1
EXHIBIT 1.1
3,150,000 Shares
XXXXXX XXXXX & ASSOCIATES, INC.
Common Stock
UNDERWRITING AGREEMENT
___________, 1998
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXX BROTHERS INC.
As representatives of the several Underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
XXXXXX XXXXX & ASSOCIATES, INC., a California corporation (the
"COMPANY"), proposes to issue and sell to the several underwriters named in
Schedule I hereto (the "UNDERWRITERS"), and certain shareholders of the Company
named in Schedule II hereto (the "SELLING SHAREHOLDERS") severally propose to
sell to the several Underwriters, an aggregate of 3,150,000 shares of the Common
Stock, no par value of the Company (the "FIRM SHARES"), of which 2,100,000
shares are to be issued and sold by the Company and 1,050,000 shares are to be
sold by the Selling Shareholders, each Selling Shareholder selling the amount
set forth opposite such Selling Shareholder's name in Schedule II hereto. The
Selling Shareholders also propose to sell to the several Underwriters not more
than an additional aggregate of 472,500 shares of its Common Stock, no par value
(the "ADDITIONAL SHARES"), if requested by the Underwriters as provided in
Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter
referred to collectively as the "SHARES." The shares of common stock of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "COMMON STOCK." The Company and the Selling
Shareholders are hereinafter sometimes referred to collectively as the
"SELLERS".
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SECTION 1. Registration Statement and Prospectus. The
Company has prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to
Rule 430A under the Act, is hereinafter referred to as the "REGISTRATION
STATEMENT;" and the prospectus in the form first used to confirm sales of
Shares is hereinafter referred to as the "PROSPECTUS." If the Company has
filed or is required pursuant to the terms hereof to file a registration
statement pursuant to Rule 462(b) under the Act registering additional shares
of Common Stock (a "RULE 462(B) REGISTRATION STATEMENT"), then, unless
otherwise specified, any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462(b) Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up
Agreements. On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, (i) the Company agrees
to issue and sell 2,100,000 Firm Shares, (ii) each Selling Shareholder agrees,
severally and not jointly, to sell the number of Firm Shares set forth opposite
such Selling Shareholder's name in Schedule II hereto and (iii) each
Underwriter agrees, severally and not jointly, to purchase from each Seller at
a price per Share of $_______ (the "PURCHASE PRICE") the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the total number of Firm Shares to
be sold by such Seller as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto bears to the total number of Firm
Shares.
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Selling
Shareholders agree, severally and not jointly, to sell up to the number of
Additional Shares set forth opposite such Selling Shareholder's name in
Schedule II hereto and the Underwriters shall have the right to purchase,
severally and not jointly, up to an aggregate of 472,500 Additional Shares
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from the Selling Shareholders at the Purchase Price. Additional Shares may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. The Underwriters may exercise their
right to purchase Additional Shares in whole or in part from time to time by
giving written notice thereof to the Company within 30 days after the date of
this Agreement. You shall give any such notice on behalf of the Underwriters
and such notice shall specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof, which date shall be a business day (i) no earlier than two business
days after such notice has been given (and, in any event, no earlier than the
Closing Date (as hereinafter defined)) and (ii) no later than ten business days
after such notice has been given. If any Additional Shares are to be
purchased, each Underwriter, severally and not jointly, agrees to purchase from
the Selling Shareholders the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) which bears
the same proportion to the total number of Additional Shares to be purchased
from the Selling Shareholders as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I bears to the total number of Firm
Shares.
Each Seller hereby agrees not to (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (ii) enter into any swap or other arrangement that transfers
all or a portion of the economic consequences associated with the ownership of
any Common Stock (regardless of whether any of the transactions described in
clause (i) or (ii) is to be settled by the delivery of Common Stock, or such
other securities, in cash or otherwise), except to the Underwriters pursuant to
this Agreement, for a period of 180 days after the date of the Prospectus
without the prior written consent of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("DLJ"). Notwithstanding the foregoing, during such period (i) the
Company may grant stock options pursuant to the Company's 1997 Stock Option
Plan and (ii) the Company may issue shares of Common Stock upon the exercise of
an option or warrant or the conversion of a security outstanding on the date
hereof. The Company also agrees
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not to file any registration statement (other than a registration statement on
Form S-8 with respect to shares of Common Stock issuable pursuant to the
Company's 1997 Stock Option Plan) with respect to any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
for a period of 180 days after the date of the Prospectus without the prior
written consent of DLJ. In addition, each Selling Shareholder agrees that, for
a period of 180 days after the date of the Prospectus without the prior written
consent of DLJ, it will not make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock. The Company
shall, prior to or concurrently with the execution of this Agreement, deliver
an agreement executed by (i) each Selling Shareholder, (ii) each of the
directors and officers of the Company who is not a Selling Shareholder and
(iii) each shareholder listed on Annex I hereto to the effect that such person
will not, during the period commencing on the date such person signs such
agreement and ending 180 days after the date of the person signs such
Prospectus, without the prior written consent of DLJ, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
SECTION 3. Terms of Public Offering. The Sellers are advised
by you that the Underwriters propose (i) to make a public offering of their
respective portions of the Shares as soon after the execution and delivery of
this Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at 9:00 A.M., New
York City time, on _________, 1998 (the "CLOSING DATE") at such place as you
shall designate. The Closing Date and the location of delivery of and payment
for the Firm Shares may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at such place as you
shall designate at 9:00 A.M., New York City time, on the date specified in the
applicable exercise
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notice given by you pursuant to Section 2 (an "OPTION CLOSING DATE"). Any such
Option Closing Date and the location of delivery of and payment for such
Additional Shares may be varied by agreement between you and the Company.
The Company authorizes DLJ to register the Shares in the name
of Cede & Co., a nominee of the Depositary Trust Company ("DTC") or such other
name as DLJ shall determine prior to the Closing Date or an Option Closing
Date, as the case may be. On the Closing Date or the applicable Option Closing
Date, as the case may be, with any transfer tax thereon duly paid by the
Sellers against payment to the Sellers by the several Underwriters of the
Purchase Price for the Shares in same day funds, the Company will cause DTC to
credit the Shares to the account of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation at DTC for the benefit of the several Underwriters. The Shares
shall be made available to the Initial Purchaser for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
SECTION 5. Agreements of the Company. The Company agrees with
you:
(a) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to the
Prospectus or for additional information, (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purposes, (iii) when any amendment to the Registration Statement becomes
effective, (iv) if the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, when the Rule 462(b)
Registration Statement has become effective and (v) of the happening of any
event during the period referred to in Section 5(d) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, the Company
will use its
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best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish to you three (3) signed copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration Statement
as so filed and of each amendment to it, without exhibits, as you may
reasonably request.
(c) To prepare the Prospectus, the form and substance of
which shall be satisfactory to you, and to file the Prospectus in such form
with the Commission within the applicable period specified in Rule 424(b) under
the Act; during the period specified in Section 5(d) below, not to file any
further amendment to the Registration Statement and not to make any amendment
or supplement to the Prospectus of which you shall not previously have been
advised or to which you shall reasonably object after being so advised; and,
during such period, to prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or amendment or
supplement to the Prospectus which may be necessary or advisable in connection
with the distribution of the Shares by you, and to use its best efforts to
cause any such amendment to the Registration Statement to become promptly
effective.
(d) Prior to 10:00 A.M., New York City time, on the first
business day after the date of this Agreement and from time to time thereafter
for such period as in the opinion of counsel for the Underwriters a prospectus
is required by law to be delivered in connection with sales by an Underwriter
or a dealer, to furnish in New York City to each Underwriter and any dealer as
many copies of the Prospectus (and of any amendment or supplement to the
Prospectus) as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel for the Underwriters, it becomes necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Underwriters, it is
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necessary to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus so that the statements in the Prospectus, as so
amended or supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply with
applicable law, and to furnish to each Underwriter and to any dealer as many
copies thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to
cooperate with you and counsel for the Underwriters in connection with the
registration or qualification of the Shares for offer and sale by the several
Underwriters and by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request, to continue such registration or
qualification in effect so long as required for distribution of the Shares and
to file such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification; provided,
however, that the Company shall not be required in connection therewith to
qualify as a foreign corporation in any jurisdiction in which it is not now so
qualified or to take any action that would subject it to general consent to
service of process or taxation other than as to matters and transactions
relating to the Prospectus, the Registration Statement, any preliminary
prospectus or the offering or sale of the Shares, in any jurisdiction in which
it is not now so subject.
(g) To mail and make generally available to its
shareholders as soon as practicable an earnings statement covering the
twelve-month period ending _________, 1999 that shall satisfy the provisions of
Section 11(a) of the Act, and to advise you in writing when such statement has
been so made available.
(h) During the period of three years after the date of
this Agreement, to furnish to you as soon as available copies of all reports or
other communications furnished to the record holders of Common Stock or
furnished to or filed with the Commission or any national securities exchange
on which any class of securities of the Company is listed and such other
publicly available information concerning the Company and its subsidiaries as
you may reasonably request.
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(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to
be paid all expenses incident to the performance of the Sellers' obligations
under this Agreement, including: (i) the fees, disbursements and expenses of
the Company's counsel, the Company's accountants and any Selling Shareholder's
counsel (in addition to the Company's counsel) in connection with the
registration and delivery of the Shares under the Act and all other fees and
expenses (other than the fees and expenses of counsel to the Underwriters) in
connection with the preparation, printing, filing and distribution of the
Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to
any of the foregoing, including the mailing and delivering of copies thereof to
the Underwriters and dealers in the quantities specified herein during the
period delivery of a prospectus is required by Rule 174 under the Act, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) all
costs of printing or producing this Agreement (other than the fees and expenses
of counsel to the Underwriters) and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Shares, (iv)
all expenses in connection with the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the several states
and all costs of printing or producing any Preliminary and Supplemental Blue
Sky Memoranda in connection therewith (including the filing fees and fees and
disbursements of counsel for the Underwriters in connection with such
registration or qualification and memoranda relating thereto), (v) the filing
fees and disbursements of counsel for the Underwriters in connection with the
review and clearance of the offering of the Shares by the National Association
of Securities Dealers, Inc., (vi) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to
the Common Stock and all costs and expenses incident to the listing of the
Shares on the Nasdaq National Market, (vii) the cost of printing certificates
representing the Shares, (viii) the costs and charges of any transfer agent,
registrar and/or depositary, and (ix) all other costs and expenses incident to
the performance of the obligations of the Company and the Selling Shareholders
hereunder for which provision is not otherwise made in this Section. The
provisions of this Section shall not supersede or
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otherwise affect any agreement that the Company and the Selling Shareholders
may otherwise have for allocation of such expenses among themselves.
(j) To use its best efforts to (i) list for quotation the
Shares on the Nasdaq National Market and (ii) maintain the listing of the
Shares on the Nasdaq National Market for a period of three years after the date
of this Agreement.
(k) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date or any Option Closing Date, as the case may
be, and to satisfy all conditions precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Shares, to file a
Rule 462(b) Registration Statement with the Commission registering the Shares
not so covered in compliance with Rule 462(b) by 10:00 P.M., New York City
time, on the date of this Agreement and to pay to the Commission the filing fee
for such Rule 462(b) Registration Statement at the time of the filing thereof
or to give irrevocable instructions for the payment of such fee pursuant to
Rule 111(b) under the Act.
SECTION 6. Representations and Warranties of the Company.
The Company represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective
(other than any Rule 462(b) Registration Statement to be filed by the Company
after the effectiveness of this Agreement); any Rule 462(b) Registration
Statement filed after the effectiveness of this Agreement will become effective
no later than 10:00 P.M., New York City time, on the date of this Agreement;
and no stop order suspending the effectiveness of the Registration Statement is
in effect, and no proceedings for such purpose are pending before or threatened
by the Commission.
(b) (i) The Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement), when it became effective, did not contain
and, as amended, if applicable, will not contain any untrue statement of a
material fact or omit to
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state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A) will 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
not misleading and (B) will comply in all material respects with the Act and
(iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the Act, and did not 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 the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions
in any preliminary prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(d) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority to carry on its
business as described in the Prospectus and to own, lease and operate its
properties, and is duly
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qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of the
Company. The Company has no subsidiaries.
(e) There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or liens
granted or issued by the Company or any of its subsidiaries relating to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of the Company or any of its subsidiaries, except as otherwise
disclosed in the Registration Statement.
(f) All the outstanding shares of capital stock of the
Company (including the Shares to be sold by the Selling Shareholders) have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights; and the Shares to be issued and
sold by the Company have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor as provided by this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(g) The authorized capital stock of the Company conforms
to the description thereof contained in the Prospectus.
(h) The Company is not in violation of its articles of
incorporation or by-laws or in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the
Company, to which the Company is a party or by which the Company or any of its
property is bound.
(i) The execution, delivery and performance of this
Agreement by the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby and as
described in the Prospectus under the captions "Recapitalization," "Prior S
Corporation Status" and "S Corporation Dividend" will not (i) require any
consent, approval,
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authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under applicable
federal, state or foreign securities laws), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the articles of
incorporation or by-laws of the Company or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the
Company, to which the Company is a party or by which the Company or its property
is bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, or any of its property or (iv)
result in the suspension, termination or revocation of any Authorization (as
defined below) of the Company or any other impairment of the rights of the
holder of any such Authorization.
(j) There are no legal or governmental proceedings
pending or, to the best of the Company's knowledge after due inquiry,
threatened to which the Company is or could be a party or to which any of its
property is or could be subject that are required to be described in the
Registration Statement or the Prospectus and are not so described; nor are
there any statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not so described or filed as
required.
(k) The Company has not violated any foreign, federal,
state or local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL LAWS") or any provisions of the Employee
Retirement Income Security Act of 1974, as amended, or the rules and
regulations promulgated thereunder, except for such violations which, singly or
in the aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company.
(l) The Company has such permits, licenses, consents,
exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and
all courts and other tribunals, including, without limitation, under any
applicable Environmental
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Laws, as are necessary to own, lease, license and operate its properties and to
conduct its business, except where the failure to have any such Authorization
or to make any such filing or notice would not, singly or in the aggregate,
have a material adverse effect on the business, prospects, financial condition
or results of operations of the Company. Each such Authorization is valid and
in full force and effect and the Company is in compliance with all the terms
and conditions thereof and with the rules and regulations of the authorities
and governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company; except where such failure to be valid and in full
force and effect or to be in compliance, the occurrence of any such event or
the presence of any such restriction would not, singly or in the aggregate,
have a material adverse effect on the business, prospects, financial condition
or results of operations of the Company.
(m) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company.
(n) This Agreement has been duly authorized, executed and
delivered by the Company.
(o) KPMG Peat Marwick LLP are independent public
accountants with respect to the Company as required by the Act.
(p) The financial statements included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
together with related schedules and notes, present fairly the financial
position, results of operations and
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changes in financial position of the Company on the basis stated therein at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; the supporting schedules, if
any, included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be stated
therein; and the other financial and statistical information and data set forth
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(q) The pro forma financial statements of the Company and
the related notes thereto set forth in the Registration Statement and the
Prospectus (and any supplement or amendment thereto) have been prepared on a
basis consistent with the historical financial statements of the Company and
its subsidiaries, give effect to the assumptions used in the preparation
thereof on a reasonable basis and in good faith and present fairly the
historical and proposed transactions contemplated by the Registration Statement
and the Prospectus. Such pro forma financial statements have been prepared in
accordance with the applicable requirements of Rule 11-02 of Regulation S-X
promulgated by the Commission. The other pro forma financial and statistical
information and data set forth in the Registration Statement and Prospectus
(and any supplement or amendment thereto) are, in all material respects,
accurately presented and prepared on a basis consistent with the pro forma
financial statements.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (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 the existing
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assets at reasonable intervals and appropriate action is taken with respect to
any differences.
(s) All material tax returns required to be filed by the
Company in any jurisdiction have been filed, other than those filings being
contested in good faith, and all material taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due pursuant to
such returns or pursuant to any assessment received by the Company have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided.
(t) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended.
(u) 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 Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement.
(v) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this
Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, backlog, management or
operations of the Company, (ii) there has not been any material adverse change
or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company and (iii) the Company has
not incurred any material liability or obligation, direct or contingent.
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16
(w) No relationship, direct or indirect, exists between
or among the Company on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company on the other hand, which is
required by the Act to be described in the Registration Statement or the
Prospectus which is not so described.
(x) The Company owns or possesses, or can acquire on
reasonable terms, all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names ("intellectual property") currently employed by
it in connection with the business now operated by it except where the failure
to own or possess or otherwise be able to acquire such intellectual property
would not, singly or in the aggregate, have a material adverse effect on the
business, prospects, financial condition or results of operation of the
Company; and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any of such
intellectual property which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect
on the business, prospects, financial condition or results of operations of the
Company.
(y) Effective as of January 1, 1991, the Company validly
elected S Corporation Status (as defined in Section 1361 of the Internal
Revenue Code of 1986, as amended) for federal and certain state income tax
purposes and has validly continued to qualify as an S corporation in each such
jurisdiction since such date and will continue to so qualify until date of
termination of the Company's S corporation status.
(z) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(aa) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
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17
SECTION 7. Representations and Warranties of the Selling
Shareholders. Each Selling Shareholder represents and warrants to each
Underwriter that:
(a) Such Selling Shareholder is the lawful owner of the
Shares to be sold by such Selling Shareholder pursuant to this Agreement and
has, and on the Closing Date will have, good and clear title to such Shares,
free of all restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever.
(b) The Shares to be sold by such Selling Shareholder
have been duly authorized and are validly issued, fully paid and
non-assessable.
(c) Such Selling Shareholder has, and on the Closing Date
will have, full legal right, power and authority, and all authorization and
approval required by law, to enter into this Agreement, the Custody Agreement
signed by such Selling Shareholder and U.S. Stock Transfer Corporation, as
Custodian, relating to the deposit of the Shares to be sold by such Selling
Shareholder (the "CUSTODY AGREEMENT") and the Power of Attorney of such Selling
Shareholder appointing certain individuals as such Selling Shareholder's
attorneys-in-fact (the "ATTORNEYS") to the extent set forth therein, relating
to the transactions contemplated hereby and by the Registration Statement and
the Custody Agreement (the "POWER OF ATTORNEY") and to sell, assign, transfer
and deliver the Shares to be sold by such Selling Shareholder in the manner
provided herein and therein.
(d) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder.
(e) The Custody Agreement of such Selling Shareholder has
been duly authorized, executed and delivered by such Selling Shareholder and is
a valid and binding agreement of such Selling Shareholder, enforceable in
accordance with its terms.
(f) The Power of Attorney of such Selling Shareholder has
been duly authorized, executed and delivered by such Selling Shareholder and is
a valid and binding instrument of such Selling Shareholder, enforceable in
accordance with its terms, and, pursuant to such Power of Attorney, such
Selling Shareholder has, among other things, authorized the Attorneys, or any
one of them,
- 17 -
18
to execute and deliver on such Selling Shareholder's behalf this Agreement and
any other document that they, or any one of them, may deem necessary or
desirable in connection with the transactions contemplated hereby and thereby
and to deliver the Shares to be sold by such Selling Shareholder pursuant to
this Agreement.
(g) Upon delivery of and payment for the Shares to be
sold by such Selling Shareholder pursuant to this Agreement, good and clear
title to such Shares will pass to the Underwriters, free of all restrictions on
transfer, liens, encumbrances, security interests, equities and claims
whatsoever.
(h) The execution, delivery and performance of this
Agreement and the Custody Agreement and Power of Attorney of such Selling
Shareholder by or on behalf of such Selling Shareholder, the compliance by such
Selling Shareholder with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not (i)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as
may be required under applicable federal, state or foreign securities laws),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the organizational documents of such Selling Shareholder,
if such Selling Shareholder is not an individual, or any indenture, loan
agreement, mortgage, lease or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder or any
property of such Selling Shareholder is bound or (iii) violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over such Selling
Shareholder or any property of such Selling Shareholder.
(i) To the knowledge of such Selling Shareholder, the
representations and warranties of the Company contained in Section 6 hereof are
true and correct and (ii) such parts of the Registration Statement under the
caption "Principal and Selling Shareholders" which specifically relate to such
Selling Shareholder do not 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 the light of the circumstances under
which they were made, not misleading.
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19
(j) At any time during the period described in Section
5(d), if there is any change in the information referred to in Section 7(i),
such Selling Shareholder will immediately notify you of such change.
(k) Each certificate signed by or on behalf of such
Selling Shareholder and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by such
Selling Shareholder to the Underwriters as to the matters covered thereby.
SECTION 8. Indemnification. (a) The Sellers, jointly and
severally, agree to indemnify and hold harmless each Underwriter, its
directors, its officers and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), from and against any and
all losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), the Prospectus (or
any amendment or supplement thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Underwriter
furnished in writing to the Company by such Underwriter through you expressly
for use therein; provided however, that (i) the aggregate liability of any
Selling Shareholder pursuant to this Section 8(a) shall be limited to an amount
equal to the purchase price received by such Selling Shareholder from the sale
of such Selling Shareholder's Shares hereunder and (ii) the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter who failed to deliver a Prospectus (as then amended
or supplemented, provided by the Company to the several Underwriters in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the Closing Date) to the person asserting any losses, claims, damages and
liabilities and
- 19 -
20
judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and the delivery of such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person.
(b) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
each Selling Shareholder and each person, if any, who controls such Selling
Shareholder within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Sellers to
such Underwriter but only with reference to information relating to such
Underwriter furnished in writing to the Company by such Underwriter through you
expressly for use in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus.
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a) or
8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Underwriter shall not be
required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense
- 20 -
21
thereof, but the fees and expenses of such counsel, except as provided below,
shall be at the expense of such Underwriter). Any indemnified party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified party unless (i) the employment of such counsel
shall have been specifically authorized in writing by the indemnifying party,
(ii) the indemnifying party shall have failed to assume the defense of such
action or employ counsel reasonably satisfactory to the indemnified party or
(iii) the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of the indemnified party). In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for (i) the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for all
Underwriters, their officers and directors and all persons, if any, who control
any Underwriter within the meaning of either Section 15 of the Act or Section
20 of the Exchange Act, (ii) the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and all persons, if
any, who control the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all Selling Shareholders and all persons, if
any, who control any Selling Shareholder within the meaning of either such
Section, and all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters, their
officers and directors and such control persons of any Underwriters, such firm
shall be designated in writing by Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation. In the case of any such separate firm for the Company and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm
for the Selling Shareholders and such control persons of any Selling Sharehol-
- 21 -
22
ders, such firm shall be designated in writing by the Attorneys. The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) Notwithstanding the foregoing, no Selling Shareholder
shall be required to provide indemnification under this Section 8 until the
earlier to occur of (i) the Underwriters seeking indemnification shall have
first made a written demand for payment on the Company (a "Demand") and the
Company shall have failed to make such demanded payment within sixty (60) days
after receipt of such Demand or (ii) the Underwriters seeking indemnification
shall have made a Demand and the Company shall deny in writing its liability
for such demanded payment; provided, that this Section 8(d) shall be of no
force or effect (i) if a petition under the Bankruptcy Code shall have been
filed by or with respect to the Company or the Company shall have sought
protection from its creditors generally under any similar federal or state law
or (ii) with respect to any Selling Shareholder if a petition under the
Bankruptcy Code shall have been filed by or with respect to such Selling
Shareholder or such Selling Shareholder shall have sought protection from its
creditors generally under any similar federal or state law.
(e) To the extent the indemnification provided for in
this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Sellers on the one hand and the Underwriters on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause 8(d)(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Sellers on the one hand and the Underwriters
on the other hand in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits
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23
received by the Sellers on the one hand and the Underwriters on the other hand
shall be deemed to be in the same proportion as the total net proceeds from the
offering (after deducting underwriting discounts and commissions, but before
deducting expenses) received by the Sellers, and the total underwriting
discounts and commissions received by the Underwriters, bear to the total price
to the public of the Shares, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Sellers on the one
hand and the Underwriters on the other hand 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 or the Selling Shareholders on
the one hand or the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Sellers and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, 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. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8(d) are several in pro-
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24
portion to the respective number of Shares purchased by each of the
Underwriters hereunder and not joint.
(f) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) Each Selling Shareholder hereby designates Xxxxxx
Xxxxx & Associates, Inc., 0000 XxxXxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, as its authorized agent, upon which process may be served in
any action which may be instituted in any state or federal court in the State
of New York by any Underwriter, any director or officer of any Underwriter or
any person controlling any Underwriter asserting a claim for indemnification or
contribution under or pursuant to this Section 8, and each Selling Shareholder
will accept the jurisdiction of such court in such action, and waives, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent or
given to such Selling Shareholder, at the address for notices specified in
Section 12 hereof.
SECTION 9. Conditions of Underwriters' Obligations. The
several obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b)
Registration Statement after the effectiveness of this Agreement, such Rule
462(b) Registration Statement shall have become effective by 10:00 P.M., New
York City time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c) You shall have received on the Closing Date a
certificate dated the Closing Date, signed by Xxxxxx X. Xxxxx and
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25
Xxxxxxx X. Xxxxxxxx, in their capacities as the President, Chairman of the
Board and Chief Executive Officer and Executive Vice President and Chief
Operating Officer, respectively, of the Company, confirming the matters set
forth in Sections 6(t), 9(a) and 9(b) and that the Company has complied with
all of the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied by the Company on or prior to the
Closing Date.
(d) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this
Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, backlog, management or operations of the Company, (ii)
there shall not have been any change or any development involving a prospective
change in the capital stock or in the long-term debt of the Company and (iii)
the Company shall not have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of each
Selling Shareholder contained in this Agreement shall be true and correct on
the Closing Date with the same force and effect as if made on and as of the
Closing Date and you shall have received on the Closing Date a certificate
dated the Closing Date from each Selling Shareholder to such effect and to the
effect that such Selling Shareholder has complied with all of the agreements
and satisfied all of the conditions herein contained and required to be
complied with or satisfied by such Selling Shareholder on or prior to the
Closing Date.
(f) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Xxxxx & Xxxxxx, counsel for the Company and the Selling
Shareholders, to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing
- 25 -
26
under the laws of California and has the corporate power and
authority to carry on its business as described in the
Prospectus and to own, lease and operate its properties;
(ii) the Company is duly qualified and is in good
standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial
condition or results of operations of the Company;
(iii) all the outstanding shares of capital stock of
the Company (including the Shares to be sold by the Selling
Shareholders) have been duly authorized and validly issued and
are fully paid, non-assessable and not subject to any
preemptive or similar rights;
(iv) the Shares to be issued and sold by the
Company hereunder have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor as
provided by this Agreement, will be validly issued, fully paid
and non-assessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights;
(v) this Agreement has been duly authorized,
executed and delivered by the Company and by or on behalf of
each Selling Shareholder;
(vi) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(vii) the Registration Statement has become
effective under the Act, no stop order suspending its
effectiveness has been issued and no proceedings for that
purpose are, to the best of such counsel's knowledge after due
inquiry, pending before or contemplated by the Commission;
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(viii) the statements under the captions "Risk
Factors--Anti-Takeover Provisions", "--Shares Eligible for
Future Sale", "Management--1997 Stock Option Plan", "--Bonus
Plan", "--Employment Agreements", "--Indemnification of
Officers and Directors", "Description of Capital Stock",
"Shares Eligible for Future Sale" and "Underwriting" in the
Prospectus and Items 14 and 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings;
(ix) the Company is not in violation of its
articles of incorporation or by-laws and, to the best of such
counsel's knowledge after due inquiry, the Company is not in
default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument
that is material to the Company, to which the Company is a
party or by which the Company or any of its property is bound;
(x) the execution, delivery and performance of
this Agreement by the Company, the compliance by the Company
with all the provisions hereof and the consummation of the
transactions contemplated hereby and as described in the
Prospectus under the caption "Recapitalization", "Prior S
Corporation Status" and "S Corporation Dividend" will not (A)
require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or
agency (except such as may be required under applicable
federal, state or foreign securities laws), (B) conflict with
or constitute a breach of any of the terms or provisions of, or
a default under, the articles of incorporation or by-laws of
the Company or any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to the
Company, to which the Company is a party or by which the
Company or any of its property is bound, (C) violate or
conflict with any applicable law or any rule, regulation,
judgment, order or decree of any
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28
court or any governmental body or agency having jurisdiction
over the Company or any of its property or (D) result in the
suspension, termination or revocation of any Authorization of
the Company or any other impairment of the rights of the
holder of any such Authorization;
(xi) after due inquiry, such counsel does not know
of any legal or governmental proceedings pending or threatened
to which the Company is or could be a party or to which any of
its property is or could be subject that are required to be
described in the Registration Statement or the Prospectus and
are not so described, or of any statutes, regulations,
contracts or other documents that are required to be described
in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not so
described or filed as required;
(xii) the Company has not violated any Environmental
Law or any provisions of the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder, except for such violations which,
singly or in the aggregate, would not have a material adverse
effect on the business, prospects, financial condition or
results of operation of the Company;
(xiii) the Company has such Authorizations of, and
has made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory organizations and
all courts and other tribunals, including, without limitation,
under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its properties and to conduct
its business, except where the failure to have any such
Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on
the business, prospects, financial condition or results of
operations of the Company; each such Authorization is valid
and in full force and effect and the Company is in compliance
with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies
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29
having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or
both, would result in any other impairment of the rights of
the holder of any such Authorization; and such Authorizations
contain no restrictions that are burdensome to the Company;
except where such failure to be valid and in full force and
effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not,
singly or in the aggregate, have a material adverse effect on
the business, prospects, financial condition or results of
operations of the Company;
(xiv) the Company is not and, after giving effect to
the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be,
an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
(xv) to the best of such counsel's knowledge after
due inquiry, (A) 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 Act with respect to any
securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the
Registration Statement and (B) no relationship, direct or
indirect, exists between the Company on the one hand, and the
directors, officers, shareholders, customers or suppliers of
the Company on the other hand, which is required by the Act to
be described in the Registration Statement or the Prospectus
which is not so described;
(xvi) (A) the Registration Statement and the
Prospectus and any supplement or amendment thereto (except for
the financial statements and other financial data included
therein as to which no opinion need be expressed) comply as to
form with the Act, (B)
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30
such counsel has no reason to believe that at the time the
Registration Statement became effective or on the date of this
Agreement, the Registration Statement and the prospectus
included therein (except for the financial statements and
other financial data as to which such counsel need not express
any belief) contained any untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading and (C) such counsel has no reason to believe that
the Prospectus, as amended or supplemented, if applicable
(except for the financial statements and other financial data,
as aforesaid) contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading;
(xvii) each Selling Shareholder is the lawful owner
of the Shares to be sold by such Selling Shareholder pursuant
to this Agreement and has good and clear title to such Shares,
free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever;
(xviii) each Selling Shareholder has full legal
right, power and authority, and all authorization and approval
required by law, to enter into this Agreement and the Custody
Agreement and the Power of Attorney of such Selling
Shareholder and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Shareholder in the manner
provided herein and therein;
(xix) the Custody Agreement of each Selling
Shareholder has been duly authorized, executed and delivered
by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, enforceable in
accordance with its terms;
(xx) the Power of Attorney of each Selling
Shareholder has been duly authorized, executed and delivered
by such Selling Shareholder and is a valid and binding
instrument of such Selling Shareholder,
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31
enforceable in accordance with its terms, and, pursuant to
such Power of Attorney, such Selling Shareholder has, among
other things, authorized the Attorneys, or any one of them, to
execute and deliver on such Selling Shareholder's behalf this
Agreement and any other document they, or any one of them, may
deem necessary or desirable in connection with the
transactions contemplated hereby and thereby and to deliver
the Shares to be sold by such Selling Shareholder pursuant to
this Agreement;
(xxi) upon delivery of and payment for the Shares to
be sold by each Selling Shareholder pursuant to this
Agreement, good and clear title to such Shares will pass to
the Underwriters, free of all restrictions on transfer, liens,
encumbrances, security interests, equities and claims
whatsoever; and
(xxii) the execution, delivery and performance of
this Agreement and the Custody Agreement and Power of Attorney
of each Selling Shareholder by such Selling Shareholder, the
compliance by such Selling Shareholder with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) require any
consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency
(except such as may be required under applicable federal,
state or foreign securities laws), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the organizational documents of such Selling
Shareholder, if such Selling Shareholder is not an individual,
or any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which such Selling Shareholder is a
party or by which any property of such Selling Shareholder is
bound or (C) violate or conflict with any applicable law or
any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over
such Selling Shareholder or any property of such Selling
Shareholder.
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32
The opinion of Xxxxx & Xxxxxx described in Section 9(f) above shall be
rendered to you at the request of the Company and the Selling Shareholders and
shall so state therein.
(g) You shall have received on the Closing Date an opinion, dated
the Closing Date, of Milbank, Tweed, Xxxxxx & XxXxxx, counsel for the
Underwriters, as to the matters referred to in Sections 9(f)(iv), 9(f)(v) (but
only with respect to the Company), 9(f)(viii) (but only with respect to the
statements under the caption "Description of Capital Stock" and "Underwriting")
and 9(f)(xvi).
In giving such opinions with respect to the matters covered by Section
9(f)(xvi), counsel for the Company and the Selling Shareholders and counsel for
the Underwriters may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification except as
specified.
(h) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you, from KPMG Peat Marwick LLP,
independent public accountants, containing the information and statements of
the type ordinarily included in accountants' "comfort letters" to Underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(i) The Company shall have delivered to you the agreements
specified in Section 2 hereof which agreements shall be in full force and
effect on the Closing Date.
(j) The Shares shall have been duly listed for quotation on the
Nasdaq National Market.
(k) The Company and the Selling Shareholders shall not have failed
on or prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the Company
or the Selling Shareholders, as the case may be, on or prior to the Closing
Date.
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33
(l) You shall have received on the Closing Date, a certificate of
each Selling Shareholder who is not a U.S. Person (as defined under applicable
U.S. federal tax legislation) to the effect that such Selling Shareholder is
not a U.S. Person, which certificate may be in the form of a properly completed
and executed United States Treasury Department Form W-8 (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof).
(m) The Company shall have consummated the Recapitalization (as
defined in the Registration Statement).
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
SECTION 10. Effectiveness of Agreement and Termination. This
Agreement shall become effective upon the execution and delivery of this
Agreement of the parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by written notice to the Sellers if any of the following
has occurred: (i) any outbreak or escalation of hostilities or other national
or international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus, (ii)
the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects,
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34
or will materially and adversely affect, the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole, (v) the declaration of a banking moratorium by either federal or
New York State authorities or (vi) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal
affairs which in your opinion has a material adverse effect on the financial
markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the total number of Firm Shares or Additional Shares, as
the case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion
which the number of Firm Shares set forth opposite its name in Schedule I bears
to the total number of Firm Shares which all the non-defaulting Underwriters
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Firm Shares or Additional Shares, as the case may be, which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Firm Shares or
Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter.
If on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Firm Shares to be purchased by all Underwriters and arrangements satisfactory
to you, the Company and the Selling Shareholders for purchase of such Firm
Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Shareholders. In any such case which does not result in
termination of this Agreement, either you or the Sellers shall have the right
to postpone the Closing Date, but in no event for
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35
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such date, the non-defaulting Underwriters shall have the option
to (i) terminate their obligation hereunder to purchase such Additional Shares
or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase on such date
in the absence of such default. Any action taken under this paragraph shall
not relieve any defaulting Underwriter from liability in respect of any default
of any such Underwriter under this Agreement.
SECTION 11. Agreements of the Selling Shareholders. Each Selling
Shareholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable in
connection with the transfer of the Shares to be sold by such Selling
Shareholder to the Underwriters.
(b) To do and perform all things to be done and performed by such
Selling Shareholder under this Agreement prior to the Closing Date and any
Option Closing Date and to satisfy all conditions precedent to the delivery of
the Shares to be sold by such Selling Shareholder pursuant to this Agreement.
SECTION 12. Miscellaneous. Notices given pursuant to any provision
of this Agreement shall be addressed as follows: (i) if to the Company, to
Xxxxxx Xxxxx & Associates, Inc., 0000 XxxXxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000, (ii) if to the Selling Shareholders, to Xxxxxxx X.
Xxxxxxxx and Xxxxxx X. Xxxx c/o Xxxxxx Xxxxx & Associates, Inc., 0000 XxxXxxxxx
Xxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 and (iii) if to any
Underwriter or to you, to you c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
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36
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and
the several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling any Underwriter, the
Company, the officers or directors of the Company, any person controlling the
Company, any Selling Shareholder or any person controlling such Selling
Shareholder, (ii) acceptance of the Shares and payment for them hereunder and
(iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of any
Seller as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10), the Sellers agree, jointly and severally, to
reimburse the several Underwriters for all out-of-pocket expenses (including
the fees and disbursements of counsel) incurred by them. Notwithstanding any
termination of this Agreement, the Company shall be liable for all expenses
which it has agreed to pay pursuant to Section 5(i) hereof. The Sellers also
agree, jointly and severally, to reimburse the several Underwriters, their
directors and officers and any persons controlling any of the Underwriters for
any and all fees and expenses (including, without limitation, the fees
disbursements of counsel) incurred by them in connection with enforcing their
rights hereunder (including, without limitation, pursuant to Section 8 hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Shareholders, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
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37
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among the
Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
XXXXXX XXXXX & ASSOCIATES, INC.
By:_________________________________
Title:
THE SELLING SHAREHOLDERS
NAMED IN SCHEDULE II
HERETO, ACTING
SEVERALLY
By:_________________________________
Attorney-in-fact
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXXX BROTHERS INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By: XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:_________________________________
Title:
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38
SCHEDULE I
Underwriters Number of Firm Shares
to be Purchased
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxx Brothers Inc.
Total 3,150,000
---------
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SCHEDULE II
Selling Shareholders
Name Number of Firm Number of Additional
Shares Being Sold Shares Being Sold
Total 1,050,000 472,500
--------- -------
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40
Annex I
[Insert names of shareholders of the Company who will be required to sign
lockups]
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