organization" as such term is defined under the Federal Credit Repair
Organizations Act.
(y) The Company (i) is in compliance in all
material respects with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("Environmental Laws"), (ii) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in
compliance in all material respects with all terms and conditions of any such
permit, license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate result in a material
adverse effect on the condition (financial or otherwise) or on the earnings,
business, properties, business prospects or operations of the Company. The
term "Hazardous Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, (B) any "hazardous waste" as defined by the Resource Conservation
and Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(z) The Company maintains insurance with respect to
its properties and business of the types and in amounts generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies and businesses, all of which insurance is in full force and
effect.
(aa) The Company has filed all material federal,
state and foreign income and franchise tax returns and has paid all taxes shown
as due thereon, other than taxes which are being contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles; and the Company has no knowledge of any
material tax deficiency which has been or might be asserted or threatened
against the Company. There are no tax returns of the Company that are
currently being audited by state, local or federal taxing authorities or
agencies (and with respect to which the Company has received notice), where the
findings of such audit, if adversely determined, would result in a material
adverse effect on the condition (financial or otherwise) or on the earnings,
business, properties, business prospects or operations of the Company.
(bb) With respect to each employee benefit plan,
program and arrangement (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"))
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maintained or contributed to by the Company, or with respect to which the
Company could incur any liability under ERISA (collectively, the "Benefit
Plans"), no event has occurred and, to the best knowledge of the Company, there
exists no condition or set of circumstances, in connection with which the
Company could be subject to any liability under the terms of such Benefit Plan,
applicable law (including, without limitation, ERISA and the Internal Revenue
Code of 1986, as amended) or any applicable agreement that could materially
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company.
4. Representations and Warranties of the Selling
Stockholders. Each Selling Stockholder, severally and not jointly, represents,
warrants and covenants to each Underwriter that:
(a) Such Selling Stockholder has full power and
authority to enter into this Agreement and the Agreement and Power of Attorney.
All authorizations and consents necessary for the execution and delivery by
such Selling Stockholder of the Agreement and Power of Attorney, and for the
execution of this Agreement on behalf of such Selling Stockholder, have been
given. Each of the Agreement and Power of Attorney and this Agreement has been
duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and constitutes a valid and binding agreement of such Selling
Stockholder and is enforceable against such Selling Stockholder in accordance
with the terms thereof and hereof.
(b) Such Selling Stockholder now has, and at the
time of delivery thereof hereunder will have, (i) good and marketable title to
the Shares to be sold by such Selling Stockholder hereunder, free and clear of
all liens, encumbrances and claims whatsoever (other than pursuant to the
Agreement and Power of Attorney), and (ii) full legal right and power, and all
authorizations and approvals required by law, to sell, transfer and deliver
such Shares to the Underwriters hereunder and to make the representations,
warranties and agreements made by such Selling Stockholder herein. Upon the
delivery of and payment for such Shares hereunder, such Selling Stockholder
will deliver good and marketable title thereto, free and clear of all liens,
encumbrances and claims whatsoever.
(c) On the Closing Date or the Option Closing
Date, as the case may be, all stock transfer or other taxes (other than income
taxes) which are required to be paid in connection with the sale and transfer
of the Shares to be sold by such Selling Stockholder to the several
Underwriters hereunder will have been fully paid or provided for by such
Selling Stockholder and all laws imposing such taxes will have been fully
complied with.
(d) The performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of such Selling Stockholder pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the acceleration of any obligation
under, if such Selling Stockholder is a corporation or partnership, the
organizational documents of such
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Selling Stockholder, or, as to all such Selling Stockholders, any contract or
other agreement to which such Selling Stockholder is a party or by which such
Selling Stockholder or any of its property is bound or affected, or under any
ruling, decree, judgment, order, statute, rule or regulation of any court or
other governmental agency or body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder.
(e) No consent, approval, authorization or order
of, or any filing or declaration with, any court or governmental agency or body
is required for the consummation by such Selling Stockholder of the
transactions on its part contemplated herein and in the Agreement and Power of
Attorney, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by such Selling
Stockholder.
(f) Such Selling Stockholder has no knowledge of
any material fact or condition not set forth in the Registration Statement or
the Prospectus which has adversely affected, or may adversely affect, the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company, and the sale of the Shares proposed to be
sold by such Selling Stockholder is not prompted by any such knowledge.
(g) All information with respect to such Selling
Stockholder contained in the Registration Statement and the Prospectus (as
amended or supplemented, if the Company shall have filed with the Commission
any amendment or supplement thereto) complied and will comply with all
applicable provisions of the Act and the Rules and Regulations, contains and
will contain all statements required to be stated therein in accordance with
the Act and the Rules and Regulations, and does not and will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading.
(h) To the best knowledge of such Selling
Stockholder, the representations and warranties of the Company contained in
Section 3 are true and correct.
(i) Other than as permitted by the Act and the
Rules and Regulations, such Selling Stockholder has not distributed and will
not distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Stockholder has not taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result in, under the Act or
otherwise, or which has caused or resulted in, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Shares.
(j) Certificates in negotiable form for the Firm
Shares and Option Shares to be sold hereunder by such Selling Stockholder have
been placed in custody, for the purpose of making delivery of such Firm Shares
and Option Shares under this Agreement, under the Agreement and Power of
Attorney which appoints Xxxxxx X. Xxxxxxx as custodian
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(the "Custodian") for each Selling Stockholder. Such Selling Stockholder
agrees that the Shares represented by the certificates held in custody for him
or it under the Agreement and Power of Attorney are for the benefit of and
coupled with and subject to the interest hereunder of the Custodian, the
Committee, the Underwriters, each other Selling Stockholder and the Company,
that the arrangements made by such Selling Stockholder for such custody and the
appointment of the Custodian and the Committee by such Selling Stockholder are
irrevocable for the period of time stated in the Agreement and Power of
Attorney, and that the obligations of such Selling Stockholder hereunder shall
not be terminated by operation of law, whether by the death, disability,
incapacity or liquidation of any Selling Stockholder or the occurrence of any
other event (other than as provided in such Agreement and Power of Attorney).
If any Selling Stockholder should die, become disabled or incapacitated or be
liquidated or if any other such event should occur before the delivery of the
Shares hereunder, certificates for the Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement and
actions taken by the Committee and the Custodian pursuant to the Agreement and
Power of Attorney shall be as valid as if such death, liquidation, incapacity
or other event had not occurred, regardless of whether or not the Custodian or
the Committee, or either of them, shall have received notice thereof.
5. Agreements of the Company and the Selling
Stockholders. The Company and the Selling Stockholders (as to Sections 5(i),
(j), (o), (p), (q) and (r)) agree, severally and not jointly, with the several
Underwriters as follows:
(a) The Company will not, either prior to the
Effective Date or thereafter during such period as the Prospectus is required
by law to be delivered in connection with sales of the Shares by an Underwriter
or dealer, file any amendment or supplement to the Registration Statement or
the Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to
cause the Registration Statement to become effective, and will notify the
Representatives promptly, and will confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (iv) of
the happening of any event during the period mentioned in the third sentence of
Section 5(e) that in the judgment of the Company makes any statement made in
the Registration Statement or the Prospectus untrue or that requires the making
of any changes in the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances in which they are made,
not misleading and (v) of receipt by the Company or any representative of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If
at any time the Commission shall issue any order
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suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. The Company will use its best efforts to comply with
the provisions of and make all requisite filings with the Commission pursuant
to Rule 430A and to notify the Representatives promptly of all such filings.
(c) The Company will furnish to each
Representative, without charge, two signed copies of the Registration Statement
and of any post-effective amendment thereto, including financial statements and
schedules, and all exhibits thereto and will furnish to the Representatives,
without charge, for transmittal to each of the other Underwriters, a copy of
the Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(d) The Company will comply with all the
provisions of any undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from
time to time, the Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus or any amendment or supplement thereto
as the Representatives may reasonably request. The Company consents to the use
of the Prospectus or any amendment or supplement thereto by the several
Underwriters and by all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur
which in the judgment of the Company or counsel to the Underwriters should be
set forth in the Prospectus in order to make any statement therein, in light of
the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, the Company
will forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and will deliver to each of the Underwriters,
without charge, such number of copies thereof as the Representatives may
reasonably request.
(f) Prior to any public offering of the Shares by
the Underwriters, the Company will cooperate with the Representatives and
counsel to the Underwriters in connection with the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Representatives may request; provided, that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not
now so subject.
(g) During the period of three years commencing
on the Effective Date, the Company will furnish to the Representatives and each
other Underwriter who may so request copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital
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stock, and will furnish to the Representatives and each other Underwriter who
may so request a copy of each annual or other report it shall be required to
file with the Commission.
(h) The Company will make generally available to
holders of its securities as soon as may be practicable but in no event later
than the last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, an earnings statement (which need
not be audited but shall be in reasonable detail) for a period of 12 months
ended commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, the Company
and CSI II, jointly and severally, will pay, or reimburse if paid by the
Representatives, all costs and expenses incident to the performance of the
obligations of the Company and the Selling Stockholders under this Agreement,
including but not limited to costs and expenses of or relating to (1) the
preparation, printing and filing of the Registration Statement and exhibits
thereto, each preliminary prospectus, the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus, (2) the preparation
and delivery of certificates representing the Shares, (3) the word processing,
printing and reproduction of this Agreement, the Agreement Among Underwriters,
any Dealer Agreements, any Underwriters' Questionnaire and the Agreement and
Power of Attorney, (4) furnishing (including costs of shipping, mailing and
courier) such copies of the Registration Statement, the Prospectus and any
preliminary prospectus, and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold, (5) the listing of the
Shares on the NNM, (6) any filings required to be made by the Underwriters with
the NASD, and the reasonable fees, disbursements and other charges of counsel
for the Underwriters in connection therewith, (7) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 5(f), including the
reasonable fees, disbursements and other charges of counsel to the Underwriters
in connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (8) counsel to the Company and
counsel to the Selling Stockholders, (9) the transfer agent for the Shares and
(10) the Accountants. Nothing contained in this Section 5(i) shall be deemed
to affect the ability of the Company and the Selling Stockholders to enter into
separate arrangements amongst themselves as to which party shall be responsible
for the aforementioned fees and expenses.
(j) If this Agreement shall be terminated by the
Company or the Selling Stockholders pursuant to any of the provisions hereof
(other than pursuant to Section 9) or if for any reason the Company or any
Selling Stockholder shall be unable to perform its obligations hereunder, the
Company and CSI II, jointly and severally, will reimburse the several
Underwriters for all out-of-pocket expenses (including the fees, disbursements
and other charges of counsel to the Underwriters) reasonably incurred by them
in connection herewith.
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(k) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds to
the Company from the offering and sale of the Shares to be sold by the Company
in the manner set forth in the Prospectus under "Use of Proceeds" and shall
file such reports with the Commission with respect to the sale of the Shares
and the application of the proceeds therefrom as may be required in accordance
with Rule 463 under the Act.
(m) During the period of 180 days commencing at
the Effective Date, the Company will not, without the prior written consent of
PaineWebber Incorporated, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any Common Stock or
securities convertible into Common Stock, other than to the Underwriters
pursuant to this Agreement and other than pursuant to employee stock option
plans as in effect on the date hereof, provided, that the Company will not
grant options to purchase shares of Common Stock pursuant to such employee
stock option plans at a price less than the initial public offering price.
(n) The Company will not, and will cause each of
its executive officers, directors and each beneficial owner of more than 5% of
the outstanding shares of Common Stock to enter into agreements with the
Representatives in the form set forth in Exhibit C to the effect that they will
not, for a period of 180 days after the commencement of the public offering of
the Shares, without the prior written consent of PaineWebber Incorporated,
sell, contract to sell or otherwise dispose of any shares of Common Stock or
rights to acquire such shares (other than pursuant to employee stock option
plans or in connection with other employee incentive compensation
arrangements).
(o) The Selling Stockholders will not, for a
period of 180 days after the commencement of the public offering of the Shares,
without the prior written consent of PaineWebber Incorporated, sell, contract
to sell or otherwise dispose of any shares of Common Stock, other than pursuant
to bona fide gifts to persons who agree in writing with PaineWebber
Incorporated, to be bound by the provisions of this Section 5(o).
(p) The Selling Stockholders will not, without
the prior written consent of PaineWebber Incorporated, make any bid for or
purchase any shares of Common Stock during the 180-day period following the
date hereof.
(q) As soon as any Selling Stockholder is advised
thereof, such Selling Stockholder will advise the Representatives and confirm
such advice in writing, (1) of receipt by such Selling Stockholder, or by any
representative of such Selling Stockholder, of any communication from the
Commission relating to the Registration Statement, the Prospectus or any
preliminary prospectus, or any notice or order of the Commission relating to
the
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Company or any of the Selling Stockholders in connection with the transactions
contemplated by this Agreement and (2) of the happening of any event during the
period from and after the Effective Date that in the judgment of such Selling
Stockholder makes any statement made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(r) The Selling Stockholders will deliver to the
Representatives prior to or on the Effective Date a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form
or statement specified by Treasury Department regulations in lieu thereof).
6. Conditions of the Obligations of the Underwriters.
In addition to the execution and delivery of the Price Determination Agreement,
the obligations of each Underwriter hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement
has become effective under the Act shall be received by the Representatives not
later than 5:00 p.m., New York City time, on the date of this Agreement or at
such later date and time as shall be consented to in writing by PaineWebber
Incorporated and all filings required by Rule 424 of the Rules and Regulations
and Rule 430A shall have been made.
(b) (i) No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened by the Commission,
(ii) no order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Shares under the securities or Blue Sky
laws of any jurisdiction shall be in effect and no proceeding for such purpose
shall be pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities, (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Representatives and the
Representatives did not object thereto in good faith and (v) the
Representatives shall have received certificates, dated the Closing Date and
the Option Closing Date and signed by the Chief Executive Officer or the
Chairman of the Board of Directors of the Company and the Chief Financial
Officer of the Company (who may, as to proceedings threatened, rely upon the
best of their information and belief), to the effect of clauses (i), (ii) and
(iii).
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there shall not have been, and no development shall have occurred which could
reasonably be expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of the Company whether or not
arising from
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transactions in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the Prospectus and
(ii) the Company shall not have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not set
forth in the Registration Statement and the Prospectus, if in the judgment of
the Representatives any such development makes it impracticable or inadvisable
to consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price.
(d) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no litigation or other proceeding instituted against the
Company or any of its officers or directors in their capacities as such, before
or by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company.
(e) Each of the representations and warranties of
the Company and the Selling Stockholders contained herein shall be true and
correct in all material respects at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, as if made at the Closing Date and,
with respect to the Option Shares, at the Option Closing Date, and all
covenants and agreements herein contained to be performed on the part of the
Company and the Selling Stockholders and all conditions herein contained to be
fulfilled or complied with by the Company and the Selling Stockholders at or
prior to the Closing Date and, with respect to the Option Shares, at or prior
to the Option Closing Date, shall have been duly performed, fulfilled or
complied with.
(f) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, and satisfactory
in form and substance to counsel for the Underwriters, from Xxxxxxx, Xxxxxxx &
Xxxx, counsel to the Company and CSI II, to the effect set forth in Exhibit D.
(g) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, and satisfactory
in form and substance to counsel for the Underwriters, from Pillsbury Madison &
Sutro LLP, special securities counsel to the Company, to the effect set forth
in Exhibit E.
(h) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, and satisfactory
in form and substance to counsel for the Underwriters, from Xxxxxxx,
Xxxxxxxxxxx & Xxxx, special regulatory counsel to the Company, to the effect
set forth in Exhibit F.
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(i) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, from Shearman &
Sterling, counsel to the Underwriters, with respect to the Registration
Statement, the Prospectus and this Agreement, which opinion shall be
satisfactory in all respects to the Representatives.
(j) On the date of the Prospectus, the
Accountants shall have furnished to the Representatives a letter, dated the
date of its delivery, addressed to the Representatives and in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations and with respect to the financial and other
statistical and numerical information contained in the Registration Statement.
At the Closing Date and, as to the Option Shares, the Option Closing Date, the
Accountants shall have furnished to the Representatives a letter, dated the
date of its delivery, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the letter from the Accountants,
that nothing has come to their attention during the period from the date of the
letter referred to in the prior sentence to a date (specified in the letter)
not more than five days prior to the Closing Date and the Option Closing Date
which would require any change in the letter referred to in the prior sentence,
if it were required to be dated and delivered at the Closing Date and the
Option Closing Date.
(k) At the Closing Date and, as to the Option
Shares, the Option Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its delivery, signed
by each of the Chief Executive Officer and the Chief Financial Officer of the
Company, in form and substance satisfactory to the Representatives, to the
effect that:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus and
(A) as of the date of such certificate, such documents are true and
correct in all material respects and do not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein not untrue or misleading and (B) since the
Effective Date, no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading in any material respect;
(ii) Each of the representations and
warranties of the Company contained in this Agreement were, when
originally made, and are, at the time such certificate is delivered,
true and correct in all material respects;
(iii) Each of the covenants required
herein to be performed by the Company on or prior to the date of such
certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or
prior to the delivery of such certificate has been duly, timely and
fully complied with; and
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(iv) Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, (A) there has not been, and no development has occurred
which could reasonably be expected to result in, a material adverse
change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results
of operations of the Company, whether or not arising from transactions
in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the
Prospectus and (B) the Company has not sustained any material loss or
interference with its business or properties from fire, explosion,
flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration
Statement and the Prospectus, and
such other matters as the Representatives may reasonably request.
(l) At the Closing Date and, as to the Option
Shares, the Option Closing Date, there shall have been furnished to the
Representatives an accurate certificate, dated the date of its delivery, signed
by the Committee on behalf of each of the Selling Stockholders, in form and
substance satisfactory to the Representatives, to the effect that the
representations and warranties of each of the Selling Stockholders contained
herein are true and correct in all material respects on and as of the date of
such certificate as if made on and as of the date of such certificate, and each
of the covenants and conditions required herein to be performed or complied
with by the Selling Stockholders on or prior to the date of such certificate
has been duly, timely and fully performed or complied with.
(m) On or prior to the Closing Date, the
Representatives shall have received the executed agreements referred to in
Section 5(n).
(n) The Shares shall be qualified for sale in
such states as the Representatives may reasonably request and each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(o) Prior to the Closing Date, the Shares shall
have been authorized for quotation on the NNM upon official notice of issuance.
(p) The NASD shall have approved the underwriting
terms and arrangements and such approval shall not have been withdrawn or
limited.
(q) The Company and the Selling Stockholders
shall have furnished to the Representatives such certificates, in addition to
those specifically mentioned herein, as the Representatives may have reasonably
requested as to the accuracy and completeness at the Closing Date and the
Option Closing Date of any statement in the Registration Statement or
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the Prospectus, as to the accuracy at the Closing Date and the Option Closing
Date of the representations and warranties of the Company and the Selling
Stockholders herein, as to the performance by the Company and the Selling
Stockholders of its and their respective obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Representatives.
7. Indemnification.
(a) Each of the Company and the Selling
Stockholders, jointly and severally, will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in settlement of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim
asserted), as and when incurred, to which any Underwriter, or any such person,
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus, or in any application or other document executed by or on behalf of
the Company or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
securities laws thereof or filed with the Commission, (ii) the omission or
alleged omission to state in such document a material fact required to be
stated in it or necessary to make the statements in it not misleading or (iii)
any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or referred to
in any loss, claim, liability, expense or damage arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the Company shall
not be liable under this clause (iii) to the extent it is finally judicially
determined by a court of competent jurisdiction that such loss, claim,
liability, expense or damage resulted directly from any such acts or failures
to act undertaken or omitted to be taken by such underwriter through its gross
negligence or willful misconduct); provided that the Company and the Selling
Stockholders will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the public offering to
any person by an Underwriter and is based on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus; and
provided further that each Selling Stockholder other than CSI II (such other
Selling Stockholders being referred to herein as the "Limited Selling
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Stockholders") will be liable in any case only to the extent that any such
loss, claim, liability, expense or damage arises out of or is based upon
statements in or omissions from the Registration Statement (or any amendment
thereto) based upon information furnished to the Company by such Limited
Selling Stockholder expressly for use therein. This indemnity agreement will
be in addition to any liability that the Company or any Selling Stockholder
might otherwise have.
(b) Each Underwriter will indemnify and hold
harmless the Company, the Selling Stockholders, each person, if any, who
controls the Company or the Selling Stockholders within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, each director of the Company
and each officer of the Company who signs the Registration Statement to the
same extent as the foregoing indemnity from the Company and the Selling
Stockholders to each Underwriter, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives on behalf of such Underwriter
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have; provided, however, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions received by such Underwriter.
(c) Any party that proposes to assert the right
to be indemnified under this Section 7 will, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim is
to be made against an indemnifying party or parties under this Section 7,
notify each such indemnifying party of the commencement of such action,
enclosing a copy of all papers served, but the omission to so notify such
indemnifying party will not relieve such indemnifying party from any liability
that it may have to any indemnified party under the foregoing provisions of
this Section 7 unless, and only to the extent that, such omission results in
the forfeiture of substantive rights or defenses by the indemnifying party. If
any such action is brought against any indemnified party and it notifies the
indemnifying party of its commencement, the indemnifying party will be entitled
to participate in and, to the extent that it elects by delivering written
notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action,
with counsel satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel will be at the expense of such indemnified party
unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on advice of
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counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All
such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 7 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 7 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company, the
Selling Stockholders or the Underwriters, the Company, the Selling Stockholders
and the Underwriters will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company or the Selling Stockholders from persons
other than the Underwriters, such as persons who control the Company or the
Selling Stockholders within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who also may be
liable for contribution) to which the Company or the Selling Stockholders and
any one or more of the Underwriters may be subject in such proportion as shall
be appropriate to reflect the relative benefits received by the Company and
Selling Stockholders on the one hand and the Underwriters on the other. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. If,
but only if, the allocation provided by the foregoing sentence is not permitted
by applicable law, the allocation of
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contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Representatives on behalf of the Underwriters,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above
in this Section 7(d) shall be deemed to include, for purpose of this Section
7(d), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission to so notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent shall not be unreasonably withheld).
(e) The indemnity and contribution agreements
contained in this Section 7 and the representations and warranties of the
Company and the Selling Stockholders contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any investigation made
by or on behalf of the Underwriters, (ii) acceptance of any of the Shares and
payment therefor or (iii) any termination of this Agreement.
8. Termination. The obligations of the several
Underwriters under this Agreement may be terminated at any time prior to the
Closing Date (or, with respect to the
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Option Shares, on or prior to the Option Closing Date), by notice to the
Company from the Representatives, without liability on the part of any
Underwriter to the Company or any Selling Stockholder, if, prior to delivery
and payment for the Shares (or the Option Shares, as the case may be), in the
sole judgment of the Representatives, (i) there has been, since the respective
dates as of which information is given in the Registration Statement, any
material adverse change in the Company's business, properties, business
prospects, condition (financial or otherwise) or results of operations, (ii)
trading in any of the equity securities of the Company shall have been
suspended by the Commission, by the NASD, by an exchange that lists the Shares
or by the Nasdaq Stock Market, (iii) trading in securities generally on the New
York Stock Exchange or the Nasdaq Stock Market shall have been suspended or
limited or minimum or maximum prices shall have been generally established on
such exchange or Nasdaq Stock Market, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by such exchange or by order of
the Commission or the NASD or any court or other governmental authority, (iv) a
general banking moratorium shall have been declared by either Federal or New
York State authorities or (v) any material adverse change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation of
hostilities or declaration by the United States of a national emergency or war
or other calamity or crisis shall have occurred, the effect of any of which is
such as to make it, in the sole judgment of the Representatives, impracticable
or inadvisable to market the Shares on the terms and in the manner contemplated
by the Prospectus.
9. Substitution of Underwriters. If any one or more of
the Underwriters shall fail or refuse to purchase any of the Firm Shares which
it or they have agreed to purchase hereunder, and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of Firm
Shares, the other Underwriters shall be obligated, severally, to purchase the
Firm Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase, in the proportions which the number of Firm Shares
which they have respectively agreed to purchase pursuant to Section 1 bears to
the aggregate number of Firm Shares which all such non-defaulting Underwriters
have so agreed to purchase, or in such other proportions as the Representatives
may specify; provided that in no event shall the maximum number of Firm Shares
which any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by more than one-ninth of the number of
Firm Shares agreed to be purchased by such Underwriter without the prior
written consent of such Underwriter. If any Underwriter or Underwriters shall
fail or refuse to purchase any Firm Shares and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase exceeds one-tenth of the aggregate number of the Firm
Shares and arrangements satisfactory to the Representatives, the Company and
the Committee for the purchase of such Firm Shares 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 any Selling Stockholder
for the purchase or sale of any Shares under this Agreement. In any such case
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either the Representatives or the Company and the Committee shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be effected.
Any action taken pursuant to this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Miscellaneous. Notice given pursuant to any of the
provisions of this Agreement shall be in writing and, unless otherwise
specified, shall be mailed or delivered (a) if to the Company, at the office of
the Company, 000 Xxxx Xxxxxxxxx Xxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000,
Attention: Chief Financial Officer, (b) if to any Selling Stockholder, to CSI
Investment Partners II, L.P., Attention: Xxxxxx X. Xxxxxxx, Esq., or (c) if to
the Underwriters, to PaineWebber Incorporated at the offices of PaineWebber
Incorporated, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Corporate Finance Department. Any such notice shall be effective only upon
receipt. Any notice under Section 8 or 9 may be made by telex or telephone,
but if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of
the several Underwriters, the Company and the Selling Stockholders and of the
controlling persons, directors and officers referred to in Section 7, and their
respective successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors and
assigns" as used in this Agreement shall not include a purchaser, as such
purchaser, of Shares from any of the several Underwriters.
With respect to any obligation of the Company and the Selling
Stockholders hereunder to make any payment, to indemnify for any liability or
to reimburse for any expense, notwithstanding the fact that such obligation is
a joint and several obligation of the Company and the Selling Stockholders, the
Underwriters (or any other person to whom such payment, indemnification or
reimbursement is owed) may pursue the Company with respect thereto prior to
pursuing any Selling Stockholder.
All representations, warranties and agreements of the Company
and the Selling Stockholders contained herein or in certificates or other
instruments delivered pursuant hereto, shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter or any of their controlling persons and shall survive delivery of
and payment for the Shares hereunder.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE. This Agreement may be signed in two
or more counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
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In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
The Company, the Selling Stockholders and the Underwriters
each hereby irrevocably waive any right they may have to a trial by jury in
respect of any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
This Agreement may not be amended or otherwise modified nor
may any provision hereof be waived except by an instrument in writing signed by
the Representatives and the Company.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
CREDENTIALS SERVICES INTERNATIONAL,
INC., a Delaware corporation
By: ________________________
Name: Xxxxx X. Xxxxxxxx
Title: President
CSI INVESTMENT PARTNERS II, L.P.
By: Credentials II G.P., L.P.,
General Partner
By: Credentials II G.P., Inc.,
its General Partner
By: ________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
CANTERBURY MEZZANINE CAPITAL, L.P.,
as a Selling Stockholder
By: The Committee
By: _________________________
Name: Xxxxxx X. Xxxxxxx
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
XXXXXXXXX & XXXXX, LLC
Acting on behalf of themselves and as
the Representatives of the other several
Underwriters named in Schedule II hereof.
By: PAINEWEBBER INCORPORATED
By: ________________________
Title:
S-1
