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EXHIBIT 1.1
DRAFT OF 02/12/96
____________, 1996
1,500,000 Shares of Common Stock
QUALITY SYSTEMS, INC.
UNDERWRITING AGREEMENT
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BEAR, XXXXXXX & CO. INC.
PACIFIC GROWTH EQUITIES, INC.
CRUTTENDEN XXXX INCORPORATED
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Quality Systems, Inc., a corporation organized and existing under the laws
of California (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule
I hereto (the "Underwriters") 1,000,000 shares of common stock, par value $.01
per share, of the Company (the "Common Stock") and the selling shareholders of
the Company named in Schedule II hereto (the "Selling Shareholders") propose to
sell to the Underwriters an additional 500,000 shares of Common Stock, which
aggregate of 1,500,000 shares of Common Stock is referred to herein as the
"Firm Shares". In addition, for the sole purpose of covering over-allotments
in connection with the sale of the Firm Shares, certain Selling Shareholders
(as set forth in Schedule II hereto) propose to sell to the Underwriters, at
the option of the Underwriters, up to an additional 225,000 shares (the
"Additional Shares") of Common Stock. The Firm Shares and any Additional
Shares purchased by the Underwriters are referred to herein as the "Shares".
The Shares are more fully described in the Registration Statement referred to
below.
1. Representations and Warranties of the Company and the Selling
Shareholders.
A. The Company represents and warrants to, and agrees with, the
Underwriters that:
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(a) A registration statement on Form S-1 (File No. 333-00161) with
respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The Company has prepared and has filed
or proposes to file prior to the effective date of such registration
statement an amendment or amendments to such registration statement,
which amendment or amendments have been or will be similarly prepared.
The Company will next file with the Commission one of the following:
(i) prior to effectiveness of such registration statement, a further
amendment thereto, including the form of final prospectus, (ii) a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations or (iii) a term sheet as described in and in accordance with
Rules 434 and 424(b) of the Rules and Regulations (a "Term Sheet"). As
filed, such amendment and form of final prospectus, or such final
prospectus, or such Term Sheet, shall include all Rule 430A Information
(as defined below) and, except to the extent that you shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the date and time that this Underwriting
Agreement (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 previously shall have 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 or became effective including all financial schedules and
exhibits thereto and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter defined),
also shall mean such registration statement as so amended; provided,
however, that such term also shall include all Rule 430A Information
deemed to be included in such registration statement at the time such
registration statement becomes or became effective as provided by Rule
430A of the Rules and 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 or became effective
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that omits Rule 430A Information. The term "Prospectus" as used in this
Agreement shall mean either (i) the prospectus relating to the Common
Shares in the form in which it first is filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, (ii) if the Company
relies on Rule 434 of the Rules and Regulations, the Term Sheet relating
to the Shares that first is filed pursuant to Rule 424(b)(7) of the Rules
and Regulations, together with the Preliminary Prospectus identified
therein that such Term Sheet supplements, or, (iii) if a Term Sheet is
not used and no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, shall mean the form of final prospectus included
in the Registration Statement at the time such registration statement
becomes or became effective. The term "Rule 430A Information" means
information with respect to the Shares and the offering thereof permitted
to be omitted from the Registration Statement when it becomes or became
effective pursuant to Rule 430A of the Rules and Regulations. Any
reference to the "date" of a Prospectus that includes a Term Sheet shall
mean the date of the Term Sheet.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus
has conformed in all material respects to the requirements of the Act and
the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and at the time
the Registration Statement becomes or became effective, and at all times
subsequent thereto up to and including each Closing Date hereinafter
mentioned, the Registration Statement and the Prospectus, and any
amendments or supplements thereto, will contain or contained all material
statements and information required to be included therein by the Act and
the Rules and Regulations and will in all material respects conform, or
did in such respects conform, to the requirements of the Act and the
Rules and Regulations, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will include or
included any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, no representation
or warranty contained in this subsection 1.A(b) shall be applicable to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or
supplement in
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reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter, directly or through the
Representatives, reciting in writing that it is specifically for use in
the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of California, with full power and authority (corporate
and other) to own and lease its properties and conduct its business as
described in the Prospectus; the Company owns 25% of the outstanding
capital stock and the outstanding voting stock of Clinitec International,
Inc., a Pennsylvania corporation ("Clinitec") free and clear of all
claims, liens, charges and encumbrances; the Company holds a valid
option (the "Clinitec Option") to acquire additional voting equity stock
of Clinitec and, upon the exercise and closing of the Clinitec Option,
would own 51% of the outstanding capital stock of Clinitec and 51% of
the outstanding voting stock of Clinitec; there are no actual or
threatened challenges to the enforceability of the Clinitec Option or
any facts that may constitute a defense by any party to the
enforceability of the Clinitec Option; the Company is in possession of
and operating in compliance with all authorizations, licenses, permits,
consents, certificates and orders material to the conduct of its
business, all of which are valid and in full force and effect; the
Company is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the ownership or
leasing of properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect upon the Company; and no
proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail such power
and authority or qualification.
(d) On or prior to the Closing Date (as hereinafter defined), the
Company will have taken all necessary action (corporate or other) to
irrevocably exercise in full the Clinitec Option unless at the Closing
Date the Company is a party to either a valid and extant (i) Agreement in
Principle dated as of February 13, 1996 (the "Clinitec Agreement in
Principle") that has not been rejected or disavowed by either party
thereto, or (ii) a definitive agreement with Clinitec that has not been
rejected or disavowed by either party thereto, to purchase 100% of
Clinitec.
(e) The Company has authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued
and outstanding shares of Common Stock have been duly authorized and the
outstanding shares of Common Stock have been validly issued, are fully
paid and nonassessable, have been duly approved for quotation on
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the Nasdaq National Market; the issued and outstanding shares of Common
Stock and the outstanding options described in the Prospectus have been
issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities, and conform in all
material respects to any description thereof contained in the Prospectus.
Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company, and the related notes thereto,
included in the Prospectus, the Company has no outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock
plans or arrangements, and the options or other rights granted and
exercised thereunder, set forth in the Prospectus, accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(f) The Shares to be sold by the Company have been duly authorized
and, when issued, delivered and paid for in the manner set forth in this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in
the Prospectus. The Shares to be sold by the Selling Shareholders have
been duly authorized, and are validly issued, fully paid and
nonassessable, and conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Shares
pursuant to this Agreement. No holder of any securities of the Company
has any right that has not been waived to require the Company to register
the sale of any shares of Common Stock or other securities of the Company
owned by such holder under the Act in the public offering contemplated by
this Agreement. No further approval or authority of the shareholders,
the Board of Directors of the Company or any other party will be required
for the transfer and sale of the Firm Shares or the Additional Shares to
be sold as contemplated herein except for compliance with the Act, the
Blue Sky laws applicable to the public offering of the Shares by the
several Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(g) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation
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of the Company, enforceable against it in accordance with its terms,
except (i) as such enforceability may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to rights and remedies of creditors, and (ii) to the
extent that rights to indemnity or contribution hereunder may be limited
by federal or state securities laws or the public policy underlying such
laws. The making and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate any
provisions of the articles of incorporation or bylaws, as amended or
restated, or other organizational documents, of the Company, and will not
conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default
under, result in the acceleration of any indebtedness under or
performance required by, result in any right of termination of, increase
any amounts payable under, decrease any amounts receivable under, or, to
the Company's best knowledge, adversely change any other rights pursuant
to, any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party or
by which the Company or any of its properties may be bound or affected,
or any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or
other governmental body, or arbitrator (domestic or foreign) applicable
to the Company or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement except for compliance with
the Act, the Blue Sky laws applicable to the public offering of the
Shares by the several Underwriters and the clearance of such offering
with the NASD.
(h) Deloitte & Touche LLP and Coopers & Xxxxxxx L.L.P., who have
expressed their opinion with respect to the financial statements and
schedules of the Company and Clinitec, respectively, filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, are each independent
accountants as required by the Act and the Rules and Regulations.
(i) The financial statements and schedules, if any, of the Company,
and the related notes thereto, included in the Registration Statement and
the Prospectus present fairly the financial positions of the Company as
of the respective dates of such financial statements and schedules, and
the results of operations and cash flows of the Company, respectively,
for the respective periods covered thereby. Such statements, schedules
and related notes have been prepared in accordance with generally
accepted
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accounting principles applied on a consistent basis as certified by the
independent accountants named in subsection 1.A(h). No other financial
statements, schedules or information are required by the Act or the Rules
and Regulations to be included in the Registration Statement. The
financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Financial Data" fairly present the
information set forth therein on the basis stated in the Registration
Statement.
(j) Except as disclosed in the Prospectus, and except as to
violations, breaches, defaults and events of default that individually or
in the aggregate would not have a material adverse effect on the Company,
(i) the Company is not in violation or default of any provision of its
articles of incorporation or bylaws, as amended or restated, or other
organizational documents, or is in breach of or default with respect to
any provision of any agreement, judgment, decree, order, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other
instrument to which the Company is a party or by which the Company or any
of its properties are bound; and (ii) there does not exist any state of
facts that constitutes an event of default on the part of the Company as
defined in such documents or which, with notice or lapse of time or both,
would constitute such an event of default.
(k) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that
have not been described or filed as required. The descriptions of the
contracts in the Prospectus are accurate in all material respects and
fairly present the information required by the Act and/or the Rules and
Regulations to be presented in Form S-1; except as disclosed in the
Prospectus, the contracts so described in the Prospectus are in full
force and effect on the date hereof, and the Company or, to the best of
the Company's knowledge, any other party is not in breach of or default
under any of such contracts other than any such breach or default as
would not, individually or in the aggregate, prevent or adversely affect
the transactions contemplated by this Agreement or result in a material
adverse change in the condition (financial or other), properties,
business, results of operations or prospects of the Company.
(l) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company is or may be
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a party or of which property owned or leased by the Company is or may be
the subject or related to environmental or discrimination matters, that
might, individually or in the aggregate, prevent or affect adversely the
transactions contemplated by this Agreement or result in a material
adverse change in the condition (financial or other), properties,
business, results of operations or prospects of the Company; and no labor
disturbance by the employees of the Company exists or is imminent that
might be expected to affect adversely such condition, properties,
business, results of operations or prospects. The Company is not a party
or subject to the provisions of any injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other
governmental body that could be expected to result in a material adverse
change in the condition (financial or other), properties, business,
results of operations or prospects of the Company.
(m) The Company has good and marketable title to all the properties
and assets reflected as owned by it in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements (or elsewhere in
the Prospectus), or (ii) those which are not material in amount and do
not affect adversely the use made and proposed to be made of such
property by the Company. The Company holds its leased properties under
valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company. Except as
disclosed in the Prospectus, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(n) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company has not
incurred any material liabilities or obligations, indirect, direct or
contingent, or entered into any material verbal or written agreement or
other transaction that is not in the ordinary course of business or that
could result in a material reduction in the future earnings of the
Company; (ii) the Company has not sustained any loss or interference with
its business or properties from fire, flood, windstorm, accident or
other calamity, whether or not covered by insurance, that materially and
adversely affects the condition (financial or other), business, results
of operations or prospects of the Company;
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(iii) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock and the Company is not in
default in the payment of principal of or interest on any outstanding
debt obligations; (iv) there has not been any change in the capital stock
(other than upon the sale of the Common Shares hereunder and upon the
exercise of options and other rights described in the Registration
Statement) or increase in indebtedness material to the Company (other
than in the ordinary course of business); and (v) there has not been any
material adverse change in the condition (financial or other), business,
properties, results of operations or prospects of the Company.
(o) Except as disclosed in or specifically contemplated by the
Prospectus, the Company has sufficient trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted; the expiration
of any trademarks, trade names, patent rights, mask works, copyrights,
licenses, approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or other), business,
results of operations or prospects of the Company; except as disclosed
in or specifically contemplated by the Prospectus, the Company has no
knowledge of any material infringement by it or its customers, with
respect to their use of the Company's trademarks, trade name rights,
patent rights, mask works, copyrights, licenses, trade secrets or other
similar rights of others, and there is no claim being made against the
Company or its customers with respect to their use of the Company's
products, which claims are regarding trademarks, trade names, patents,
mask works, copyrights, licenses, trade secrets or other infringements
which could have a material adverse effect on the condition (financial
or other), business, results of operations or prospects of the Company.
(p) The Company has not been advised, and has no reason to believe,
that it is not conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where
failure to be so in compliance would not materially and adversely affect
the condition (financial or other), business, results of operations or
prospects of the Company.
(q) The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid all taxes shown as due
thereon;
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and the Company has no knowledge of any tax deficiency which has been or
might be asserted or threatened against the Company which could
materially and adversely affect the business, operations or properties of
the Company.
(r) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(s) The Company has not distributed and will not distribute prior to
the Closing Date any offering material in connection with the offering
and sale of the Shares other than the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(t) The Company maintains, with insurers of recognized financial
responsibility, insurance of the types and in the amounts as are
reasonable and customary in the businesses in which it is engaged,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
(u) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign or domestic
office, or failed to disclose fully any contribution in violation of law,
or (ii) made any payment to any foreign or federal or state governmental
officer or official or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(v) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(x) Other than the Underwriters acting in their capacity as such, no
person is or will be owed any finders fee or commission or similar
payment in connection with the transactions contemplated by this
Agreement.
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B. Each Selling Shareholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(a) Such Selling Shareholder has, and on the Closing Date and the
Additional Closing Date hereinafter mentioned will have, good and valid
title to the Firm Shares and/or the Additional Shares, as applicable,
proposed to be sold by such Selling Shareholder hereunder on such Closing
Date and full right, power and authority to enter into this Agreement and
to sell, assign, transfer and deliver such Shares hereunder, free and
clear of all voting trust arrangements, liens, encumbrances, equities,
security interests, restrictions and claims whatsoever; and upon delivery
of and payment for such Shares hereunder, the Underwriters will acquire
good and marketable title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting
trusts or other defects of title whatsoever.
(b) Such Selling Shareholder has executed and delivered a Power of
Attorney and caused to be executed and delivered on his or her behalf a
Custody Agreement (hereinafter collectively referred to as the
"Stockholders Agreement") and in connection herewith such Selling
Shareholder further represents, warrants and agrees that such Selling
Shareholder has deposited in custody, under the Stockholders Agreement,
with the agent named therein (the "Agent") as custodian, certificates in
negotiable form for the Shares to be sold hereunder by such Selling
Shareholder, for the purpose of further delivery pursuant to this
Agreement. Such Selling Shareholder agrees that the Shares to be sold by
such Selling Shareholder on deposit with the Agent are subject to the
interests of the Company and the Underwriters, that the arrangements made
for such custody are to that extent irrevocable, and that the obligations
of such Selling Shareholder hereunder shall not be terminated, except as
provided in this Agreement or in the Stockholders Agreement, by any act
of such Selling Shareholder, by operation of law, by the death or
incapacity of such Selling Shareholder or by the occurrence of any other
event. If the Selling Shareholder should die or become incapacitated, or
if any other event should occur, before the delivery of the Shares
hereunder, the documents evidencing Shares then on deposit with the Agent
shall be delivered by the Agent in accordance with the terms and
conditions of this Agreement as if such death, incapacity or other event
had not occurred, regardless of whether or not the Agent shall have
received notice thereof. This Agreement and the Stockholders Agreement
have been duly executed and delivered by or on behalf of such Selling
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Shareholder and the form of such Stockholders Agreement has been
delivered to you.
(c) The performance of this Agreement and the Stockholders Agreement
and the consummation of the transactions contemplated hereby and by the
Stockholders Agreement will not result in a breach or violation by such
Selling Shareholder of any of the terms or provisions of, or constitute a
default by such Selling Shareholder under, any indenture, mortgage, deed
of trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder or any of its
properties is bound, any statute, or any judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to such
Selling Shareholder or any of its properties.
(d) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted
or that 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.
(e) Each Preliminary Prospectus and the Prospectus, insofar as it
has related to such Selling Shareholder, has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and
has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made; and
neither the Registration Statement nor the Prospectus, nor any amendment
or supplement thereto, as it relates to such Selling Shareholder,
included or will include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(f) Such Selling Shareholder is not aware that any of the
representations and warranties set forth in Section 1.A above is untrue
or inaccurate in any material respect.
C. Xxxxxxx Xxxxx, in his capacity as a Selling Shareholder, additionally
represents and warrants to, and agrees with, the several Underwriters that each
Preliminary Prospectus and the Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and has
not included any untrue statement of a
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material fact or omitted to state a material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made; and neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, included or will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, (i) the Company agrees to issue and sell to the several Underwriters and
the Underwriters, severally and not jointly, agree to purchase from the
Company, at a price per share of $_______, the number of Firm Shares set forth
opposite the respective names of the Underwriters in Column (1) of Schedule I
hereto and (ii) the Selling Shareholders, severally and not jointly, agree to
sell to the several Underwriters and the Underwriters, severally and not
jointly, agree to purchase from the Selling Shareholders, at the same price per
share as specified in clause (i) hereof, the number of Firm Shares set forth
opposite the respective names of the Underwriters in Column (2) of Schedule I
hereto. The number of Firm Shares to be sold by each Selling Shareholder to
each Underwriter shall be the number which bears the same proportion to the
total number of Firm Shares to be sold by such Selling Shareholder, as
specified in Schedule II hereto, as the number of Firm Shares set forth
opposite the name of such Underwriter in Column (2) of Schedule I (or such
number increased as set forth in Section 9 hereof) bears to 500,000, subject to
such adjustments to eliminate any fractional shares as you in your sole
discretion shall make.
(b) Payment of the purchase price for, and delivery of certificates for,
the Firm Shares shall be made at the office of Bear, Xxxxxxx & Co. Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 10:00 A.M. on
the third business day (unless such time and date postponed in accordance with
the provisions of Section 9 hereof) following the date of the effectiveness of
the Registration Statement (or, if the Company has elected to rely upon Rule
430A of the Regulations, the third business day after the determination of the
initial public offering price of the Shares), or such other time not later than
ten business days after such date as shall be agreed upon by you, the Selling
Shareholders and the Company (such time and date of payment and delivery being
herein called the "Closing Date"). Delivery of the certificates for the Firm
Shares shall be made to you for the respective accounts
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of the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price for the Firm Shares to the order of
the Company and to each of the Selling Shareholders by certified or official
bank checks payable in New York Clearing House Funds.
The Company shall cause certificates for the Firm Shares to be prepared in
registered form, in such name or names and in such authorized denominations as
you may request in writing at least two full business days prior to the Closing
Date. The Company and the Selling Shareholders will permit you to examine and
package such certificates for delivery at least one full business day prior to
the Closing Date.
(c) In addition, certain of the Selling Shareholders (as set forth on
Schedule II hereto) hereby grant to the several Underwriters the option to
purchase up to an aggregate of 225,000 Additional Shares (as set forth opposite
the respective names of the Underwriters in Column (3) of Schedule I hereto),
at the same purchase price per share to be paid by the several Underwriters to
the Company and the Selling Shareholders for the Firm Shares as set forth in
this Section 2, for the sole purpose of covering over-allotments in the sale of
Firm Shares by the several Underwriters. This option may be exercised at any
time, in whole or in part, on or before the thirtieth day following the date of
the Prospectus, by written notice by you to the Selling Shareholders or their
respective Attorneys-in-Fact, on behalf of such Selling Shareholders. Such
notice shall set forth the aggregate number of Additional Shares as to which
the option is being exercised and the date and time, as reasonably determined
by you, when the Additional Shares are to be delivered (such date and time
being herein sometimes referred to as the "Additional Closing Date"); provided,
however, that the Additional Closing Date shall not be earlier than the Closing
Date or earlier than the second full business day after the date on which the
option shall have been exercised nor later than the three full business day
after the date on which the option shall have been exercised (unless such time
and date are postponed in accordance with the provisions of Section 9 hereof).
The Company shall cause certificates for the Additional Shares to be prepared
in registered form in such name or names and in such authorized denominations
as you may request in writing at least two full business days prior to the
Additional Closing Date. The Company and the Selling Shareholders will permit
you to examine and package such certificates for delivery at least one full
business day prior to the Additional Closing Date.
The number of Additional Shares to be sold by each Selling Shareholder
shall be the number which bears the same proportion to the total number of
Additional Shares that are
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to be sold by the Selling Shareholders on the Additional Closing Date, as
specified in the notice provided to the Selling Shareholders or their
Attorney-in-Fact, on behalf of such Selling Shareholders, as the maximum number
of Additional Shares that may be sold by such Selling Shareholder bears to
225,000 (the "Additional Share Allotment"). The number of Additional Shares to
be sold by each Selling Shareholder to each Underwriter shall be the number
that bears the same proportion to such Selling Shareholder's Additional Share
Allotment as number of Additional Shares set forth opposite the name of such
Underwriter in Column (3) of Schedule I hereto (or such number increased as set
forth in Section 9 hereof) bears to 225,000, subject, however, to such
adjustments to eliminate any fractional shares as you in your sole discretion
shall make.
Payment for the Additional Shares shall be made by certified or official
bank check or checks, in New York Clearing House or similar next day funds,
payable to the order of the applicable Selling Shareholders at the offices of
Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such
other location as may be mutually acceptable, upon delivery of the certificates
for the Additional Shares to you for the respective accounts of the
Underwriters.
3. Offering. Upon your authorization of the release of the Firm Shares,
the Underwriters propose to offer the Shares for sale to the public upon the
terms set forth in the Prospectus.
4. Covenants of the Company and the Selling Shareholders.
A. The Company covenants and agrees with the several Underwriters that:
(a) If the Registration Statement has not yet been declared effective at
the time of execution of this Agreement the Company will use its best efforts
to cause the Registration Statement and any amendments thereto to become
effective as promptly as possible, and if Rule 430A is used or the filing of
the Prospectus or any Term Sheet that constitutes a part thereof is otherwise
required under Rules 424(b) and/or 434, the Company will file the Prospectus
(properly completed if Rule 430A has been used) pursuant to Rules 424(b) and/or
434 within the prescribed time period and will provide evidence satisfactory to
you of such timely filing.
The Company will notify you immediately (and, if requested by you, will
confirm such notice in writing) (i) when the Registration Statement and any
amendments
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thereto become effective, (ii) of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Prospectus or
for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time,
the Company will make every reasonable effort to prevent the issuance of any
such stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration
Statement or any amendment of or supplement to the Prospectus (including the
prospectus required to be filed pursuant to Rule 424(b) or the term sheet
required to be filed pursuant to Rule 434) that differs from the prospectus or
term sheet on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the Act any event shall have occurred as a result of which
the Prospectus as then amended or supplemented includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement to comply with the Act or the Regulations, the Company will notify
you promptly and prepare and file with the Commission an appropriate amendment
or supplement (in form and substance satisfactory to you) which will correct
such statement or omission and will use its best efforts to have any amendment
to the Registration Statement declared effective as soon as possible.
(c) The Company will, without charge, promptly deliver to you a signed
copy of the Registration Statement, including exhibits and all amendments
thereto, [or a conformed copy of the registration statement originally filed
with respect to the Shares, including exhibits and all amendments thereto,
certified by the Secretary of the Company to be true and complete copies
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thereof as filed with the Commission by electronic transmission.] The Company
will promptly deliver to each of the several Underwriters such number of copies
of any preliminary prospectus, the Prospectus, the Registration Statement, and
all amendments of and supplements to such documents, if any, as you may
reasonably request.
(d) The Company will endeavor in good faith, in cooperation with you, at
or prior to the time the Registration Statement becomes effective, to qualify
the Shares for offering and sale under the securities laws relating to the
offering or sale of the Shares of such jurisdictions as you may designate and
to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not otherwise required to be so qualified, or to execute a general
consent for service of process in any jurisdiction in which it is not otherwise
required to execute such a consent.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act and Rule 158 of the Rules and Regulations) to its
security holders and to you as soon as practicable, but not later than 45 days
after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earning statement (in
form complying with the provisions of Section 11(a) of the Act and Rule 158 of
the Rules and Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 90 days from the date of the Prospectus, the
Company will not, without the prior written consent of Bear, Xxxxxxx & Co.
Inc., on behalf of the Representatives, issue, sell, offer or agree to sell,
encumber, pledge, grant any option for the sale of, or otherwise dispose (or
announce any offer, sale, grant of an option to purchase or other disposition)
of, directly or indirectly, any Common Stock (or any securities convertible
into, exercisable for or exchangeable for Common Stock), and the Company will
obtain the undertaking of each of its officers and directors, each of the
Selling Shareholders and such of its other shareholders as have been heretofore
designated by you not to engage in any of the aforementioned transactions on
their own behalf, other than the sale by the Company and the Selling
Shareholders of Shares hereunder and the Company's issuance of Common Stock
upon the exercise of presently outstanding stock options disclosed in the
Prospectus.
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(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to the Representatives copies
of (i) all reports to its shareholders; and (ii) all reports, financial
statements and proxy or information statements filed by the Company with the
Commission or any national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares as set
forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to remain qualified, and to
cause the Shares to be included, for quotation on the Nasdaq National Market.
(j) The Company will file with the Commission such reports on Form SR as
may be required pursuant to Rule 463 of the Regulations.
(k) On or prior to June 30, 1996, the Company will take all action to
irrevocably exercise in full, the Clinitec Option, unless the Company has, on
or before such date, consummated the acquisition of 100% of Clinitec, provided,
--------
however, that the Company shall not be required to exercise the Clinitec Option
-------
if the Board of Directors of the Company determines, in accordance with its
fiduciary duties, that the exercise of the Clinitec Option would have a
material adverse financial effect on the Company's business and prospects and
its shareholders.
B. Each of the Selling Shareholders covenants and agrees with the several
Underwriters that, during the period of 90 days from the date of the
Prospectus, he or she will not, without the prior written consent of Bear,
Xxxxxxx & Co. Inc., on behalf of the Representatives, issue, sell, offer or
agree to sell, encumber, pledge, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock).
5. Payment of Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company and the Selling Shareholders hereunder, including
those in connection with (i) preparing, printing, duplicating, filing and
distributing the Registration Statement, as originally filed, and all amendments
thereof (including all exhibits thereto), any preliminary prospectus, the
Prospectus and any amendments thereof or supplements thereto (including,
without limitation, fees and expenses of the Company's accountants and
counsel), the underwriting documents (including this Agreement and the
Agreement Among Underwriters) and all other documents related to the public
offering of the Shares (including those supplied to the Underwriters in
quantities as hereinabove stated), (ii) the issuance, transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon, (iii) the
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qualification of the Shares under state or foreign securities or Blue Sky laws,
including the costs of printing and mailing a preliminary and final "Blue Sky
Memorandum" and the fees of counsel for the Underwriters and such counsel's
disbursements in relation thereto, (iv) quotation of the Shares on the Nasdaq
National Market, (v) filing fees of the Commission and the NASD, (vi) the cost
of printing certificates representing the Shares and (vii) the cost and charges
of any transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
herein contained, as of the date hereof and as of the Closing Date (for
purposes of this Section 6, "Closing Date" shall refer to the Closing Date for
the Firm Shares and any Additional Closing Date, if different, for the
Additional Shares), to the absence from any certificates, opinions, written
statements or letters furnished to you or to Xxxxxx, Xxxx & Xxxxxxxx
("Underwriters' Counsel") pursuant to this Section 6 of any material
misstatement or omission, to the performance by the Company and the Selling
Shareholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., New York time, on the date of this Agreement, or at such later time
and date as shall have been consented to in writing by you; if the Company
shall have elected to rely upon Rule 430A of the Regulations, the Prospectus or
any Term Sheet that constitutes a part thereof shall have been filed with the
Commission in a timely fashion in accordance with Section 4.A(a) hereof; and,
at or prior to the Closing Date, and Additional Closing Date, as the case may
be, no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date and the Additional Closing Date you shall have
received the opinion of Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the
Company, dated the Closing Date or the Additional Closing Date, as the case may
be, addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(1) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
California, is duly qualified to do business as a foreign corporation and
is in good standing in all
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other jurisdictions where the ownership or leasing of properties or the
conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company and has full corporate power and
authority to own its properties and conduct its business as described in
the Registration Statement, and has no subsidiaries;
(2) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all outstanding shares of Common Stock (including the Firm
Shares to be sold by the Selling Shareholders and the Additional Shares)
have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with federal and state
securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase any
securities and conform to the description thereof contained in the
Prospectus; without limiting the foregoing, there are no preemptive or
other rights to subscribe for or purchase any of the Shares to be sold by
the Company hereunder;
(3) All of the issued and outstanding shares of Clinitec owned
beneficially by the Company are so owned free and clear of all liens,
encumbrances, equities, claims, security interests, voting trusts or
other defects of title whatsoever;
(4) The certificates evidencing the Shares to be delivered hereunder
are in due and proper form under California law, and when duly
countersigned by the Company's transfer agent and registrar, and
delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of this
Agreement, the Shares represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, will not have been issued
in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities and will conform in all material
respects to the description thereof contained in the Prospectus;
(5) Except as disclosed in or specifically contemplated by the
Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and, to the best knowledge of such counsel,
no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or
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any security convertible into or exchangeable for capital stock of the
Company;
(6) The statements under the captions "Risk Factors - Proprietary
Technology," "Risk Factors - Product Liability," "Risk Factors -
Uncertainty in Health Care Industry; Government Regulation," "Description
of Capital Stock," "Business-Government Regulation" and "Shares Eligible
for Future Sale," at the time the Registration Statement became
effective, fairly summarize, in all material respects, the matters
described therein insofar as such statements constitute a summary of
documents referred to therein or matters of law;
(7)(a) The Registration Statement has become effective under the
Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or preventing
the use of the Prospectus has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated by the
Commission; any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules and Regulations has been
made in the manner and within the time period required by such Rule
424(b);
(b) The Registration Statement, the Prospectus and each amendment
or supplement thereto (except for the financial statements and schedules
included therein as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Act and
the Rules and Regulations;
(c) To such counsel's best knowledge, there are no franchises,
leases, contracts, agreements or documents of a character required to be
disclosed in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not disclosed or filed,
as required; and
(d) To such counsel's best knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened against
the Company which are required to be described in the Prospectus which
are not described as required;
(8) The Company has full corporate power and authority to enter into
this Agreement and to sell and deliver the Firm Shares to be sold by it
to the several Underwriters; this Agreement has been duly and validly
authorized by all necessary corporate
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action by the Company, has been duly and validly executed and delivered
by and on behalf of the Company; this Agreement has been duly and validly
delivered by and on behalf of the Selling Shareholders; and no approval,
authorization, order, consent, registration, filing, qualification,
license or permit of or with any court, regulatory, administrative or
other governmental body is required for the execution and delivery of
this Agreement by the Company or the consummation of the transactions
contemplated by this Agreement except such as have been obtained and are
in full force and effect under the Act and such as may be required under
applicable Blue Sky laws in connection with the purchase and distribution
of the Shares by the Underwriters and the clearance of such offering with
the NASD;
(9) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with, result in the acceleration of any indebtedness under or performance
required by, result in any right of termination of, increase any amounts
payable under, decrease any amounts receivable under, result in the
breach of, or constitute, either by itself or upon notice or the passage
of time or both, a default under, or, to such counsel's best knowledge
adversely change any other rights pursuant to, any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument known to such counsel to which the Company is a party or by
which the Company or any of its property may be bound or affected which
is material to the Company, or violate any of the provisions of the
articles of incorporation or bylaws, or other organizational documents,
of the Company or, so far as is known to such counsel violate any
statute, judgment, decree, order, rule or regulation of any court or
governmental body having jurisdiction over the Company or any of its
property;
(10) The Company is not in violation of its articles of
incorporation or bylaws, as amended or restated, or other organizational
documents, or in breach of or default with respect to any provision of
any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument known to such counsel to which the
Company is a party or by which it or any of its properties may be bound
or affected, except where such default would not materially and adversely
affect the Company; and, to the best knowledge of such counsel, the
Company is in compliance with all laws, rules, regulations, judgments,
decrees, orders and statutes of any court or jurisdiction to which they
are subject, except where
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noncompliance would not materially and adversely affect the Company;
(11) To the best knowledge of such counsel no holders of securities
of the Company have rights which have not been waived to the registration
of shares of Common Stock or other securities because of the filing of
the Registration Statement by the Company or the offering contemplated
hereby;
(12) Except as set forth in the Registration Statement and the
Prospectus, such counsel has no knowledge that any patent or copyright
held by others is infringed by the activities of the Company described in
the Registration Statement or the Prospectus or by the manufacture, use
or sale of any product, device, system or instrument made by the Company;
(13) Except as set forth in the Registration Statement and the
Prospectus, such counsel has no knowledge of any actual or threatened
material action, suit, claim or proceeding relating to patents, patent
rights or licenses, trademarks or trademark rights, copyrights,
collaborative research, licenses or royalty arrangements or agreements or
trade secrets, know-how or proprietary techniques or technology,
including, processes and substances, owned by or affecting the business
operations of the Company which are pending or threatened against the
Company or any of its officers or directors;
(14) This Agreement and the Stockholders Agreement have been duly
authorized, executed and delivered by or on behalf of each of the Selling
Shareholders; the Agent has been duly and validly authorized to act as
the custodian of the Common Shares to be sold by each such Selling
Shareholder; the performance of this Agreement and the Stockholders
Agreement, and the consummation of the transactions herein and therein
contemplated by the Selling Shareholders will not conflict with, result
in the acceleration of any indebtedness under or performance required by,
result in any right of termination of, increase any amounts payable
under, decrease any amounts receivable under, to such counsel's best
knowledge adversely change any other rights pursuant to, result in a
breach or violation of, or constitute, either by itself or upon notice of
the passage of time or both, a default under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease,
franchise, license, or other agreement or instrument to which any of the
Selling Shareholders is a party or by which any of the Selling
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Shareholders or any of their properties may be bound, or violate any
statute, judgment, decree, order, rule or regulation known to such
counsel as applicable to the Selling Shareholders of any court or
governmental body having jurisdiction over any of the Selling
Shareholders or any of their properties; and no approval, authorization,
order or consent of any court, regulatory body, administrative agency or
other governmental body is required for the execution and delivery of
this Agreement and the Stockholders Agreement or the consummation by the
Selling Shareholders of the transactions contemplated herein or therein
except such as have been obtained and are in full force and effect under
the Act and such as may be required under the rules of the NASD and
applicable Blue Sky laws, as to which no opinion is expressed;
(15) The Selling Shareholders have full right, power and authority
to enter into this Agreement and the Stockholders Agreement and to sell,
transfer and deliver the Common Shares to be sold on such Closing Date by
such Selling Shareholders hereunder and good and marketable title to such
Common Shares so sold, free and clear of all liens, encumbrances,
equities, claims, restrictions, security interests, voting trusts, or
other defects of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona fide purchasers) who
have purchased such Common Shares hereunder;
(16) To the best knowledge of such counsel, there are no actual or
threatened challenges to the enforceability of the Clinitec Option or any
facts that may constitute a defense by any party to the enforceability of
the Clinitec Option.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and its subsidiaries, provided that copies of any
such statements or certificates shall be delivered to Underwriters' Counsel.
The opinion of such counsel for the Company shall state that the opinion of any
such other
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counsel is in form satisfactory to such counsel and, in their opinion, you and
they are justified in relying thereon.
(c) All proceedings taken in connection with the sale of the Firm Shares
and the Additional Shares as herein contemplated shall be satisfactory in form
and substance to you and to Underwriters' Counsel, and the Underwriters shall
have received from said Underwriters' Counsel a favorable opinion, dated as of
the Closing Date and the Additional Closing Date, as the case may be, with
respect to the issuance and sale of the Shares, the Registration Statement and
the Prospectus and such other related matters as you may reasonably require,
and the Company and the Selling Shareholders shall have furnished to
Underwriters' Counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) At the Closing Date and the Additional Closing Date you shall have
received a certificate of the Chief Executive Officer and Corporate Controller
of the Company, dated the Closing Date or Additional Closing Date to the effect
that (i) the condition set forth in subsection (a) of this Section 6 has been
satisfied, (ii) as of the date hereof and as of the Closing Date or Additional
Closing Date, as the case may be, the representations and warranties of the
Company set forth in Section 1.A hereof are accurate, (iii) as of the Closing
Date, or Additional Closing Date, as the case may be, the obligations of the
Company to be performed hereunder on or prior thereto have been duly performed
and (iv) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company has not sustained
any material loss or interference with its business or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding,
and there has not been any material adverse change, or any development
involving a material adverse change, in the business prospects, properties,
operations, condition (financial or otherwise), or results of operations of the
Company, except in each case as described in or contemplated by the Prospectus.
(e) At the time this Agreement is executed and at the Closing Date (or
Additional Closing Date, as the case may be), you shall have received a letter,
from Deloitte & Touche LLP, independent public accountants for the Company,
dated, respectively, as of the date of this Agreement and as of the Closing
Date addressed to the Underwriters and in form and substance satisfactory to
you, to the effect that: (i) they are independent certified public accountants
with respect to the Company within the meaning of the Act and the Regulations
and stating that the
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answer to Item 10 of the Registration Statement is correct insofar as it
relates to them; (ii) in their opinion, the financial statements and schedules
and the pro forma financial statements and schedules of the Company included in
the Registration Statement and the Prospectus and covered by their opinion
therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the latest available unaudited interim consolidated
financial statements of the Company, a reading of the minutes of meetings and
consents of the shareholders and boards of directors of the Company and the
committees of such boards subsequent to March 31, 1995, inquiries of officers
and other employees of the Company and its subsidiaries who have responsibility
for financial and accounting matters of the Company and its subsidiaries with
respect to transactions and events subsequent to March 31, 1995 and other
specified procedures and inquiries to a date not more than five days prior to
the date of such letter, nothing has come to their attention that would cause
them to believe that: (A) the unaudited consolidated financial statements and
schedules of the Company presented in the Registration Statement and the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and, if applicable, the Exchange
Act and the applicable published rules and regulations of the Commission
thereunder or that such unaudited consolidated financial statements are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Registration Statement and
the Prospectus; (B) with respect to the period subsequent to December 31, 1995
there were, as of the date of the most recent available monthly consolidated
financial statements of the Company and its subsidiaries, if any, and as of a
specified date not more than five days prior to the date of such letter, any
changes in the capital stock or long-term indebtedness of the Company or any
decrease in the net current assets or stockholders' equity of the Company, in
each case as compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for changes
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter or (C) that during
the period from January 1, 1996 to the date of the most recent available
monthly consolidated financial statements of the Company and its subsidiaries,
if any, and to a specified date not more than five days prior to the date of
such letter, there was any decrease, as compared with the corresponding period
in the prior fiscal year, in total revenues, or total or per share net income,
except for decreases which the Registration Statement and
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the Prospectus disclose have occurred or may occur or which are set forth in
such letter; and (iv) they have compared specific dollar amounts, numbers of
shares, percentages of revenues and earnings, and other financial information
pertaining to the Company set forth in the Registration Statement and the
Prospectus, which have been specified by you prior to the date of this
Agreement, to the extent that such amounts, numbers, percentages, and
information may be derived from the general accounting and financial records of
the Company and its subsidiaries or from schedules furnished by the Company,
and excluding any questions requiring an interpretation by legal counsel, with
the results obtained from the application of specified readings, inquiries, and
other appropriate procedures specified by you set forth in such letter, and
found them to be in agreement.
(f) Prior to the Closing Date and the Additional Closing Date the Company
and the Selling Shareholders shall have furnished to you such further
information, certificates and documents as you may reasonably request
including, without limitation, in the case of each Selling Shareholder, a
custody agreement in form and substance reasonably satisfactory to
Underwriters' Counsel relating to the sale of Additional Shares hereunder (the
"Additional Shares Custody Agreement").
(g) You shall have received from each person who is a director or officer
of the Company, each Selling Shareholder and such additional shareholders as
have been heretofore designated by you an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
Bear, Xxxxxxx & Co. Inc. on behalf of the Representatives, offer, sell, offer
or agree to sell, encumber, pledge, grant any option to purchase or otherwise
dispose (or announce any offer, sale, grant of an option to purchase or other
disposition) of any shares of Common Stock (or any securities convertible into,
exercisable for or exchangeable or exercisable for shares of Common Stock) for
a period of 90 days after the date of the Prospectus.
(h) At the Closing Date, the Shares shall have been approved for quotation
on the Nasdaq National Market.
(i) There shall not have occurred any change, or any development involving
a prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, of the Company from that set forth in the
Registration Statement, that, in your judgment, is material and adverse and
that make it, in your judgment, impracticable to market the Shares on the terms
and in the manner contemplated in the Prospectus.
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If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company and the Selling
Shareholders in writing, or by telephone, telex or telegraph, confirmed in
writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any and all losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and disbursements and any and all expenses whatsoever incurred
in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (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 for the
registration of the Shares, as originally filed or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Company will not be liable in any such case to the extent, but only to
the extent, that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through you expressly for use therein. This indemnity will be in
addition to any liability which the Company may otherwise have, including under
this Agreement.
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(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each Selling Shareholder, each of the directors
of the Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and
disbursements and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), jointly or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (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 for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder. This indemnity will be in addition to
any liability which any Underwriter may otherwise have, including under this
Agreement. The Company acknowledges that the statements set forth in the last
paragraph of the cover page and in the paragraphs under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the
registration statement relating to the Shares as originally filed or in any
amendment thereof, any related preliminary prospectus or the Prospectus or in
any amendment thereof or supplement thereto, as the case may be.
(c) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all
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30
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and disbursements and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (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 for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case (for each Selling Shareholder other than Xx. Xxxxxxx
Xxxxx) to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein relating to such Selling Shareholder in reliance upon and in conformity
with written information relating to such Selling Shareholder furnished to the
Company by such Selling Shareholder expressly for use therein; provided,
however, that the liability of each Selling Shareholder (including Xx. Xxxxxxx
Xxxxx) hereunder shall in no event exceed the net proceeds received by such
Selling Shareholder from the sale of Common Stock pursuant to this Agreement.
This indemnity will be in addition to any liability which any Selling
Shareholder may otherwise have, including under this Agreement.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the 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 each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from
such indemnified party, to assume the defense thereof with counsel satisfactory
to such indemnified party. Notwithstanding the
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31
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by one of
the indemnifying parties in connection with the defense of such action, (ii)
the indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties), in any of which events such fees and expenses shall be borne by
the indemnifying parties. Anything in this subsection to the contrary
notwithstanding, (y) an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld, and (z) no
indemnifying party, in the defense of any such claim or action, shall consent
to the entry of any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release for all liability with respect to such
claim or action, without the written consent of such indemnified party.
8. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Sections 7(a), (b) or (c) hereof is
for any reason held to be unavailable from the Company, any Underwriter or any
Selling Shareholder who would otherwise be liable as an indemnifying party
under Section 7 of this Agreement, as the case may be, or is insufficient to
hold harmless a party indemnified thereunder, the Company, such Selling
Shareholder and such Underwriter shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provisions (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company, such Selling Shareholder or such Underwriter, any contribution
received by the Company, such Selling Shareholder or such Underwriter from
persons other than (i) the Underwriters or the Selling Shareholder in the case
of the Company, (ii) the Company or any Selling Shareholder in the case of the
Underwriters, and (iii) the Company or any Underwriter, in the case of the
Selling Shareholders, who may also be liable for contribution, including
persons
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who control the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company, such
Selling Shareholder and such Underwriter may be subject, in such proportions as
is appropriate to reflect the relative benefits received by the Company, such
Selling Shareholder and such Underwriter from the offering of the Shares or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company, such Selling Shareholder and such Underwriter in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, such Selling
Shareholder and such Underwriter shall be deemed to be in the same proportion
as (x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company, (y) the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by such Selling Shareholder and (z) the
underwriting discounts and commissions received by such Underwriter,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company, such Selling Shareholder and
such Underwriter 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, such Selling Shareholder or such Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, such Selling
Shareholder and such Underwriter agree that it would not be just and equitable
if contribution pursuant to this Section 8 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 above. Notwithstanding the provisions
of this Section 8, (i) in no case shall any Underwriter (except as may be
provided in the Agreement Among Underwriters entered into by and among the
several Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, (ii) in no case shall any Selling Shareholder be liable or
responsible for any amount in excess of the net proceeds received by such
Selling Shareholder from the sale of Common Stock pursuant to this Agreement,
and (iii) no person guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
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 that 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 8,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, each person, if any, who controls any
Selling Shareholder within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Selling Shareholder, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) through (iii) of this Section 8.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8, notify such party or parties from whom contribution may
be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, such Shares to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to the respective
proportions which the numbers of Firm Shares set forth opposite their
respective names in Column (1) of Schedule I hereto bear to the aggregate
number of Firm Shares set forth opposite the names of the non-defaulting
Underwriters.
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34
(b) In the event that such default relates to more than 10% of the Firm
Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days
after such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as
provided in this Section 9, this Agreement or, in the case of a default with
respect to the Additional Shares, the obligations of the Underwriters to
purchase and of the applicable Selling Shareholders to sell the Additional
Shares shall thereupon terminate, without liability on the part of the Company,
the Selling Shareholders or the several Underwriters with respect thereto
(except in each case as provided in Sections 5, 7(a),(b),(c) and 8 hereof), but
nothing in this Agreement shall relieve a defaulting Underwriter or
Underwriters of its or their liability, if any, to the other several
Underwriters, the Company and the Selling Shareholders for damages occasioned
by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which the
default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date,
as the case may be, for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of the Underwriters and
Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Underwriters, the Selling
Shareholders and the Company contained in this Agreement, including the
representations and warranties contained in Section 1, the agreements contained
in Section 5, the indemnity agreements contained in Section 7 and the
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person thereof or by or on behalf of the
Company, any of its
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officers and directors or any Selling Shareholder or any controlling person
thereof, and shall survive delivery of and payment for the Shares to and by the
several Underwriters. The representations contained in Section 1 and the
agreements contained in Sections 5, 7, 8 and 11(d) hereof shall survive the
termination of this Agreement, including termination pursuant to Sections 9 or
11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later of when (i) you,
the Company and the Selling Shareholders shall have received notification of
the effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price
per Share has not been agreed upon prior to 5:00 P.M., New York time, on the
fifth full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company
by notifying you and the Selling Shareholders or by you notifying the Company
and the Selling Shareholders, or the Attorney-in-Fact on their behalf.
Notwithstanding the foregoing, the provisions of this Section 11 and of
Sections 1, 5, 7 and 8 hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any time prior
to the Closing Date or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case
may be, if (i) any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future
materially disrupt, the market for the Company's securities or the securities
markets in general; or (ii) if trading on the New York or American Stock
Exchanges shall have been suspended or materially limited, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required, on the New York or American Stock
Exchanges by the New York or American Stock Exchanges or by order of the
Commission or any other governmental authority having jurisdiction; or (iii) if
a banking moratorium has been declared by a state or federal authority, or if a
moratorium in foreign exchange trading by major international banks or person
has been declared, or if any new restriction materially adversely affecting the
distribution of the Firm Shares or the Additional Shares, as the case may be,
shall have become effective; or (iv) if there shall have occurred any outbreak
or escalation of major hostilities or any change in the financial markets or
any calamity or crises that, in your reasonable judgment, is
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36
material and adverse; or (v) if there shall have been such a change in the
market for securities in general or in political, financial or economic
conditions, in the case of each of clauses (i) through (v) if, in your
reasonable judgment, any such event, individually or in the aggregate with
any other such event, makes it inadvisable to proceed with the offering, sale
and delivery of the Firm Shares or the Additional Shares, as the case may be,
on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, telecopy, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Sections 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the several Underwriters set forth herein is
not satisfied or because of any refusal, inability or failure on the part of
the Company or any Selling Shareholder to perform any agreement herein or
comply with any provision hereof, the Company will, subject to demand by you,
reimburse the Underwriters for all out-of-pocket expenses (including the fees
and expenses of their counsel), incurred by the several Underwriters in
connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, telecopied or telexed or telegraphed
and confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx XxXxxxxx; if sent to
the Company or any Selling Shareholder, shall be mailed, delivered, or
telegraphed and confirmed in writing to the Company, 00000 Xxxx 00xx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 , Attention: Xx. Xxxxxxx Xxxxx. All such
notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; three business days after being
deposited in the mail, postage prepaid, if mailed; one business day after being
sent by next-day courier; when answered back, if telexed; and when receipt
acknowledged, if telecopied.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the several Underwriters, the Selling Shareholders and
the Company and the controlling persons, directors, officers, employees and
agents referred to in Sections 7 and 8, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or
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claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
If the foregoing correctly sets forth the understanding among you, the
Company, and the Selling Shareholders, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
QUALITY SYSTEMS, INC.
By
------------------------------
Xxxxxxx Xxxxx
Chairman and Chief
Executive Officer
THE SELLING SHAREHOLDERS, ACTING
SEVERALLY
---------------------------------
Xxxxxxx Xxxxx
---------------------------------
Xxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxxxx
---------------------------------
Xxx Xxxxxxx
---------------------------------
Xxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxxx
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
PACIFIC GROWTH EQUITIES, INC.
CRUTTENDEN XXXX INCORPORATED
BY BEAR, XXXXXXX & CO. INC.
By
---------------------------
General Partner
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
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SCHEDULE I
Number of Shares to Be Purchased
Maximum No. of
From the Additional Shares
From the Selling Shares to be
Name of Underwriter Company Shareholders Purchased
------------------- ------- ------------ -----------------
Bear, Xxxxxxx & Co. Inc.
Pacific Growth Equities, Inc.
Cruttenden Xxxx Incorporated
TOTAL 1,000,000 500,000 225,000
========= ======= =======
Schedule I to Underwriting Agreement
Page 1
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SCHEDULE II
Selling Shareholders
Maximum No. of
No. of Firm Additional Shares
Name of Selling Shareholder Shares to be Sold to be Sold
--------------------------- ----------------- -----------------
Xxxxxxx and Xxxxx Xxxxx 452,000 225,000
Xxxxxx Xxxxxxx 20,000 0
Xxx Xxxxxxx 13,000 0
Xxxxx Xxxxx 10,000 0
Xxxxxxx Xxxxxx 5,000 0
Schedule II to Underwriting Agreement
Page 1
