3,000,000 SHARES
CORNELL COMPANIES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
------------------------------------
November 26, 2001
Xxxxxx Brothers Inc.
Xxxxxxxxx & Company, Inc.
First Analysis Securities Corporation
As Representatives of the several
Underwriters named in Schedule 1
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Cornell Companies, Inc., a Delaware corporation (the "COMPANY"),
proposes to sell 3,000,000 shares (the "FIRM STOCK") of the Company's Common
Stock, par value $0.001 per share (the "COMMON STOCK"). In addition, the
Company proposes to grant to the Underwriters named in SCHEDULE 1 (the
"UNDERWRITERS") an option to purchase up to 450,000 additional shares of the
Common Stock on the terms and for the purposes set forth in SECTION 2 (the
"OPTION STOCK"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "STOCK." This is to confirm the agreement
concerning the purchase of the Stock from the Company by the Underwriters.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 (No. 333-91211) with
respect to the Stock has (i) been prepared by the Company in conformity
with the requirements of the United States Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the rules and regulations (the
"RULES AND REGULATIONS") of the United States Securities and Exchange
Commission (the "COMMISSION") thereunder, (ii) been filed with the
Commission under the Securities Act, including the related preliminary
prospectus, preliminary prospectus supplement and prospectus and
prospectus supplement and (iii) become effective under the Securities
Act. The Company has filed such post-effective amendments to such
registration statement as may be required. Executed copies of such
registration statement have been delivered by the Company to you as the
representatives (the "REPRESENTATIVES") of the Underwriters. Promptly
after execution and delivery of
this Agreement, the Company will prepare and file a prospectus and a
prospectus supplement in accordance with the provisions of Rule 430A
of the Rules and Regulations and paragraph (b) of Rule 424 of the
Securities Act. As used in this Agreement, "EFFECTIVE TIME" means the
date and the time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared effective
by the Commission; "EFFECTIVE DATE" means the date of the Effective
Time; "PRELIMINARY PROSPECTUS" means the prospectus included in such
registration statement as supplemented by the prospectus supplement
filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424 of the Rules and Regulations and
used prior to the filing of the Prospectus; "REGISTRATION STATEMENT"
means such registration statement, as amended at the Effective Time,
including the documents incorporated by reference therein and all
information contained in the final prospectus and prospectus supplement
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with SECTION 5 and deemed to be a part of
the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations, and including
any registration statement registering additional shares of Common
Stock filed with the Commission pursuant to Rule 462(b) of the Rules
and Regulations; and "PROSPECTUS" means such final prospectus and
final prospectus supplement, including the documents incorporated by
reference therein, as first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations. All references in this
Agreement to financial statements and schedules and other information
which is "contained," "included" or "stated" in the Registration
Statement, any Preliminary Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which
is incorporated by reference in the Registration Statement, any
Preliminary Prospectus or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the
Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 which is incorporated by reference
in the Registration Statement, such Preliminary Prospectus or the
Prospectus, as the case may be. For purposes of this Agreement, all
references to the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement to any of the foregoing
shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system. The
Commission has not issued any order preventing or suspending the use
of any Preliminary Prospectus or Prospectus.
(b) (i) On the Effective Date, the Registration Statement
conformed, and the Prospectus and any further amendments or supplements
to the Prospectus will, when they are filed with the Commission,
conform in all material respects to the requirements of the Securities
Act and the Rules and Regulations, (ii) the Registration Statement does
not and did not, as of the Effective Date, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and (iii) the Prospectus and any further amendment or
supplement to the Prospectus does not and will not, as of the
applicable filing date, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they
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were made, not misleading; PROVIDED that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus or any further amendments or supplements
to the Registration Statement or Prospectus, in reliance upon and in
conformity with written information furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically
for inclusion therein.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which the ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken as a
whole, and has all corporate power and authority necessary to own or
hold its properties and to conduct business as described in the
Registration Statement and Prospectus.
(d) Each of the Company's subsidiaries has been duly
incorporated or formed and is validly existing as a corporation or
limited partnership in good standing under the laws of the jurisdiction
of its incorporation or formation, is duly qualified to do business in
each jurisdiction in which the ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, or materially impact
the transactions contemplated by this Agreement (a "MATERIAL ADVERSE
EFFECT").
(e) All of the outstanding shares of capital stock or other
equity interest of each of the Company's subsidiaries have been duly
and validly authorized and issued and are fully paid and non-assessable
and are 100% owned by the Company, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature.
(f) The Company has the capitalization as set forth in the
Prospectus (except as modified by subsequent issuances of shares of
capital stock of the Company, if any, contemplated under this
Agreement, pursuant to reservations, agreements or employee benefit
plans as set forth in the Prospectus or pursuant to the exercise of
options or warrants as set forth in the Prospectus); all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; and all of the
issued shares of capital stock of the Company have been listed on the
New York Stock Exchange ("NYSE").
(g) The unissued shares of the Stock to be issued and sold by
the Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and
non-assessable; and the Stock will conform to the description thereof
obtained in the Prospectus.
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(h) This Agreement has been duly authorized, executed and
delivered by the Company.
(i) The execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except for such conflicts, breaches,
violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect; (ii) conflict with or result
in any violation of the provisions of the charter or bylaws of the
Company or any of its subsidiaries; (iii) result in any violation of
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their respective properties or assets,
except for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect; and (iv) except for such
consents, approvals, authorizations, registrations or qualifications as
may be required under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
(j) There are no contracts, agreements or understandings
between the Company and any person granting such person the right
(other than rights which have been waived or satisfied), with respect
to any securities of the Company owned by such person, to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement. There are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to register or
include securities pursuant to any other registration statement filed
by the Company under the Securities Act.
(k) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act, other
than shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(l) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus;
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and, since such date, there has not been any material change in the
capital stock or long-term debt of the Company and its subsidiaries
taken as a whole, or any material adverse change in, or any development
involving a prospective material adverse change in, the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement and
included in the Prospectus present fairly the financial condition and
results of operations of the Company and its consolidated subsidiaries,
at the dates and for the periods indicated, and have been prepared in
conformity with U.S. generally accepted accounting principles applied
on a consistent basis throughout the periods involved.
(n) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company, whose reports are incorporated by reference
in the Prospectus and who have delivered the initial letter referred to
in SECTION 7(f), are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(o) Each of the Company and its subsidiaries has good and
marketable title to all personal property owned by it, free and clear
of all liens, encumbrances and defects except such as are described in
the Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed
to be made of such property by the Company or such subsidiary and all
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company or such subsidiary.
(p) Each of the Company and its subsidiaries carries, or is
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar
businesses in similar industries.
(q) There are no legal or governmental proceedings pending (i)
to which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries is the
subject and (ii) which, if determined adversely to the Company or any
of its subsidiaries, are reasonably likely to have a Material Adverse
Effect, and to the knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(r) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement.
(s) No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries on the one hand, and the
directors, officers, stockholders,
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customers or suppliers of the Company or any of its subsidiaries on
the other hand, which is required to be described in the Prospectus
which is not so described.
(t) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is
imminent which would reasonably be expected to have a Material Adverse
Effect.
(u) Each of the Company and its subsidiaries is in compliance
in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the
Company or any of its subsidiaries would have any liability; none of
the Company or any of its subsidiaries has incurred and none of them
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections
412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "CODE");
and each "pension plan" for which the Company and its subsidiaries
would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(v) Each of the Company and its subsidiaries has filed all
federal, state and local income and franchise tax returns required to
be filed through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to the Company or
any of its subsidiaries which has had (nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to the
Company, would reasonably be expected to have) a Material Adverse
Effect.
(w) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, other than pursuant to its employee benefits plans,
qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to outstanding options or
rights, all of which are described in the Prospectus, (ii) incurred any
liability or obligation, direct or contingent, other than liabilities
and obligations which were incurred in the ordinary course of business,
(iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(x) Each of the Company and its subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
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(y) Neither the Company nor any of its subsidiaries is in
violation of its charter, bylaws or other formation documents, in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is
subject or in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject; and each of the Company and its
subsidiaries has obtained all material licenses, permits, certificates,
franchises or other governmental authorizations or permits necessary to
the ownership of its property or to the conduct of its business.
(z) Neither the Company nor any of its subsidiaries nor any
director or officer associated with or acting on behalf of the Company
or any of its subsidiaries has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(aa) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the
Company, any of its predecessors in interest) at, upon or from any of
the property now or previously owned or leased by the Company or such
subsidiary in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any
of its subsidiaries or with respect to which the Company has knowledge,
except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not have or would not be
reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes,"
"toxic wastes," "hazardous substances" and "medical wastes" shall have
the meanings specified in any applicable local, state and federal laws
or regulations with respect to environmental protection.
(bb) The Company is not, and after giving effect to the
offering and sale of the Stock and the initial investment of the
proceeds therefrom as contemplated under "Use of Proceeds" in the
Prospectus, will not be an "investment company" within the meaning of
such term under the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT"), and the rules and regulations of the
Commission thereunder.
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(cc) Except as otherwise expressly agreed to by the
Representatives, the Company has obtained an agreement, in form and
substance reasonably satisfactory to the Representatives, of each of
its directors and officers and certain of its stockholders designated
by you not to, during the period beginning on the date hereof and
ending 90 days after the date of the Prospectus, (1) offer, pledge,
announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock
(including without limitation, Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock that
may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Commission), (2) enter into any
swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of any Common Stock, whether any
such transaction described in clause (1) or (2) above is to be settled
by delivery of Common Stock or such other securities, in cash or
otherwise, or (3) make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common
Stock; provided, however, that such persons may transfer Common Stock
(i) as otherwise provided in the applicable agreement or (ii) as a gift
or gifts to family members, trusts on behalf of family members, family
limited partnerships, or charitable organizations, provided that any
such donee thereof agrees in writing to be bound by the terms of the
respective agreement.
(dd) The Company has applied for the listing of the Stock on
the NYSE.
2. PURCHASE OF THE STOCK BY THE UNDERWRITERS. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 3,000,000 shares of
the Firm Stock to the several Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in SCHEDULE 1.
In addition, the Company grants to the Underwriters an option to
purchase up to 450,000 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in SECTION 4. Shares of Option Stock shall be purchased severally
for the account of the Underwriters in proportion to the number of shares of
Firm Stock set opposite the name of such Underwriters in Schedule 1. The
respective purchase obligations of each Underwriter with respect to the Option
Stock shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Stock other than in 100 share amounts. The price of
both the Firm Stock and any Option Stock shall be $13.02 per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), as the case may be,
except upon payment for all the Stock to be purchased on such Delivery Date
as provided herein.
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3. OFFERING OF STOCK BY THE UNDERWRITERS. Upon authorization by the
Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set
forth in the Prospectus.
4. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment for
the Firm Stock shall be made at the offices of Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P., 0000 Xxxxxxxx Xxxxx, Xxxxx Tower, 000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000 at 9:00 a.m., New York City time, on the fourth full
business day following the date of this Agreement or at such other date or
place as shall be determined by agreement between the Representatives and the
Company. This date and time are sometimes referred to as the "FIRST DELIVERY
DATE." On the First Delivery Date, the Company shall deliver or cause to be
delivered the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the
purchase price by wire transfer in immediately available funds. Time shall be
of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names
and in such denominations as the Representatives shall request in writing not
less than two full business days prior to the First Delivery Date. If
requested by the Representatives, the Company shall make the certificates
representing the Firm Stock available for inspection by the Representatives
in New York, New York, not later than 2:00 p.m., New York City time, on the
business day prior to the First Delivery Date.
The option granted in SECTION 2 will expire 30 days after the date
of this Agreement and may be exercised in whole or in part from time to time
by written notice being given to the Company by the Representatives. If the
option is exercised in part, the Underwriters shall purchase on a pro rata
basis from the Company that number of shares of Option Stock offered by the
Company pursuant to SECTION 2. Such notice shall set forth the aggregate
number of shares of Option Stock as to which the option is being exercised,
the names in which the shares of Option Stock are to be registered, the
denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of
Option Stock are to be delivered; PROVIDED, HOWEVER, that this date and time
shall not be earlier than (but may be at the same time as) the First Delivery
Date nor earlier than the second full business day after the date on which
the option shall have been exercised unless agreed to by the parties nor
later than the fifth full business day after the date on which the option
shall have been exercised. The date and time the shares of Option Stock are
delivered are sometimes referred to as a "SECOND DELIVERY DATE" and the First
Delivery Date and any Second Delivery Date are sometimes each referred to as
a "DELIVERY DATE."
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this SECTION
4 (or at such other place as shall be determined by agreement between the
Representatives and the Company) at 9:00 a.m., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the Option Stock to the Representatives for the
account of each Underwriter against payment of the purchase price by wire
transfer in immediately available funds to or upon the order of the Company.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in
the aforesaid written
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notice. If requested by the Representatives, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 p.m., New York
City time, on the business day prior to such Second Delivery Date.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the execution and
delivery of this Agreement or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to
the Prospectus except as permitted herein; to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with
copies thereof; to advise the Representatives, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to
use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case including exhibits other than this Agreement and the
computation of per share earnings) and (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus;
and, if the delivery of a prospectus is required at any time after the
Effective Time in connection with the offering or sale of the Stock or
any other securities relating thereto and if at such time any event
shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the Securities Act, to notify the
Representatives and, upon their request, to file such amended or
supplemented prospectus and to prepare and furnish without charge to
each Underwriter
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and to any dealer in securities as many copies as the Representatives
may from time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Representatives and counsel for the
Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date, but in
any event not later than 18 months after the Effective Date of the
Registration Statement, to make generally available to the Company's
security holders and to deliver to the Representatives an earnings
statement of the Company (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date,
to furnish to the Representatives upon request copies of all materials
furnished by the Company to its stockholders and all public reports and
all reports and financial statements furnished by the Company to the
principal national securities exchange upon which the Common Stock may
be listed pursuant to requirements of or agreements with such exchange
or to the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(h) Promptly, from time to time, to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock; provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(i) For a period of 90 days from the date of the Prospectus,
not to, directly or indirectly, (1) issue, offer, sell, contract to
sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or any
options, rights or warrants to purchase any shares of Common Stock, or
any securities convertible into, exchangeable for or that represent the
right to receive shares of Common Stock or file a registration
statement with respect to any of the foregoing (other than the Stock
and shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans existing on the date
hereof or pursuant to currently outstanding
11
options, warrants or rights, or other than the grant of options
pursuant to option plans existing on the date hereof), or (2) enter
into any hedging or other transaction which is designed to or could
reasonably be expected to lead to or result in a direct or indirect
sale or disposition or otherwise transfers the economic consequences
of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case without the prior written consent of Xxxxxx Brothers Inc.;
(j) To use its best efforts to complete the listing of the
Stock on the NYSE, subject only to official notice of issuance and
evidence of satisfactory distribution, prior to the First Delivery
Date;
(k) To take such steps as shall be necessary to ensure that
the Company shall not become an "investment company" within the meaning
of such term under the Investment Company Act and the rules and
regulations of the Commission thereunder;
(l) To use the net proceeds received by it from the sale of
the Stock pursuant to this Agreement in the manner set forth in the
Prospectus under the caption "Use of Proceeds"; and
(m) If necessary or appropriate, use its best efforts to file
a registration statement pursuant to Rule 462(b) under the Securities
Act by 10:00 p.m. on the date hereof but in any event not later than by
8:00 a.m. on the date immediately following the date hereof.
6. EXPENSES. The Company agrees to pay (a) the costs incident to the
registration, authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement
and any amendments and exhibits thereto; (c) the costs of printing and
distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus, all as provided in this Agreement;
(d) the costs of producing and distributing this Agreement, any Agreement
among Underwriters, closing documents, including any compilation thereof, and
any other related documents in connection with the offering, purchase, sale
and delivery of the Stock; (e) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc.
("NASD") of the terms of sale of the Stock; (f) any applicable listing or
other fees; (g) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in SECTION 5(h) and
of preparing, printing and distributing any Blue Sky surveys and of securing
any required review by the NASD (including related fees and expenses of
counsel to the Underwriters); (h) all fees and expenses in connection with
listing the Stock on the NYSE; (i) fees and expenses of any transfer agent or
registrar for the Stock; (j) the preparation, issuance and delivery of the
certificates for the Stock to the Representatives, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the stock to the Representatives; (k) the expenses of
the Company relating to the "roadshow" or other investor presentations for
the offering and other marketing activities associated therewith; and (l) all
other costs and expenses incident to the performance of
12
the obligations of the Company under this Agreement; PROVIDED that, except as
provided in this SECTION 6 and in SECTION 11, the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Stock which they may sell and the expenses
of advertising any offering of the Stock made by the Underwriters.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on
each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with SECTION 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus contains any untrue statement
of a fact which, in the opinion of the Representatives, is material or
omits to state any fact which, in the opinion of the Representatives,
is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Stock,
the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to the
Representatives, and the Company shall have furnished to counsel to the
Underwriters all documents and information that they may reasonably
request to enable them to advise the Underwriters as to such matters.
(d) Xxxxx Liddell & Xxxx LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, and is duly qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property
or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the business, financial condition
or results of operations of the Company and its subsidiaries
taken as a whole, and has all corporate power and authority
necessary to own or hold its properties and
13
conduct its business as described in the Registration
Statement and the Prospectus;
(ii) Each of the Company's subsidiaries has been duly
incorporated or formed and is validly existing as a
corporation or limited partnership in good standing under the
laws of the jurisdiction of its incorporation or formation, is
duly qualified to do business in each jurisdiction in which
the ownership or lease of property or the conduct of its
business requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on
the business, financial condition or results of operations of
the Company and its subsidiaries taken as a whole;
(iii) The Company has the capitalization as set forth
in the Prospectus (except as modified by subsequent issuances
of shares of capital stock of the Company, if any,
contemplated under this Agreement, pursuant to reservations,
agreements or employee benefit plans as set forth in the
Prospectus or pursuant to the exercise of options or warrants
as set forth in the Prospectus), and the issued shares of
capital stock of the Company (a) issued on or after October
17, 1997 (including the shares of Stock being delivered on
such Delivery Date) have been duly and validly authorized and
issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus and (b) issued
prior to October 17, 1997, to such counsel's knowledge, have
been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description thereof
contained in the Prospectus;
(iv) All of the issued shares of capital stock,
partnership interests or other equity interests of each of the
Company's subsidiaries are 100% owned by the Company, directly
or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse
interest of any nature;
(v) To such counsel's knowledge, there are no legal
or governmental proceedings pending (i) to which the Company
or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the
subject and (ii) which, if determined adversely to the Company
or any of its subsidiaries, are reasonably likely to have a
Material Adverse Effect, and, to such counsel's knowledge, no
such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vi) The Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations as of the date specified in such opinion
and, to such counsel's knowledge after due inquiry, no stop
order suspending the effectiveness of the Registration
Statement has been issued and, to such counsel's knowledge
after due inquiry, no proceeding for that purpose is pending
or threatened by the Commission;
14
(vii) The Registration Statement and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus made by the Company prior to such
Delivery Date (other than the financial statements, financial
data and related schedules therein, as to which such counsel
need express no opinion) comply as to form in all material
respects with the requirements of the Securities Act and the
Rules and Regulations;
(viii) To such counsel's knowledge, there are no
contracts or other documents that are required to be described
in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and
Regulations that have not been described or filed as exhibits
to the Registration Statement;
(ix) This Agreement has been duly authorized,
executed and delivered by the Company;
(x) The execution, delivery and performance of this
Agreement by the Company, the compliance by the Company with
all of the provisions of this Agreement and the consummation
of the transactions contemplated hereby will not (i) conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, except for such
conflicts, breaches, violations or defaults that wound not,
individually or in the aggregate, have a Material Adverse
Effect; (ii) conflict with or result in any violation of the
provisions of the charter or bylaws of the Company or any of
its subsidiaries; (iii) result in any violation of any statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or
assets, except for such violations that would not,
individually or in the aggregate, have a Material Adverse
Effect; and (iv) except for such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the
transactions contemplated hereby;
(xi) The Company is not, and after giving effect to
the offering and sale of the Stock and assuming the initial
investment of the proceeds therefrom as contemplated under
"Use of Proceeds" in the Prospectus, will not be, an
"investment company" within the meaning of such term under the
Investment Company Act and the rules and regulations of the
Commission thereunder; and
15
(xii) To such counsel's knowledge, there are no
contracts, agreements or understandings between the Company
and any person granting such person the right (other than
rights which have been waived or satisfied) to require the
Company to include securities in the securities registered
pursuant to the Registration Statement. To such counsel's
knowledge, there are no contracts, agreements or
understandings between the Company and any person granting
such person the right to require the Company to register or
include securities pursuant to any other registration
statement filed by the Company under the Securities Act.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the federal laws of the United
States of America, the laws of the State of Texas and the General Corporation
Law of the State of Delaware. Such counsel shall also have furnished to the
Representatives a written statement, addressed to the Underwriters and dated
such Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that:
"In connection with the preparation of the Registration
Statement and the Prospectus, we have participated in conferences with
officers and other representatives of the Company, representatives of
the independent public or certified public accountants for the Company
and with representatives of the Underwriters, including their counsel,
at which the contents of the Registration Statement and Prospectus were
discussed and reviewed. We have not independently verified and
accordingly, are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus and any amendments or
supplements to the Registration Statement or the Prospectus (except as
and to the extent stated in Section 7(d)(iii)). On the basis of the
foregoing, in the course of such participation, review and discussion,
nothing has come to our attention which has caused us to believe that
the Registration Statement at the time such Registration Statement
became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus or any amendments or supplements thereto at the date of such
Prospectus, amendment or supplement, and at the date hereof, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood we express no opinion with respect to
the financial statements and schedules and other financial data and
statistical data included in the Registration Statement or
Prospectus)."
(e) The Representatives shall have received from Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., counsel for the Underwriters, such
opinion or opinions, dated such Delivery Date, with respect to the
issuance and sale of the Stock, the Registration Statement, the
Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
16
(f) At the time of execution of this Agreement, the
Representatives shall have received from Xxxxxx Xxxxxxxx LLP a letter,
in form and substance reasonably satisfactory to the Representatives,
addressed to the Underwriters and dated the date hereof (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information
is given in the Prospectus, as of a date not more than five days prior
to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to Underwriters in connection
with registered public offerings.
(g) With respect to the letter of Xxxxxx Xxxxxxxx LLP referred
to in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "INITIAL
LETTER"), the Company shall have furnished to the Representatives a
letter (the "BRING-DOWN LETTER") of such accountants, addressed to the
Underwriters and dated such Delivery Date (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(h) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of (1) its Chief Executive
Officer and (2) its Chief Financial Officer, stating that the
representations, warranties and agreements of the Company in SECTION 1
are true and correct as of such Delivery Date; the Company has complied
with all its agreements contained herein; and the conditions set forth
in SECTIONS 7(a) and 7(i) have been fulfilled.
(i) Neither the Company nor any of its subsidiaries shall have
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there shall not
have been any material change in the capital stock or long-term debt of
the Company and its subsidiaries taken as a whole, or any material
adverse change in, or any development involving a prospective material
adverse change in, the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus.
17
(j) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the NYSE, the American Stock Exchange or on The
Nasdaq Stock Market, Inc.'s National Market shall have been suspended
or minimum prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities
involving the United States or there shall have been a declaration of a
national emergency or war by the United States or any other substantial
national or international calamity or emergency if, in the judgment of
a majority in interest of the several Underwriters, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impracticable or inadvisable to proceed with the public offering or
delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such)
as to make it, in the judgment of a majority in interest of the several
Underwriters, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date
on the terms and in the manner contemplated in the Prospectus.
(k) the NYSE shall have approved the Stock for listing,
subject only to official notice of issuance and evidence of
satisfactory distribution.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to the Representatives.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from
and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of,
or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any written or electronically produced
materials or information provided to investors by, or with the approval
of, the Company in connection with the marketing of the offering of the
Stock ("MARKETING MATERIALS"), including any roadshow or investor
presentations made to investors by the Company, (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application or in any Marketing
18
Materials, any material fact required to be stated therein or necessary
to make the statements therein 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 Stock or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon matters covered by clause (i) or (ii) above (provided
that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter
and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for inclusion therein, which information
consists solely of the information specified in SECTION 8(e). The
foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, the Company's directors,
officers and employees, and each person, if any, who controls the
Company within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer,
employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the Prospectus or
in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information concerning such Underwriter
furnished to the Company through the Representatives by or on behalf of
that Underwriter specifically for inclusion therein, and shall
reimburse the Company and any such director, officer, employee or
controlling person for any legal or other expenses reasonably incurred
by the Company or any such director, officer, employee or controlling
person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage,
19
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person under applicable law.
(c) Promptly after receipt by an indemnified party under this
SECTION 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this SECTION 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; PROVIDED, HOWEVER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this SECTION 8 except to the extent it has been materially prejudiced
by such failure and, PROVIDED FURTHER, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this SECTION 8. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this SECTION 8 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that the Representatives shall have
the right to employ counsel to represent jointly the Representatives
and those other Underwriters and their respective officers, employees
and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the
Underwriters against the Company under this SECTION 8 if, in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees and
controlling persons to be jointly represented by separate counsel, and
in that event the fees and expenses of such separate counsel shall be
paid by the Company. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding, or (ii) be liable for any settlement of any
such action effected without its written consent (which consent shall
not be unreasonably withheld), but if settled with the consent of the
indemnifying party or if there be a final judgment for the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment.
(d) If the indemnification provided for in this SECTION 8
shall for any reason be unavailable to or insufficient to hold harmless
an indemnified party under SECTION 8(a) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified
20
party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action
in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other from the offering of the Stock 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 on the one hand and the Underwriters
on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters
with respect to the shares of the Stock purchased under this Agreement,
on the other hand, bear to the total gross proceeds from the offering
of the shares of the Stock under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to 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 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 and the Underwriters agree
that it would not be just and equitable if contributions pursuant to
this SECTION 8(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, damage or
liability, or action in respect thereof, referred to above in this
SECTION 8(d) shall be deemed to include, for purposes of this
SECTION 8(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 8(d), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the
public exceeds the amount of any damages which such Underwriter has
otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as
provided in this SECTION 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of
the Stock by the Underwriters set forth on the cover page of, and the
list of Underwriters and their respective participation in the sale of
the Stock and the concession and reallowance figures appearing under
the caption "Underwriting" in, the Prospectus are correct and
constitute the only information
21
concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
9. DEFAULTING UNDERWRITERS. If, on either Delivery Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to purchase the
Stock which the defaulting Underwriter agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Stock set forth opposite the name of each remaining non-defaulting
Underwriter in SCHEDULE 1 bears to the total number of shares of the Firm
Stock set forth opposite the names of all the remaining non-defaulting
Underwriters in SCHEDULE 1; PROVIDED, HOWEVER, that the remaining
non-defaulting Underwriters shall not be obligated to purchase any of the
Stock on such Delivery Date if the total number of shares of the Stock which
the defaulting Underwriter or Underwriters agreed but failed to purchase on
such date exceeds 9.09% of the total number of shares of the Stock to be
purchased on such Delivery Date, and any remaining non-defaulting Underwriter
shall not be obligated to purchase more than 110% of the number of shares of
the Stock which it agreed to purchase on such Delivery Date pursuant to the
terms of Section 2. If the foregoing maximums are exceeded, the remaining
non-defaulting Underwriters, or those other underwriters satisfactory to the
Representatives who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them,
all the Stock to be purchased on such Delivery Date. If the remaining
Underwriters or other Underwriters satisfactory to the Representatives do not
elect to purchase the shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such Delivery Date, this Agreement (or, with
respect to the Second Delivery Date, the obligation of the Underwriters to
purchase, and of the Company to sell, the Option Stock) shall terminate
without liability on the part of any non-defaulting Underwriter or the
Company, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in SECTIONS 6 and 11. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
SCHEDULE 1 who, pursuant to this SECTION 9, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default.
If other Underwriters are obligated or agree to purchase the Stock of a
defaulting or withdrawing Underwriter, either the Representatives or the
Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement,
the Prospectus or in any other document or arrangement.
10. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in SECTIONS 7(h) or 7(j) shall have
occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Company shall fail
to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other
22
condition of the Underwriters' obligations hereunder required to be fulfilled
by the Company is not fulfilled, the Company will reimburse the Underwriters
for all reasonable out-of-pocket expenses (including fees and disbursements
of counsel) incurred by the Underwriters in connection with this Agreement
and the proposed purchase of the Stock, and upon demand the Company shall pay
the full amount thereof to the Representative(s). If this Agreement is
terminated pursuant to SECTION 9 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to Xxxxxx Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department, with a
copy, in the case of any notice pursuant to SECTION 8(c), to the Director
of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., Three
World Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000; or
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Chief Executive Officer.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon the Underwriters, the Company and their
respective personal representatives and successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (a) the representations, warranties, indemnities and agreements
of the Company contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any Underwriter within
the meaning of Section 15 of the Securities Act and (b) the indemnity
agreement of the Underwriters contained in SECTION 8(b) shall be deemed to be
for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement, employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this SECTION 13, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
14. SURVIVAL. The respective indemnities, representations, warranties
and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or
on behalf of any of them or any person controlling any of them.
15. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close and (b) "SUBSIDIARY" has the meaning set forth in
23
Rule 405 of the Rules and Regulations.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of New York.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided that purpose below.
Very truly yours,
CORNELL COMPANIES, INC.
By: /s/ XXXXXX X. XXXXX
---------------------------------------------
Xxxxxx X. Xxxxx, Chairman of the Board,
President and Chief Executive Officer
Accepted:
XXXXXX BROTHERS INC.
XXXXXXXXX AND COMPANY, INC.
FIRST ANALYSIS SECURITIES CORPORATION
For themselves and as Representatives
of the several Underwriters named
in Schedule 1
By: XXXXXX BROTHERS INC.
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Authorized Representative
SCHEDULE 1
Number of Shares
Underwriters of Firm Stock
------------ -------------
Xxxxxx Brothers Inc. 1,875,000
Xxxxxxxxx & Company, Inc. 675,000
First Analysis Securities Corporation 450,000
----------
Total 3,000,000
==========
