Exhibit 1
THE PROVIDENCE SERVICE CORPORATION
(a Delaware Corporation)
4,300,000 Shares of Common Stock
Par Value $0.01 Per Share
Underwriting Agreement
August ___, 2003
SunTrust Capital Markets, Inc.
Xxxxxxxxx & Company, Inc.
Avondale Partners, LLC
As Representatives for the several underwriters
named in Schedule II
c/o SunTrust Capital Markets, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Ladies and Gentlemen:
The Providence Service Corporation, a Delaware corporation (the "Company"),
and those certain stockholders of the Company listed in Schedule I (the "Selling
Stockholders") propose to sell to the several underwriters named in Schedule II
(collectively, the "Underwriters") an aggregate of ____________shares (the "Firm
Shares") of the Company's common stock, $0.001 par value per share (the "Common
Stock"), of which [_________] shares will be sold by the Company and [_________]
shares will be sold by the Selling Stockholders. The Firm Shares are to be sold
to each Underwriter, acting severally and not jointly, in such amounts as are
set forth in Schedule II opposite the name of such Underwriter. The respective
number of shares to be sold by the Selling Stockholders is set forth opposite
their names in Schedule I.
Solely for the purpose of covering over-allotments in the sale of the Firm
Shares, the Company grants to the Underwriters the right to purchase up to an
additional [_________] shares of Common Stock (the "Option Shares"), which
option shall be exercisable in the manner, and such Option Shares shall be sold
in the denominations, set forth in Section 3(b) below. The Firm Shares and
Option Shares are herein sometimes referred to as the "Shares."
Section 1. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-106286 with respect to the Shares, including a preliminary form of
prospectus subject to completion, in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations
of the Commission thereunder (all such rules and regulations, including
Regulation S-X and Regulation S-K to the extent applicable, referred to as the
"1933 Act Regulations"); and such amendments to such registration statement as
may have been required, if any, prior to the date hereof have been filed with
the Commission, and such amendments have been similarly prepared. Copies of such
registration statement and amendment or amendments and of each related
preliminary prospectus, and the exhibits, financial statements and schedules, as
finally amended and revised, have been delivered to you. The Company has
prepared in the same manner, and proposes so to file with the Commission, one of
the following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus, or (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the 1933 Act
Regulations. If the Company elects, with the consent of the Representatives, to
rely on Rule 434 of the 1933 Act Regulations, all references to the Prospectus
shall be deemed to include the form of prospectus and term sheet contemplated by
Rule 434, taken together, provided to the Underwriters by the Company in
reliance on Rule 434 (the "Rule 434 Prospectus"). The Company also may file a
related registration statement with the Commission pursuant to Rule 462(b) of
the 1933 Act Regulations for the purpose of registering certain additional
shares of Common Stock, which registration statement will be effective upon
filing with the Commission. As filed, such amendment, any registration statement
filed pursuant to Rule 462(b) of the 1933 Act Regulations and the final
prospectus, shall include all Rule 430A Information (as hereinafter defined)
and, except to the extent that you shall agree in writing to a modification,
shall be in all respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
preliminary prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the Closing Time (as hereinafter defined), shall also mean such registration
statement as so amended; provided, however, that such term shall also include
all Rule 430A Information contained in any Prospectus (as hereinafter defined)
and deemed to be included in such registration statement at the time such
registration statement becomes effective as provided by Rule 430A of the 1933
Act Regulations. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary prospectus
included in the Registration Statement at the time it becomes effective that
omits Rule 430A Information. The term "Prospectus" as used in this Agreement
shall mean any Rule 434 Prospectus or the prospectus relating to the Shares in
the form in which it is first filed with the Commission pursuant to Rule 424(b)
of the 1933 Act Regulations or, if no filing pursuant to Rule 424(b) of the 1933
Act Regulations is required, shall mean the form of final prospectus included in
the Registration Statement at the time such Registration Statement becomes
effective. The term "Rule 430A Information" means information with respect to
the Shares and the offering thereof permitted pursuant to Rule 430A of the 1933
Act Regulations to be omitted from the Registration Statement when it becomes
effective. The term "462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b) of the 1933 Act
Regulations (including the Registration Statement and any Preliminary Prospectus
or Prospectus incorporated therein at the time such registration statement
becomes effective).
2
(b) No order preventing or suspending the use of any Preliminary Prospectus
has been issued by the Commission and no proceedings for that purpose have been
instituted or, to the knowledge of the Company, threatened by the Commission or
the state securities authority of any jurisdiction, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all respects to the
requirements of the 1933 Act and the 1933 Act Regulations and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter expressly for use in the
Registration Statement or any 462(b) Registration Statement.
(c) When the Registration Statement and any 462(b) Registration Statement
shall become effective, when the Prospectus is first filed pursuant to Rule
424(b) of the 1933 Act Regulations, when any amendment to the Registration
Statement or any 462(b) Registration Statement becomes effective, when any Rule
434 Prospectus is filed with the Commission, when any supplement to the
Prospectus is filed with the Commission, and at each Closing Date (as
hereinafter defined in Section 3), (i) the Registration Statement, the 462(b)
Registration Statement, the Prospectus and all amendments thereof and
supplements thereto will conform in all respects with the requirements of the
1933 Act and the 1933 Act Regulations and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the Prospectus nor any amendment
or supplement thereto, will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statement or omission made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(d) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its state of incorporation, with
all requisite corporate power and authority to own, lease and license its
properties, and conduct its business as currently carried on and as currently
proposed to be conducted. The Company has qualified to do business and is in
good standing as a foreign corporation in every jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of its business,
as currently carried on and as currently proposed to be conducted, requires such
qualification, except where the failure to do so would not have a material
adverse effect on the financial condition, results of operations, cash flows or
prospects of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect").
(e) Each subsidiary of the Company has been duly incorporated or organized
and is an existing corporation or other entity in good standing under the laws
of the jurisdiction of its incorporation or organization, with power and
authority (corporate and other) to own its properties and conduct its business
as described in the Prospectus; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation or other entity in good
standing in all other jurisdictions in which its ownership or leasing of
property or the conduct of its business requires such qualification; all of the
issued and outstanding capital stock or other equity interest of each subsidiary
of the Company has been duly authorized and validly issued and is fully paid and
nonassessable; and
3
the capital stock or other equity interest of each subsidiary owned by the
Company, directly or through its subsidiaries, is owned free from liens,
encumbrances and defects.
(f) The Company has the full legal right, power and authority to enter into
this Agreement and to consummate the transactions contemplated herein. The
Company has the full corporate power and authority to issue, sell and deliver
the Shares as provided herein. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes the valid and binding agreement of
the Company enforceable against the Company in accordance with its terms, except
to the extent that the indemnification provisions set forth in Section 9 of this
Agreement may be limited by applicable law or equitable principles, and except
as enforceability may be limited by bankruptcy, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally and
rules of law governing specific performance, injunctive relief and other
equitable remedies.
(g) Each consent, approval, authorization, order, designation or filing by
or with any governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, has been made or obtained by the Company, and is in full
force and effect, except as may be required under applicable state securities
laws. The issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated by this Agreement, (i) will not result in a breach or violation of
any of the terms and provisions of, or constitute a default by the Company or
any subsidiary under, its Certificate of Incorporation or Bylaws (or similar
corporate documents) and (ii) will not result in a breach or violation of any of
the terms or provisions of, or constitute a default by the Company or any
subsidiary, under, any provision of any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which the Company or
any subsidiary is a party or to which it or its properties is subject, or (iii)
will not result in a breach or violation of any statute, judgment, decree,
order, rule or regulation of any court or governmental agency or body applicable
to the Company or any subsidiary or any of their properties.
(h) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus under the caption "Capitalization." All of the
issued and outstanding shares of Common Stock of the Company, including the
Shares to be sold by the Selling Stockholders, have been duly authorized and
validly issued, are fully paid and non-assessable. The Common Stock of the
Company conforms to the description of the Common Stock contained in the
Registration Statement and the Prospectus. All offers and sales of the Company's
capital stock prior to the date hereof were at all relevant times duly
registered under the 1933 Act or were exempt from the registration requirements
of the 1933 Act by reason of Sections 3(b), 4(2) or 4(6) thereof and were duly
registered or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws. The Shares to
be sold by the Company, when issued and delivered by the Company and paid for
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable and will conform in all respects to the description thereof
contained in the Prospectus. No preemptive rights of stockholders exist with
respect to any of the Shares. Except as described in the Prospectus, no person
or entity holds a right to require or participate in the registration of the
offer and sale of the Shares under the 1933 Act, and no person holds a right to
require registration under the 1933 Act of the offer and sale of any shares of
Common Stock of the Company at any other time. No person or entity has a right
of participation or first refusal with respect to the sale of the Shares by the
Company or Selling
4
Stockholders. None of the issued shares of capital stock of the Company has been
issued in violation of any preemptive or similar right. Except as described in
the Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of any share of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the Company.
There is no commitment, plan or arrangement to issue any share of capital stock
of the Company or any security convertible into or exchangeable for capital
stock of the Company, except as is disclosed in the Prospectus.
(i) The financial statements of the Company (including all related notes
and schedules) included in the Registration Statement and the Prospectus present
fairly the financial position of the Company and its consolidated subsidiaries
as of the dates indicated and the results of their operations, stockholders'
equity and cash flows for the periods specified, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (subject, in the case of unaudited financial
statements, to normal year-end adjustments) and in conformity with Regulation
S-X of the Commission. The supporting schedules included in the Registration
Statement and the amounts in the Prospectus under the captions "Prospectus
Summary -- Summary Financial and Operating Information," "Selected Historical
Consolidated Financial and Operating Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" are accurately
computed, fairly present the information shown therein and have been determined
on a basis consistent with the financial statements included in the Registration
Statement and the Prospectus. No financial statements or schedules other than
those included in the Prospectus are required by Form S-1 or otherwise to be
included in the Registration Statement, the Prospectus or any Preliminary
Prospectus.
The pro forma financial data set forth in the Registration Statement and
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations, the
assumptions underlying the pro forma adjustments are reasonable, and such
adjustments have been properly applied to the historical amounts in the
compilation of such statements. All other financial and statistical data
included in the Registration Statement and Prospectus present fairly and
accurately the information stated therein and have been prepared and compiled on
a basis consistent with the financial statements presented in the Registration
Statement and Prospectus and the books and records of the Company.
(j) Each of Ernst & Young LLP and Deloitte & Touche, LLP has examined and
are reporting upon certain of the audited financial statements and schedules
included in the Registration Statement and the Prospectus, are, and were during
the periods covered by their reports included in the Registration Statement and
the Prospectus, independent public accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act and the 1933 Act
Regulations.
(k) The Company has obtained, for the benefit of the Underwriters, from
each of the Company's directors, officers and stockholders, a written agreement
that for a period of 180 days from the date of the Prospectus such director,
officer or stockholder will not, without your prior written consent, offer,
sell, contract to sell, pledge, grant any option to purchase, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, any shares of Common Stock except shares of Common Stock being
sold pursuant hereto and listed in the Prospectus.
5
(l) Neither the Company nor any of its subsidiaries has sustained, since
December 31, 2002, any material loss or interference with its business from
fire, explosion, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or arbitration, or from any
court or governmental action or inaction (including action or inaction relating
to budget or appropriation matters materially impacting the Company), order or
decree, otherwise than as set forth in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been (i) any change in the capital stock, long-term
debt, obligations under capital leases or short-term borrowings of the Company
or any of its subsidiaries; (ii) any event or development which could reasonably
be seen as having a Material Adverse Effect; or (iii) any liability or
obligation, direct or contingent, incurred or undertaken by the Company or any
of its subsidiaries, except for liabilities or obligations incurred in the
ordinary course of business or which otherwise would not have a Material Adverse
Effect.
(m) Nether the Company nor any subsidiary is in violation of its
Certificate of Incorporation or similar organizational document, or its Bylaws
or similar document governing the internal affairs of the entity and, as of the
date hereof, no default exists, and no event has occurred, nor state of facts
exists, which, with notice or after the lapse of time to cure or both, would
constitute a default in the due performance and observance of any obligation,
agreement, covenant, consideration or condition contained in any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it, any of its subsidiaries or any of their respective properties is
subject, and no violation of any law, order, rule, regulation, writ, injunction
or decree of any government, governmental instrumentality or court, domestic or
foreign, has occurred or exists, in any such case where the consequences of such
violation or default would have a Material Adverse Effect.
(n) Except as otherwise disclosed in the Prospectus, (i) the Company has
not authorized or conducted, and otherwise has no knowledge of the generation,
transportation, storage, presence, use, treatment, disposal, release or handling
of (in an amount or of a type that has been or must be reported to any
governmental agency, violates any Environmental Law (as hereinafter defined), or
has required or could require remediation expenditures) any hazardous substance,
asbestos, radon, polychlorinated biphenyl ("PCBs"), petroleum product or waste
(including crude oil or any fraction thereof), natural gas, liquefied gas,
synthetic gas or other material defined, regulated, controlled or potentially
subject to any remediation requirement under any Environmental Law
(collectively, "Hazardous Materials"), on, in or under any real property owned,
leased or used by the Company or any of its subsidiaries, (ii) the Company and
each of its subsidiaries is in compliance with all federal, state and local
laws, ordinances, rules, regulations and other governmental requirements
relating to pollution, control of chemicals, management of waste, discharges of
materials into the environment, health, safety, natural resources, and the
environment (collectively, "Environmental Laws"), and (iii) the Company and each
of its subsidiaries has, and is in compliance with, all licenses, permits,
registrations and government authorizations necessary to operate under all
applicable Environmental Laws, except in the case of clause (i) or (ii) where
such noncompliance would not have a Material Adverse Effect. Except as otherwise
disclosed in the Prospectus, neither the Company nor any of its subsidiaries has
received any written or oral notice from any governmental entity or any other
person, and there is no pending or, to the knowledge of the Company or any of
its subsidiaries, threatened claim, litigation or any administrative agency
proceeding, that: (i) alleges a violation of any Environmental Laws by the
Company or any of its subsidiaries; (ii) alleges that the Company or any of its
subsidiaries is a liable
6
party or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 X.X.X.xx.xx. 9601, et seq., or any
state superfund law; (iii) has resulted in or could result in the attachment of
an environmental lien on any real property owned, leased or used by the Company
or any of its subsidiaries; or (iv) alleges the occurrence of contamination of
any of such real property, damage to natural resources, property damage, or
personal injury based on activities of the Company or any of its subsidiaries,
or the activities of its predecessors, if any, or third parties (whether at the
real property or elsewhere) involving Hazardous Materials, whether arising under
the Environmental Laws, common law principles, or other legal standards.
(o) The Company and its subsidiaries have good and marketable title to all
real property owned by them, free and clear of all liens, encumbrances, claims,
security interests, restrictions and defects, except such as are reflected in
the Prospectus. Each parcel of real property owned or leased by the Company or
any of its subsidiaries, and each improvement thereon, complies with all
applicable codes, laws and regulations (including, without limitation, building
and zoning codes, laws and regulations and laws relating to access to facilities
located on such real property), except for such failures to comply that would
not have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has knowledge of any pending or threatened condemnation
proceedings, zoning change, or other proceeding or action that will in any
manner affect the size of, use of, improvements on, construction on or access to
such real property and improvements, except such proceedings or actions that
would not have a Material Adverse Effect.
(p) All real property and buildings held or occupied under lease by the
Company or any of its subsidiaries are held or occupied under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere in any material respect with the use made and proposed to be made of
such property and buildings by the Company or any of its subsidiaries; such
leases conform to the description thereof, if any, set forth in the Registration
Statement and the Prospectus; and no notice has been given or claim asserted by
anyone adverse to the rights of the Company or any of its subsidiaries under any
of the leases or affecting the Company's or any of its subsidiaries' rights to
the continued possession of the leased property.
(q) Except as described in the Prospectus, there is not pending, nor to the
Company's knowledge threatened, any action, suit, proceeding, inquiry or
investigation, against the Company, any of its subsidiaries or any of their
respective officers, directors or stockholders or to which the properties,
assets or rights of the Company or any of its subsidiaries are subject, before
or brought by any court or governmental agency or body or board of arbitrators,
which would, if adversely determined, have a Material Adverse Effect, or which
could prevent consummation of the transactions contemplated by this Agreement.
(r) There are no contracts or other documents required by the 1933 Act or
the 1933 Act Regulations to be described in or incorporated by reference into
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been accurately described in all material
respects in the Prospectus or incorporated or filed as required. The agreements
to which the Company or any of its subsidiaries is a party which are described
in the Registration Statement and the Prospectus are valid and enforceable in
all material respects by the Company or its subsidiary and, to the best of the
Company's or any of its subsidiary's knowledge, no party thereto is in breach or
default under any of such agreements except where such breach or default would
not have a
7
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
received notice of the intention of any other party to any contract to which the
Company or any such Subsidiary is also a party to terminate such contract,
except such contracts termination of which, individually or in the aggregate
with other contracts with respect to which such notice shall have been received,
would not have a Material Adverse Effect.
(s) The Company and each of its subsidiaries owns, possesses or has
obtained all permits, licenses, franchises, certificates, consents, orders,
approvals and other authorizations of governmental or regulatory authorities and
other third parties as are necessary to own or lease, as the case may be, and to
operate its properties and to carry on its businesses as presently conducted and
as currently proposed to be conducted, except where a failure to own, possess or
obtain such permits, licenses, franchises, certificates, consents, orders,
approvals and other authorizations would not have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries have received any notice
relating to termination, revocation or modification of any such license, permit,
franchise, certificate, consent, order, approval or authorization, which
termination, revocation or modification would have a Material Adverse Effect.
(t) The Company and each of its subsidiaries owns or possesses all
intangible property rights and know-how necessary for the conduct of its
business as currently carried on and as currently proposed to be carried on
(collectively, the "Intellectual Property"). Except as described in the
Prospectus, (i) no third parties have received rights to any such Intellectual
Property from the Company or any subsidiary, other than licenses granted in the
ordinary course of business; (ii) to the Company's or any subsidiary's
knowledge, there is no infringement by third parties of any such Intellectual
Property; (iii) there is no pending or, to the Company's or any subsidiary's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's or any subsidiary's rights in or to any such Intellectual
Property, and the Company and each subsidiary is unaware of any facts which
would form a basis for any such claim; and (iv) there is no pending or, to the
Company's or any subsidiary's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property, and the Company and each subsidiary is unaware of any facts which
would form a basis for any such claim. None of the technology employed by the
Company or any subsidiary has been obtained or, to the Company's or any
subsidiary's knowledge, is being used by the Company or any subsidiary in
violation of the rights of any person or third party. Neither the Company nor
any subsidiary knows of infringement by others of Intellectual Property owned by
or licensed to the Company or any subsidiary.
(u) The Company and its subsidiaries have implemented controls and other
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within the
time periods specified in the Commission's rules and forms and is accumulated
and communicated to the Company's management, including its chief executive
officer and chief financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure; and the
Company makes and keeps books, records, and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company and its subsidiaries; and the Company and its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as
8
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences; and, to the Company's
knowledge, neither the Company nor any subsidiary, nor any employee or agent
thereof, has made any payment of funds of the Company or any subsidiary, as the
case may be, or received or retained any funds, and no funds of the Company or
any subsidiary, as the case may be, have been set aside to be used for any
payment, in each case in violation of any law, rule or regulation.
(v) The Company and each subsidiary has filed all federal, state, local and
foreign income, franchise, property and other tax returns and tax forms required
to be filed, except where the failure to do so would not have a Material Adverse
Effect. Neither the Company nor any subsidiary is in default in the payment of
any taxes which were payable pursuant to said returns or any assessments with
respect thereto, other than any which the Company or any subsidiary is
contesting in good faith and as to which adequate reserves have been provided,
except where any such default would not have a Material Adverse Effect. Such
returns and forms are complete and correct in all material respects. The Company
and each subsidiary has made all payroll withholdings required to be made by it
with respect to employees. The charges, accruals and reserves on the books of
the Company and each subsidiary in respect of any tax liability for any year not
finally determined are adequate to meet any assessments or reassessments for
additional taxes. There have been no tax deficiencies asserted and, to the
Company's and each subsidiary's knowledge, no tax deficiency might be reasonably
asserted or threatened against the Company or any subsidiary that could
individually or in the aggregate have a Material Adverse Effect.
(w) The Company and each subsidiary maintains insurance (issued by insurers
of recognized financial responsibility) of the types and in the amounts
generally deemed adequate for its business and, to the best of the Company's,
each subsidiary's and the Selling Stockholders' knowledge, generally consistent
with insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company or any subsidiary against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
professional liability and casualty and liability (including, but not limited to
product liability) insurance covering the Company's and its subsidiaries'
operations, all of which insurance is in full force and effect.
(x) To the Company's and each subsidiary's knowledge, no labor problem
exists with the Company's or any subsidiary's employees, or is threatened or
imminent, that would have a Material Adverse Effect. Neither the Company nor any
subsidiary is aware of any existing, threatened or imminent labor disturbance by
the employees of any of its principal vendors, suppliers, contractors or
customers that would have a Material Adverse Effect.
(y) Neither the Company nor its officers, directors, stockholders or
affiliates, have taken, and such parties will not take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or result
in or constitute, the stabilization or manipulation of the price of the Shares
to facilitate the sale or resale of the Shares.
9
(z) The Common Stock has been registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the Shares
have been approved for listing on The Nasdaq Stock Market's National Market (the
"NASDAQ"), subject to official notice of issuance.
(aa) The Company has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby or as described in the Prospectus.
(bb) The Company is not, will not become as a result of the transactions
contemplated hereby, and does not intend to conduct its business in a manner
that would cause it to become, an "investment company" or a company controlled
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(cc) Except as described in the Registration Statement or Prospectus, the
Company has not sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the 1933 Act Regulations.
(dd) The Company and each subsidiary has good and marketable title to all
personal property owned by it, free and clear of all encumbrances and defects;
and all personal property held under lease by the Company and each subsidiary is
held by it under valid, subsisting and enforceable leases, with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property by the Company or its subsidiary.
(ee) No relationship, direct or indirect, exists between or among the
Company or any subsidiary on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any subsidiary on the
other hand, which is required to be described in the Prospectus and which is not
so described.
(ff) The statistical and market-related data included in the Prospectus and
the Registration Statement are based on or derived from sources that the Company
believes to be reliable and accurate.
(gg) The Company and each subsidiary is in compliance in all material
respects with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); to the Company's and each
subsidiary's knowledge, no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in Section 3(2) ERISA) for which
the Company or any subsidiary would have any liability; neither the Company nor
any subsidiary has incurred, and does not expect to incur, liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Code; and each "pension plan"
for which the Company or any subsidiary would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, that would reasonably be expected to cause the loss of such qualification.
10
(hh) Except as set forth in the Registration Statement and the Prospectus,
the Company and each of its subsidiaries is in material compliance with all of
its obligations arising under any contract to which the Company is a party or by
which it is bound where the Company is a prime contractor to a government entity
or agency or a subcontractor or supplier at any tier to any entity providing
services to a government entity or agency including material compliance with all
statutes, regulations and contractual provisions applicable to the Company as a
government contractor, prime contractor, subcontractor or supplier as
incorporated into any prime contracts, subcontracts or supply agreements, except
where such noncompliance would not have a Material Adverse Effect. Except as set
forth in the Registration Statement and the Prospectus, neither the Company nor
any of its subsidiaries has questioned or disallowed costs pending pursuant to
any government contract audit of which the Company or any subsidiary has
knowledge and has no pending or threatened claims against it as a result of the
performance or non-performance of any government contract, subcontract or supply
agreement.
Section 2. Representations and Warranties of the Selling Stockholders.
----------------------------------------------------------
Each Selling Stockholder severally represents and warrants to each Underwriter
and agrees that:
(a) The Selling Stockholder has placed in custody under a custody agreement
(the "Custody Agreement" and, together with all other similar agreements
executed by the other Selling Stockholders, the "Custody Agreements") with
[BANK], as custodian (the "Custodian"), for delivery under this Agreement,
certificates in negotiable form (with signature guaranteed by a commercial bank
or trust company having an office or correspondent in the United States or a
member firm of the New York Stock Exchange) representing the Shares to be sold
by the Selling Stockholder.
(b) The Selling Stockholder has duly and irrevocably executed and delivered
a power of attorney (the "Power of Attorney" and, together with all other
similar agreements executed by the other Selling Stockholders, the "Powers of
Attorney") appointing [_________], and any one of them acting singly, as
attorneys-in-fact, with full power of substitution, and with full authority
(exercisable by any one or more of them) to execute and deliver this Agreement
and to take such other action as may be necessary or desirable to carry out the
provisions hereof on behalf of the Selling Stockholder.
(c) Such Selling Stockholder has all legal capacity necessary to execute
and deliver this Agreement, the Custody Agreement and the Power of Attorney, to
sell and deliver the Shares to be sold by him, her or it hereunder and to
perform all other obligations under this Agreement, the Custody Agreement and
the Power of Attorney; each of this Agreement, the Custody Agreement and the
Power of Attorney has been duly executed and delivered by such Selling
Stockholder and constitutes the valid and binding agreement of such Selling
Stockholder, enforceable against him, her or it in accordance with its terms,
except that the indemnification provisions set forth in Section 9 of this
Agreement may be limited by applicable law or equitable principles, and except
as enforceability may be limited by bankruptcy, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally and
rules of law governing specific performance, injunctive relief and other
equitable remedies; the execution, delivery and performance of this Agreement,
the Custody Agreement and the Power of Attorney by such Selling Stockholder do
not and will not conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon any of the Shares to be sold by such Selling
Stockholder pursuant to the terms of, or constitute a default under, any
agreement or other instrument, or any order, rule or regulation of any court or
governmental agency having jurisdiction over such
11
Selling Stockholder or the Selling Stockholder's properties; and except as
required by the 1933 Act and applicable state securities laws, no consent,
authorization or order of, or filing or registration with, any court or
governmental agency is required (or, if required, has been obtained) for the
execution, delivery and performance of this Agreement, the Custody Agreement or
the Power of Attorney by such Selling Stockholder.
(d) At the Closing Time and any Delivery Date, such Selling Stockholder
will have good and valid title to the Shares being sold by him or her hereunder;
such Shares are, and at the Closing Time and any Delivery Date will be, duly
authorized, validly issued and outstanding, fully paid and non-assessable Common
Stock of the Company with no personal liability attaching to the ownership
thereof; and upon the delivery of and payment for such Shares as contemplated
herein, the Underwriters will receive good title to the Shares purchased by
them, respectively, from such Selling Stockholder, free and clear of any and all
liens, encumbrances, security interests and adverse claims.
(e) Without the prior written consent of the Representatives, such Selling
Stockholder, and any affiliate controlled by him, her or it (other than the
Company), will not sell or offer or contract to sell, except to the Underwriters
pursuant to this Agreement, any securities of the Company which he, she or it
beneficially owns, within 180 days after the effective date of the Registration
Statement. Such Selling Stockholder has not (i) taken, and agrees that he, she
or it will not take, directly or indirectly, any action which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares, or
(ii) since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares, or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(f) Except as set forth in the Prospectus, such Selling Stockholder is
disposing of his, her or its Shares hereunder for his, her or its own account
and is not selling such Shares, directly or indirectly, for the benefit of the
Company or the Underwriters.
(g) When any Preliminary Prospectus was filed with the Commission (i) it
contained all statements required to be stated therein regarding such Selling
Stockholder in accordance with, and complied in all respects regarding such
Selling Stockholder with the requirements of, the 1933 Act and 1933 Act
Regulations, and (ii) such statements in the Preliminary Prospectus as are made
in reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder for use therein did not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. When the Registration Statement or any amendment
thereto or any 462(b) Registration Statement or any amendment thereto was or is
declared effective and at the Closing Time or any Date of Delivery, as the case
may be, (i) it contained or will contain all statements required to be stated
therein regarding such Selling Stockholder in accordance with, and complied or
will comply in all respects regarding such Selling Stockholder with the
requirements of the 1933 Act and the 1933 Act Regulations and (ii) such
statements in the Registration Statement any 462(b) Registration Statement or
any amendment thereto as are made in reliance upon and in conformity with
written information furnished to the Company by such Selling Stockholder
specifically for use therein did not or will not include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any amendment or
12
supplement thereto is filed with the Commission pursuant to Rule 424(b) (or, if
any Prospectus or such amendment or supplement is not required to be so filed,
when the Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective), and at
the Closing Time or any Date of Delivery, as the case may be, (i) the
Prospectus, as amended or supplemented at any such time, contained or will
contain all statements required to be contained or stated therein regarding such
Selling Stockholder in accordance with, and complied or will comply in all
respects regarding such Selling Stockholder with the requirements of, the 1933
Xxx 0000 Act Regulations and (ii) such statements in the Prospectus, as so
amended or supplemented at any such time, as are made in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder specifically for use therein will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(h) The sale of the Shares by such Selling Stockholder pursuant to this
Agreement is not prompted by any information concerning the Company that is not
set forth in the Prospectus.
(i) The Selling Stockholder has not incurred any liability for a fee,
commission or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby.
Section 3. Sale and Delivery of Shares to the Underwriters; Closing.
--------------------------------------------------------
(a) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, the Company and the
Selling Stockholders agree to sell to the Underwriters named in Schedule II
hereto, and the Underwriters agree, severally and not jointly, to purchase from
the Company and the Selling Stockholders, at a purchase price of $[_________]
per share, the aggregate number of Firm Shares set forth opposite the name of
such Underwriter in Schedule II hereto.
(b) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, the Company hereby
grants an option to the Underwriters, severally and not jointly, to purchase up
to an additional [________] Option Shares on the same terms and conditions as
the Firm Shares. The option hereby granted will expire if not exercised within
the 30-day period after the first date on which you release the Firm Shares for
sale to the public. The option granted hereby may be exercised by you, as
Representatives of the several Underwriters, in whole or in part (but not more
than once), only for the purpose of covering the over-allotments that may be
made in connection with the offering and distribution of the Firm Shares, by
giving written notice to the Company. The notice of exercise shall set forth the
number of Option Shares as to which the several Underwriters are exercising the
option, and the time and date of payment and delivery thereof. Such time and
date of delivery (the "Date of Delivery") shall be determined by you but shall
not be earlier than the second business day after the date on which the notice
of the exercise of the option shall have been given nor later than seven full
business days after the exercise of such option, nor in any event prior to the
Closing Time. If the option is exercised as to all or any portion of the Option
Shares, the Option Shares as to which the option is exercised shall be purchased
by the Underwriters, severally and not jointly, in their respective underwriting
obligation proportions.
13
(c) Payment of the purchase price for and delivery of the Firm Shares shall
be made at the offices of SunTrust Capital Markets, Inc. ("SunTrust") or at such
other place as shall be agreed upon by the Company, the Selling Stockholders and
you, at 9:00 A.M. (prevailing Eastern time), either (i) on the third full
business day after the effective date of the Registration Statement, or (ii) at
such other time not more than ten full business days thereafter as you, the
Selling Stockholders and the Company shall determine (unless, in either case,
postponed pursuant to Section 12 hereof) (such date and time of payment and
delivery being herein called the "Closing Time") (the Closing Time and each Date
of Delivery, if any, being sometimes referred to as a "Closing Date"). In
addition, in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for and delivery of the Option
Shares shall be made at the offices of SunTrust in the manner set forth above,
or at such other place as the Company and you shall determine, on the Date of
Delivery as specified in the notice from you to the Company. Payment for the
Firm Shares and the Option Shares in immediately available funds shall be made
by wire transfer to the respective bank accounts designated by the Company and
[_________] as Custodian for the Selling Stockholders, against delivery to you
for the respective accounts of the Underwriters of the Shares to be purchased by
them.
(d) The Shares to be purchased by the Underwriters shall be in such
denominations and registered in such names as you may request in writing at
least two full business days before the Closing Time or the Date of Delivery, as
the case may be. The Shares will be made available at the offices of SunTrust or
at such other place as you may designate for examination and packaging not later
than 9:00 A.M. (prevailing Eastern time) at least two full business days prior
to the Closing Time or the Date of Delivery, as the case may be.
(e) After the Registration Statement becomes effective, you intend to offer
the Shares to the public as set forth in the Prospectus, but after the initial
public offering of such Shares, you may from time to time increase or decrease
the public offering price, in your sole discretion, by reason of changes in
general market condition or otherwise.
Section 4. Certain Covenants of the Company. The Company covenants and
--------------------------------
agrees with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time that
this Agreement is executed and delivered by the parties hereto). If the Company
elects to rely upon Rule 430A of the 1933 Act Regulations or the filing of the
Prospectus is otherwise required under Rule 424(b) of the 1933 Act Regulations,
and subject to the provisions of Section 4(b) of this Agreement, the Company
will comply with the requirements of Rule 430A and will file the Prospectus,
properly completed, pursuant to the applicable provisions of Rule 424(b), within
the time period prescribed. If the Company elects to rely upon Rule 462(b), the
Company shall file a 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 A.M., prevailing Eastern time, on the date
of this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee. If the Company elects,
with the consent of the Representatives, to rely on Rule 434 under the 1933 Act,
the Company will file with the Commission in accordance with Rule 424(b) of the
1933 Act Regulations the Rule 434 Prospectus. The Company will notify you
immediately and confirm the notice in writing, (i) when the Registration
Statement, the 462(b) Registration Statement or any post-effective amendment to
the Registration
14
Statement, shall have become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission to amend
the Registration Statement or the 462(b) Registration Statement or amend or
supplement the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any 462(b) Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus, or of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the institution or threat of any proceedings for any of such
purposes. The Company will use its best efforts to prevent the issuance of any
such stop order or of any order preventing or suspending such use and, if any
such order is issued, use its best efforts to obtain the withdrawal thereof at
the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement or any amendment or supplement (i) to the Prospectus, if
the Company has not elected to rely upon Rule 430A, or (ii) if the Company has
elected to rely upon Rule 430A, to either the Prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectus
filed in accordance with Rule 424(b), or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement, in any case if you
shall not have previously been advised and furnished a copy thereof a reasonable
time prior to the proposed filing, or if you or counsel for the Underwriters
shall reasonably object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at the Company's
expense, as soon as available, as many signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished or
will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto (but without
exhibits).
(d) The Company will deliver to each Underwriter, at the Company's expense,
from time to time, as many copies of each Preliminary Prospectus as such
Underwriter may reasonably request, and the Company hereby consents to the use
of such copies for purposes permitted by the 1933 Act and the 1933 Act
Regulations. If the Company elects, with the consent of the Representatives, to
rely on Rule 434 under the Act, the Company will provide the Underwriters with
copies of the Rule 434 Prospectus (including copies of a term sheet that
complies with the requirements of Rule 434 under the 1933 Act), in such numbers
as each Underwriter may reasonably request. The Company will deliver to each
Underwriter, at the Company's expense, as soon as the Registration Statement
shall have become effective, and thereafter from time to time as requested
during the period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as supplemented or amended) as
each Underwriter may reasonably request. The Company will use its best efforts
to comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and in the Prospectus. In case you are required to deliver a prospectus within
nine months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in
15
light of the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any reason it shall be necessary during
such period to amend or supplement the Prospectus in order to comply with the
1933 Act or the 1933 Act Regulations, the Company will notify you and upon your
request prepare promptly and furnish without charge to each Underwriter and to
any dealer in securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance. In case any
Underwriter is required to deliver a prospectus in connection with sales of any
of the Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, the
Company will prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with the requirements
of Section 10(a)(3) of the 1933 Act.
(e) The Company will use its best efforts, in cooperation with you, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not otherwise so subject.
The Company will file such statements and reports as may be required by the laws
of each jurisdiction in which the Shares have been qualified as above provided.
(f) The Company will use the net proceeds received by it from the sale of
the Shares in the manner specified in the Prospectus under the caption "Use of
Proceeds."
(g) The Company will make generally available to its security holders as
soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the 1933 Act
Regulations), an earnings statement (in reasonable detail but which need not be
audited) complying with the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Regulations and covering a period of at least 12 months
beginning after the effective date of the Registration Statement.
(h) During a period of three years from the date hereof, the Company will
furnish to you: (i) copies of all reports mailed to stockholders of the Company;
and (ii) copies of all reports and financial statements furnished to or filed
with the Commission, NASDAQ, any securities exchange or the NASD.
(i) For a period of 180 days from the date hereof (the "Lock-Up Period"),
the Company will not, without your prior written consent, directly or
indirectly, sell, offer to sell, grant any option for the sale of, hypothecate,
pledge, enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by the
Company or any affiliate, or otherwise issue or dispose of, any Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock, or
register or publicly announce any intent to register under the 1933 Act the
offer or sale of any capital stock of the Company, except for: (i) the
registration of the offer and sale of the Shares and sales to the Underwriters
pursuant to this Agreement; (ii) contributions to employee benefit plans in
existence on the date of the execution of this Agreement; (iii) the grant of
16
options, not exercisable during the Lock-Up Period, pursuant to the Company's
1997 Stock Option and Incentive Plan or 2003 Stock Option Plan in effect at the
time of execution of this Agreement; and (iv) a registration statement filed on
Form S-8 limited in scope to the Company's 1997 Stock Option and Incentive Plan
and 2003 Stock Option Plan described in the Registration Statement and
Prospectus and the Company's tax-qualified employee savings plan under Section
401(k) of the Code. The Company will not, and will use its best efforts to cause
its officers, directors and affiliates not to, take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares.
(j) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the same
entity as the transfer agent) for its Common Stock.
(k) For as long as the Common Stock of the Company is publicly traded, the
Company will use it best efforts to maintain the listing of its shares of Common
Stock on NASDAQ; provided that nothing herein shall prevent the Company from
listing its Common Stock on the New York Stock Exchange.
(l) If at any time during the 30-day period after the Registration
Statement becomes effective, any publication or event relating to or affecting
the Company shall occur as a result of which in your reasonable opinion the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such publication or event necessitates a supplement or
amendment of the Prospectus), the Company agrees to forthwith consult and
cooperate with you concerning the Company's response to or comment on such
publication or event.
(m) The Company will file timely and accurate information with the
Commission in accordance with Rule 463 of the 1933 Act Regulations or any
successor provision.
(n) The Company will supply the Underwriters with copies of all
correspondence to and from and all documents issued to and by the Commission or
the Commission staff in connection with the registration of the Shares under the
1933 Act.
Section 5. Covenants of the Selling Stockholders. Each Selling Stockholder
covenants and agrees with each Underwriter as follows:
(a) Such Selling Stockholder will pay all taxes, if any, on the transfer
and sale of the Shares to be sold by him, her or it hereunder.
(b) Such Selling Stockholder will comply with all reasonable requests of
the Company to cause the Registration Statement to become effective, to do and
perform all things to be done and performed by the Selling Stockholder hereunder
prior to the Closing Time and, if applicable, the Date of Delivery, and to
satisfy all conditions precedent to the delivery of the Shares to be sold by the
Selling Stockholders.
17
(c) During the Lock-Up Period, such Selling Stockholder will not, without
your prior written consent, directly or indirectly, sell, offer or contract to
sell, grant any option for the sale of, hypothecate, pledge, enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by such Selling Stockholder or any
affiliate of, or otherwise issue or dispose of, any Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, except to the
Underwriters pursuant to this Agreement. The Selling Stockholder will not take,
directly or indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to stabilize or manipulate
the price of any security of the Company, or which may cause or result in, or
which might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of any of the Shares.
(d) Such Stockholder acknowledges and agrees that the shares to be sold by
the Selling Stockholder hereunder, which are represented by the certificates
held in custody for the Selling Stockholder, are subject to the interests of the
Underwriters and the other Selling Stockholders thereunder, that the
arrangements made by the Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholder hereunder shall
not be terminated by any act of the Selling Stockholder, by operation of law, by
the death or incapacity of any individual Selling Stockholder or, in the case of
a trust, by the death or incapacity of any executor or trustee or the
termination of such trust, or the occurrence of any other event.
(e) Such Selling Stockholder will deliver to you prior to the Closing Time
a properly completed and executed U.S. Treasury Department Form W-9.
Section 6. Payment of Expenses.
-------------------
(a) The Company will pay or cause to be paid and bear all costs, fees and
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits), as originally filed and as
amended, the Preliminary Prospectuses and the Prospectus and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters; (ii) the preparation, printing and distribution of this Agreement
and any instruments relating to any of the foregoing; (iii) the issuance and
delivery of the Shares to the Underwriters, including any transfer taxes payable
upon the sale of the Shares to the Underwriters (other than transfer taxes on
resales by the Underwriters); (iv) the fees and disbursements of the Company's
counsel and accountants; (v) the qualification of the Shares under the
applicable securities laws in accordance with Section 4(e) hereof and any filing
for review of the offering with the NASD, including filing fees and fees and
disbursements of counsel for the Underwriters in connection therewith; (vi) the
transfer agent's and registrar's fees and all miscellaneous expenses referred to
in Item 13 of the Registration Statement; (vii) costs related to travel and
lodging incurred by the Company and its representatives relating to meetings
with and presentations to prospective purchasers of the Shares; and (viii) all
other costs and expenses incident to the performance of the Company's
obligations hereunder (including costs incurred in closing the purchase of the
Option Shares, if any) that are not otherwise specifically provided for in this
section. The Company, upon your request, will provide funds in advance for
filing fees in connection with "blue sky" qualifications and the NASD review of
the offering.
18
(b) The Selling Stockholders shall pay (i) their proportionate share of the
Underwriters' discount relating to Shares sold by such Selling Stockholders and
(ii) any transfer taxes imposed on the sale of the Shares to the Underwriters by
the Selling Stockholders (other than transfer taxes on resales by the
Underwriters).
Section 7. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Shares that they have severally agreed
to purchase pursuant to this Agreement (whether Firm Shares at the Closing Time
or, upon exercise of the option granted in Section 3, Option Shares on the Date
of Delivery) are subject to the following conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., prevailing Eastern time, on the date of this Agreement or, with your
consent, at a later time and date not later, however, than 5:30 P.M., prevailing
Eastern time, on the first business day following the date hereof, or at such
later time or on such later date as you may agree to in writing; as of such
Closing Date the Registration Statement shall remain effective and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to your knowledge or the knowledge of the
Company or the Selling Stockholders, shall be contemplated by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel for the
Underwriters. If the Company has elected to rely upon Rule 430A, a prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) You shall have received the favorable opinion, dated such Closing Date,
of Blank Rome LLP, counsel for the Company and the Selling Stockholders, with
respect to the Company and the Selling Stockholders, together with signed or
reproduced copies of such opinions for each of the other Underwriters, in form
and substance satisfactory to you and counsel for the Underwriters, stating
that:
(i) the Company and each of its subsidiaries has been duly
incorporated or organized and is validly existing as a corporation or other
entity in good standing under the laws of the state of its incorporation or
organization, is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each jurisdiction within the United
States 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 or in good standing would not have a Material Adverse Effect;
(ii) all of the issued and outstanding capital stock or other equity
interest of each subsidiary of the Company has been duly authorized and
validly issued and is fully paid and nonassessable; and the capital stock
or other equity interest of each subsidiary owned by the Company, directly
or through subsidiaries, is owned free from liens, encumbrances and
defects;
(iii) the Company and each of its subsidiaries has all power and
authority necessary to own or hold its properties and conduct its business
as described in the Registration Statement and Prospectus;
19
(iv) the authorized, issued and outstanding capital stock as of
[_____________], 2003 is as set forth under the heading "Capitalization" in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable;
(v) the outstanding shares of capital stock of the Company are free of
statutory and contractual preemptive rights and have been issued in
compliance with all state and federal securities laws; there are no
outstanding securities of the Company convertible or exchangeable into, or
evidencing the right to purchase or subscribe for, any shares of capital
stock of the Company and, except for options under the Company's 1997 Stock
Option and Incentive Plan and warrants described in the Registration
Statement and Prospectus, there are no outstanding or authorized options,
warrants or rights of a similar character obligating the Company to issue
any shares of its capital stock or any securities convertible or
exchangeable into, or evidencing the right to purchase or subscribe for,
any shares of such stock; there are no restrictions upon the voting or
transfer of any shares of the Company's capital stock pursuant to the
Company's Certificate of Incorporation or Bylaws or any agreement or other
instrument known to such counsel;
(vi) the Shares being delivered by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and
delivered against payment therefore, will be duly and validly issued, fully
paid and non-assessable;
(vii) other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending, or, to such counsel's knowledge,
threatened, to which the Company or any subsidiary is a party or of which
any property or assets of the Company or any subsidiary is the subject
which is required to be set forth in the Prospectus;
(viii) the Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company (except as to the
financial statements and schedules and other financial data contained
therein, as to which such counsel need express no opinion) comply in all
material respects with the requirements of the 1933 Act and the 1933
Regulations, and no amendment to the Registration Statement is required to
be filed which has not been filed;
(ix) the Registration Statement was declared effective under the 1933
Act as of the date and time specified in such opinion, any required filing
with the Commission of the Prospectus pursuant to Rule 424 of the 1933 Act
Regulations was made as of the date specified in such opinion, and, to the
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceeding for that
purpose is pending or threatened by the Commission;
(x) the statements contained in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to summarize
certain provisions of the capital stock of the Company, are correct in all
material respects and constitute a fair summary thereof; the statements
contained in the Prospectus under the captions "Management," "Description
of Capital Stock" and "Shares Eligible for Future Sales" and in the
Registration Statement in Item
20
14, in each case insofar as such statements constitute summaries of
statutes, rules, regulations, or legal matters, are correct in all material
respects and constitute a fair summary thereof;
(xi) to such counsel's knowledge, there are no contracts or other
documents that are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations that have not been described or filed as exhibits to the
Registration Statement;
(xii) this Agreement has been duly authorized, executed and delivered
by the Company, and it constitutes the valid and binding agreement of the
Company, enforceable in accordance with its terms;
(xiii) the issuance and sale of the Shares being delivered by the
Company pursuant to this Agreement and the execution, delivery and
compliance by the Company with all of the provisions of this Agreement and
the consummation of the transactions contemplated hereby will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument filed or required to be
filed as exhibits to the Registration Statement pursuant to the 1933 Act
Regulations to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions of
the Certificate of Incorporation or Bylaws (or similar corporate documents)
of the Company or any of its subsidiaries or any statute or any order, rule
or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any
of their respective properties or assets; and, except for the registration
of the Shares under the 1933 Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Shares by the Underwriters, no
consent, approval, authorization or order of, or filing or registration
with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, except for such consents,
approvals, authorizations, orders, filings or registrations as have been
obtained or made;
(xiv) except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the 1933 Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the 1933 Act;
(xv) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be, an "investment company" or an entity
"controlled" by an "investment company", as those terms are defined in the
Investment Company Act of 1940, as amended;
21
(xvi) each Selling Stockholder has full right and power to enter into
this Agreement, the Power of Attorney and the Custody Agreement; except for
the registration of the Shares under the 1933 Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Shares by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Power of
Attorney or the Custody Agreement by any Selling Stockholder and the
consummation by any Selling Stockholder of the transactions contemplated
hereby and thereby;
(xvii) this Agreement has been duly executed and delivered by or on
behalf of each Selling Stockholder, and it constitutes the valid and
binding agreement of each such Selling Stockholder, enforceable in
accordance with its terms;
(xviii) a Power of Attorney and a Custody Agreement have been duly
executed and delivered by each Selling Stockholder and constitute valid and
binding agreements of each Selling Stockholder, enforceable in accordance
with their respective terms; and
(xix) each Selling Stockholder has good and valid title to the Shares
to be sold by such Selling Stockholder under this Agreement, free and clear
of all liens, encumbrances, equities or claims, and full right, power and
authority to sell, assign, transfer and deliver such Shares to be sold by
such Selling Stockholder hereunder.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the federal laws of the United States of America
and the laws of the State of Delaware. Such opinion shall also be to the effect
that (x) such counsel has acted as counsel to the Company and the Selling
Stockholders in connection with the preparation of the Registration Statement,
and (y) based on the foregoing, no facts have come to the attention of such
counsel which lead them to believe that the Registration Statement (except for
the financial statements and financial schedules and other financial data
included therein, as to which such counsel need express no belief), as of the
Closing Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus (except as
stated above) contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as set forth in clause (x)
above).
(c) You shall have received a favorable opinion from Bass, Xxxxx & Xxxx
PLC, counsel for the Underwriters, dated such Closing Date, with respect to the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(d) As of such Closing Date,
22
(i) the Registration Statement, any 462(b) Registration Statement, and
the Prospectus, as they may then be amended or supplemented, shall contain
all statements that are required to be stated therein under the 1933 Act
and the 1933 Act Regulations and in all respects shall conform to the
requirements of the 1933 Act and the 1933 Act Regulations, the Company
shall have complied in all respects with Rules 424(b), 430A and 462 under
the 1933 Act and neither the Registration Statement, any 462(b)
Registration Statement nor the Prospectus, as they may then be amended or
supplemented, shall contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(ii) there shall not have been any change in the capital stock or
long-term debt of the Company or any subsidiary or any change, or any
development involving a prospective change, in or affecting the business,
general affairs, management, condition (financial or otherwise),
stockholders' equity, results of operations, properties or prospects of the
Company and its subsidiaries, otherwise than as set forth in the
Prospectus, the effect of which is, in your judgment, so material and
adverse as to make it impracticable or inadvisable to proceed with the
completion of the public offering or the sale of payment for the Shares;
(iii) no action, suit or proceeding at law or in equity before or by
any federal, state or other commission, court, board or administrative
agency shall be pending or, to the best of the Company's or any
subsidiary's knowledge, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus,
other than as set forth therein, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect;
(iv) the Company and the Selling Stockholders shall have complied with
all agreements and satisfied all conditions contained herein in all
respects on their respective parts to be performed or satisfied at or prior
to such Closing Date; and
(v) the representations and warranties of the Company set forth in
Section 1 and the representations and warranties of the Selling
Stockholders set forth in Section 2 shall be accurate in all respects as
though expressly made at and as of such Closing Date. You shall have
received certificates, dated as of such Closing Date, executed by the Chief
Executive Officer and the Chief Financial Officer of the Company to such
effect and with respect to the following additional matters:
(A) the Registration Statement has become effective under the
1933 Act and no stop order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the
Prospectus has been issued, and no proceedings for that purpose have
been instituted or are pending or, to the best of their knowledge,
threatened under the 1933 Act;
(B) they have carefully reviewed the Registration Statement, any
462(b) Registration Statement and the Prospectus and when the
Registration Statement and any 462(b) Registration Statement became
effective and at all times subsequent thereto up
23
to the delivery of such certificate, the Registration Statement, any
462(b) Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required
to be included therein or necessary to make the statements therein in
light of the circumstances in which they were made, not misleading and
neither the Registration Statement, any 462(b) Registration Statement,
the Prospectus nor any amendment or supplement thereto included any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, and, since the effective date of
the Registration Statement, there has occurred no event required to be
set forth in an amended or supplemented Prospectus that has not been
so set forth, and
(C) all agreements herein to be performed by the Company and the
Selling Stockholders, respectively, on or prior to such Closing Date
have been duly performed.
(e) You shall have received from Ernst & Young LLP a letter addressed to
the Underwriters and dated the date hereof and the Closing Date, substantially
in the form heretofore approved by you and your counsel.
(f) [Intentionally Omitted]
(g) You shall have received from Deloitte & Touche, LLP a letter addressed
to the Underwriters and dated the date hereof and the Closing Date,
substantially in the form heretofore approved by you and your counsel.
(h) [Intentionally Omitted]
(i) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or the Nasdaq Stock Market or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or the
settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by federal or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions, including without limitation as a result of terrorist
activities after the date hereof, or the effect of international conditions on
the financial markets in the United States shall be such as to make it, in your
judgment, impracticable or inadvisable to proceed with the completion of the
public offering or the sale or payment for the Shares.
(j) As of such Closing Date, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated in this Agreement and the matters
referred to in Section 7(d) and in order to evidence the accuracy and
completeness of any
24
of the representations and warranties or statements of the Company and the
Selling Stockholders, the performance of any of the covenants of the Company and
the Selling Stockholders, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling Stockholders
at or prior to such Closing Date in connection with the authorization, issuance
and sale of the Shares as contemplated in this Agreement shall be reasonably
satisfactory in form and substance to you and to counsel for the Underwriters.
The Company will furnish you with such number of conformed copies of such
opinion, certificates, letters and documents, as you shall request.
(k) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(l) The Firm Shares and the Option Shares, if any, shall have been approved
for listing on the NASDAQ National Market upon official notice of the issuance,
sale and evidence of satisfactory distribution thereof pursuant to this
underwritten public offering.
(m) Each officer, director and stockholder of the Company shall have agreed
in writing as to the matters set forth in Section 1(k).
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you on notice to the Company and the Selling Stockholders
at any time at or prior to such Closing Date, and such termination shall be
without liability of any party to any other party.
Section 8. [Intentionally Omitted]
Section 9. Indemnification and Contribution.
--------------------------------
(a) The Company will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the Exchange Act, and the successors and assigns of all such persons, from and
against any losses, claims, damages or liabilities, joint or several, to which
any such Underwriter or any such other person may become subject under the 1933
Act, the Exchange Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any Rule 434 Prospectus, or any amendment or supplement thereto, or
in any "blue sky" application or other document executed by the Company or based
upon any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, and will reimburse each
Underwriter and each such partner, director, officer, employee and controlling
person for any legal or other expenses reasonably incurred by such Underwriter,
partner, director, officer, employee or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged
25
untrue statement or omission or alleged omission made in the Registration
Statement, such Preliminary Prospectus, Prospectus or Rule 434 Prospectus, or
such amendment or supplement, or any Blue Sky Application in reliance upon and
in conformity with written information furnished to the Company by you or by any
Underwriter through you expressly for use therein, it being understood and
agreed that the only such information furnished by you or by any Underwriter
through you consists of the information specified in Section 9(h) below;
provided, further, that the Company will not be liable for any such losses,
claims, damages, or liabilities arising from the sale of the Shares to any
person if a copy of the Prospectus (as first filed pursuant to Rule 424(b)) or
the Prospectus as amended or supplemented by all amendments or supplements
thereto which has been furnished to the Underwriters (within a reasonable amount
of time prior to such sale) shall not have been sent, mailed or given to such
person, at or prior to the written confirmation of the sale of such Shares to
such person, but only if and to the extent that such Prospectus, if so sent or
delivered, would have cured the defect giving rise to, and been a complete
defense against the person asserting, such loss, claim, damage or liability. In
addition to its other obligations under this Section 9(a), the Company agrees
that, as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
breach or any statement or omission, or any alleged statement or omission,
described in this Section 9(a), it will reimburse the Underwriters, their
partners, directors, officers, employees and controlling persons on a monthly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters and such other persons for such expense and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to an
Underwriter or any such other person within 30 days of a request for
reimbursement shall bear interest at the prime rate (or reference rate or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by [bank, city, state] (the "Prime Rate") from the date of
such request. This indemnity agreement shall be in addition to any liabilities
that the Company may otherwise have.
(b) Each Selling Stockholder, severally but not jointly, will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the Exchange Act, and the successors and assigns
of all such persons, from and against any losses, claims, damages or
liabilities, joint or several, to which any such Underwriter or any such other
person may become subject under the 1933 Act, the Exchange Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, any Rule 434 Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, in each
case to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, such
Preliminary Prospectus, Prospectus or Rule 434 Prospectus, or such amendment or
supplement, or any Blue Sky Application, in reliance upon and in conformity with
written information furnished to the Company by such Selling Stockholder for use
therein, and will reimburse each Underwriter and each such partner, director,
officer, employee and
26
controlling person for any legal or other expenses reasonably incurred by such
Underwriter, partner, director, officer, employee or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Selling Stockholders shall not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus, Prospectus or Rule 434 Prospectus, or such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by you or by any
Underwriter through you expressly for use therein, it being understood and
agreed that the only such information furnished by you or by any Underwriter
through you consists of the information specified in Section 9(h) below;
provided further, that the Selling Stockholders will not be liable for any such
losses, claims, damages, or liabilities arising from the sale of the Shares to
any person if a copy of the Prospectus (as first filed pursuant to Rule 424(b))
or the Prospectus as amended or supplemented by all amendments or supplements
thereto which has been furnished to the Underwriters (within a reasonable amount
of time prior to such sale) shall not have been sent, mailed or given to such
person, at or prior to the written confirmation of the sale of such Shares to
such person, but only if and to the extent that such Prospectus, if so sent or
delivered, would have cured the defect giving rise to, and been a complete
defense against the person asserting, such loss, claim, damage or liability; and
provided further, that the liability of such Selling Stockholder under this
Section 9(b) will be limited to an amount equal to the aggregate proceeds, net
of underwriting discounts, to such Selling Stockholder from the sale of Shares
by such Selling Stockholder hereunder. In addition to his or her other
obligations under this Section 9(b), each Selling Stockholder agrees, severally
and not jointly, that as an interim measure during the pendency of any such
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any breach or any statement or omission, or any alleged statement or
omission, with respect to such Selling Stockholder described in this Section
9(b), he or she will reimburse the Underwriters, their partners, directors,
officers, employees and controlling persons on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of such Selling Stockholder's obligation to reimburse the
Underwriters and such other persons for such expense and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to an
Underwriter or any such other person within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities that
the Selling Stockholders may otherwise have.
(c) Each Underwriter, severally but not jointly, will indemnify and hold
harmless the Company and the Selling Stockholders against any losses, claims,
damages or liabilities to which the Company or the Selling Stockholders may
become subject under the 1933 Act, the Exchange Act, common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, any Rule 434 Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
27
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, such Preliminary Prospectus, Prospectus or Rule 434
Prospectus, or such amendment or supplement, or any Blue Sky Application, in
reliance upon and in conformity with information furnished to the Company by
such Underwriter expressly for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information specified in Section 9(h) below, and will reimburse the Company and
the Selling Stockholders for any legal or other expenses reasonably incurred by
the Company or the Selling Stockholders in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to
their other obligations under this Section 9(c), the Underwriters agree that, as
an interim measure during the pendency of any such claim, action, investigation,
inquiry or other proceeding arising out of or based upon any breach or any
statement or omission, or any alleged statement or omission, described in this
Section 9(c), they will reimburse the Company and the Selling Stockholders on a
monthly basis for all reasonable legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of their obligation to reimburse the Company
or the Selling Stockholders for such expense and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to the
Company or the Selling Stockholders within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities that
the Underwriters may otherwise have.
The indemnity agreement in this Section 9(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the Exchange Act, to the same extent as such
agreement applies to the Company.
(d) Within ten days after receipt by an indemnified party under subsection
(a), (b), (c) or (d) above of notice of commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; no indemnification provided in this Section
9(a), 9(b) or 9(c) shall be available to any party who shall fail to give notice
as provided in this Section 9(d) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party otherwise than under this Section 9.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it shall wish, jointly with any other indemnifying party, similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized by the indemnifying party, (ii)
28
the indemnified party shall have been advised by such counsel that there may be
a conflict of interest between the indemnifying party and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf of
the indemnified party) or (iii) the indemnifying party shall not in fact have
employed counsel to assume the defense of such action, in any of which events
such fees and expenses shall be borne by the indemnifying party. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Section 9(a), 9(b) and 9(c)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Service of
a written demand for arbitration or a written notice of intention to arbitrate
must commence any such arbitration, therein electing the arbitration tribunal.
In the event the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding to
said demand or notice is authorized to do so. Any such arbitration will be
limited to the operation of the interim reimbursement provisions contained in
Sections 9(a), 9(b) and 9(c) hereof and will not resolve the ultimate propriety
or enforceability of the obligation to indemnify for expenses that is created by
the provisions of Sections 9(a), 9(b) and 9(c).
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 9 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Selling Stockholders and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity incurred by the Company, the Selling Stockholders and one or more
of the Underwriters, as incurred, in such proportions that (i) the Underwriters
are responsible pro rata for that portion represented by the underwriting
discount appearing on the cover page of the Prospectus bears to the public
offering price (before deducting expenses) appearing thereon, and (ii) the
Company and the Selling Stockholders are responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation; provided,
further, that if the allocation provided above is not permitted by applicable
law, the Company, the Selling Stockholders and the Underwriters shall contribute
to the aggregate losses in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company, the Selling Stockholders and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, by the Selling Stockholders or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the
29
losses, claims, damages or liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (f), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 9(f),
the partners, directors, officers and employees and each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company.
(g) The parties to this Agreement acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions of this Agreement, including without limitation, the
provisions of this Section 9, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the 0000 Xxx. The parties
are advised that federal or state public policy, as interpreted by the courts in
certain jurisdictions, may be contrary to certain of the provisions of this
Section 9, and the parties hereto hereby expressly waive and relinquish any
right or ability to assert such public policy as a defense to a claim under this
Section 9 and further agree not to attempt to assert any such defense.
(h) For purposes of this Section 9, the Underwriters severally confirm, and
the Company and the Selling Stockholders acknowledge, that the concession and
reallowance figures appearing under the caption "Underwriting--Underwriting
Discount and Expenses" and under the caption "Underwriting--Stabilization, Short
Positions and Penalty Bids" in any Preliminary Prospectus and in the Prospectus
constitutes the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
Section 10. Representations and Agreements to Survive Delivery. The
--------------------------------------------------
representations, warranties, indemnities, agreements and other statements of the
Company and the Selling Stockholders, set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, the Selling Stockholders, any
Underwriter or any representative, officer, director or any controlling person
with respect to an Underwriter or the Company, and will survive delivery of and
payment for the Shares or termination of this Agreement.
Section 11. Effective Date of Agreement and Termination.
-------------------------------------------
(a) This Agreement shall become effective upon the later of (a) the
execution and delivery hereof by the parties hereto and (b) release of
notification of the effectiveness of the Registration Statement by the
Commission, provided, however, that the provisions of Sections 6 and 9 shall at
all times be effective.
30
(b) You may terminate this Agreement by notice to the Company and the
Selling Stockholders at any time at or prior to the Closing Date in accordance
with the last paragraph of Section 7 of this Agreement.
(c) If this Agreement is terminated pursuant to this Section 11, such
termination shall be without liability of any party to any other party, except
that, notwithstanding any such termination, (i) the provisions of Section 6 and
Section 9 shall remain in effect, and (ii) if any Shares have been purchased
hereunder, the representations and warranties in Section 1 and Section 2 and all
obligations under Section 4 and Section 5 shall also remain in effect.
Section 12. Default by One or More of the Underwriters.
------------------------------------------
(a) If any Underwriter shall default in its obligation to purchase the Firm
Shares that it has agreed to purchase hereunder, you may in your discretion
arrange for you, another party, or other parties to purchase such Firm Shares on
the terms contained herein. If within 36 hours after such default by any
Underwriter you do not arrange for the purchase of such Firm Shares, then the
Company or the Selling Stockholders shall be entitled to a further period of 36
hours within which to procure another party or other parties satisfactory to you
to purchase such Firm Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the Selling
Stockholders that you have so arranged for the purchase of such Firm Shares, or
the Company or the Selling Stockholders notifies you that it has so arranged for
the purchase of such Firm Shares, you or the Company or the Selling Stockholders
shall have the right to postpone the Closing Time for a period of not more than
seven days in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any persons substituted under this Section 12 with like effect as if such person
had originally been a party to this Agreement with respect to such Firm Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Stockholders as provided in subsection (a) above, the
aggregate number of Firm Shares which remains unpurchased does not exceed 10%
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the Firm Shares which such Underwriter agreed to purchase hereunder
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Firm Shares which such Underwriter agreed to
purchase hereunder) of the Firm Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Stockholders as provided in subsection (a) above, the
number of Firm Shares which remains unpurchased exceeds 10%, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Firm Shares of a defaulting Underwriter
or Underwriters, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Stockholders except for the expenses to be borne by the Company, the
31
Selling Stockholders and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 9 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
Section 13. Default by the Company or the Selling Stockholders. If the
--------------------------------------------------
Company or the Selling Stockholders shall fail at the Closing Time to sell and
deliver the respective aggregate number of Firm Shares that they are obligated
to sell, then this Agreement shall terminate without any liability on the part
of any non-defaulting party, except to the extent provided in Section 6 and
except that the provisions of Section 9 shall remain in effect. No action taken
pursuant to this Section shall relieve the Company or the Selling Stockholders
from liability, if any, in respect of its default.
Section 14. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, delivered or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o SunTrust Xxxxxxxx Xxxxxxxx,
000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx
Xxxxx and notices to the Company and the Selling Stockholders shall be directed
to The Providence Service Corporation, 000 Xxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx
00000, Attention: Xxxxxxxx XxXxxxxx. Each notice hereunder shall be effective
upon receipt by the party to which it is addressed.
Section 15. Parties. This Agreement is made solely for the benefit of the
-------
Underwriters, the Selling Stockholders, and the Company and, to the extent so
provided, the partners, directors, officers and employees of the Underwriters
and any person controlling any of the Underwriters, the directors of the
Company, the officers of the Company who have signed the Registration Statement
and any person controlling the Company, and their respective executors,
administrators, successors and assigns and, subject to the provisions of Section
12, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Shares.
Section 16. Governing Law and Time. This Agreement shall be governed by,
----------------------
and construed in accordance with, the laws of the State of Delaware. Specified
time of the day refers to United States Eastern Time, unless otherwise
specified.
Section 17. Counterparts. This Agreement may be executed in any number of
------------
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
32
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Selling Stockholders and
the several Underwriters in accordance with its terms.
Very truly yours,
THE PROVIDENCE SERVICE CORPORATION
By:
----------------------------------------------------------
Xxxxxxxx X. XxXxxxxx, Chairman and Chief Executive Officer
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE I:
By:
-----------------------------------------------------------
[_________], Attorney-in-Fact
Confirmed and accepted in Atlanta, Georgia,
as of the date first above written, as Representatives
of the Underwriters named in Schedule II hereto.
By: SunTrust Capital Markets, Inc.
By:
-----------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
33
SCHEDULE I
Number of Firm
Selling Stockholder Shares to be Sold
------------------- -----------------
Xxxxxx Xxxxxx Darling 72,179
Xxxxxx X. Xxxxxxxx 16,072
Xxxxxx X'Xxxxx 168,096
Xxxxxxx Xxxxxxxxx 10,715
Xxxxxx Xxxxxxxx and Xxxxxx Xxxxx, JTWROS 250,483
Petra Mezzanine Fund, L.P. 168,096
Harbinger Mezzanine Partners, L.P. 224,128
Xxxxxx Xxxxx, III
Schedule I
Schedule I
SCHEDULE II
Name Number of Shares
---- ----------------
SunTrust Capital Markets, Inc. ........................... [_________]
Xxxxxxxxx & Company, Inc. ................................ [_________]
Avondale Partners, LLC ................................... [_________]
Total .................................................... [_________]
Schedule II
