1
EXHIBIT 1.1
4,000,000 Shares of Common Stock
XXXXX/XXXXXX HOLDINGS, INC.
UNDERWRITING AGREEMENT
___________, 1998
BEAR, XXXXXXX & CO. INC.
XXXXX XXXXXXX INC.
CONNING & COMPANY
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Ladies and Gentlemen:
Xxxxx/Xxxxxx Holdings, Inc., a Delaware corporation (the
"Company" or "CBH"), proposes, subject to the terms and conditions stated
herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 4,000,000 shares (the "Firm
Shares") of its common stock, par value $0.01 per share (the "Common Stock").
In addition, W. Xxx Xxxxxxx (the "Selling Stockholder") proposes to grant to
the Underwriters, for the sole purpose of covering over-allotments in
connection with the sale of the Firm Shares, an option to purchase up to an
additional 600,000 shares (the "Additional Shares") of Common Stock as provided
in Section 2 hereof. The Firm Shares and any
2
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.
(a) The Company represents and warrants to, and
agrees with, the Underwriters that:
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement and amendments
thereto, on Form S-1 (No. 333-56799), for the registration of the Shares under
the Securities Act of 1933, as amended (the "Act"). Such registration
statement, including the prospectus, financial statements and schedules,
exhibits and all other documents filed as a part thereof, as amended at the
time of effectiveness of the registration statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations of the
Commission under the Act (the "Regulations"), and any additional registration
statement increasing the size of the offering filed pursuant to Rule 462(b) of
the Regulations with respect to the Shares ("Rule 462(b) Registration
Statement"), is herein called the "Registration Statement" and the prospectus,
in the form first filed with the Commission pursuant to Rule 424(b) of the
Regulations or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) or Rule 434 filing is required, is herein
called the "Prospectus." The term "preliminary prospectus" as used herein
means a preliminary prospectus as described in Rule 430 of the Regulations.
(ii) At the time of the effectiveness of the
Registration Statement or the effectiveness of any post-effective amendment to
the Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission and
at the Closing Date and the Additional Closing Date, if any (as hereinafter
respectively defined), the Registration Statement and the Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects
2
3
with the applicable provisions of the Act and the Regulations and do not or
will not contain an untrue statement of a material fact and do not or will not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein (i) in the case of the Registration
Statement, not misleading and (ii) in the case of the Prospectus, in light of
the circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading. No representation and warranty is
made in this paragraph (ii), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through Bear, Xxxxxxx & Co. Inc.
("Bear Xxxxxxx") as herein stated expressly for use in connection with the
preparation thereof. If Rule 434 is used, the Company will comply with the
requirements of Rule 434.
(iii) No order preventing or suspending the use of
any preliminary prospectus or suspending the effectiveness of the Registration
Statement or any post effective amendment thereof has been issued by the
Commission and no proceedings for that purpose have been instituted, nor are
any such proceedings pending or, to the knowledge of the Company, threatened by
the Commission, and no order suspending the offering of the Shares in any
jurisdiction designated by you has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the Company, threatened,
and any request of the Commission for additional information (to be included in
the Registration Statement or Prospectus or otherwise) has been complied with.
3
4
(iv) Ernst & Young LLP, who have certified certain
financial statements and supporting schedules included in the Registration
Statement, are independent public accountants as required by the Act and the
Regulations. Xxxx Xxxxxx Xxxxxxx LLP and McGladrey & Xxxxxx, LLP, who have
certified certain financial statements and supporting schedules included in the
Registration Statement, were independent public accountants for the period of
time covered by their audit as required by the Act and the Regulations.
(v) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except
as set forth in the Registration Statement and the Prospectus, there has been
no material adverse change or any development involving a prospective material
adverse change in the business, prospects, properties, operations, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Change"), whether or not
arising from transactions in the ordinary course of business, and since the
date of the latest balance sheet presented in the Registration Statement and
the Prospectus, neither the Company nor any of its subsidiaries has incurred or
undertaken any liabilities or obligations, direct or contingent, which are
material to the Company and its subsidiaries, taken as a whole, except for
liabilities or obligations which are reflected in the Registration Statement
and the Prospectus.
(vi) The Company has all requisite corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder. This Agreement and the transactions contemplated herein have been
duly and validly authorized by the Company and this Agreement has been duly and
validly executed and delivered by the Company.
(vii) The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not (i) conflict with or result in a breach of any of the terms
and provisions of, or constitute a default (or an event
4
5
which with notice or lapse of time, or both, would constitute a default) under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries pursuant to,
any agreement, instrument, franchise, license or permit to which the Company or
any of its subsidiaries is a party or by which any of such entities or their
respective properties or assets may be bound, (ii) violate or conflict with any
provision of the certificate of incorporation or by-laws of the Company or the
constituent documents of any of its subsidiaries or (iii) violate or conflict
with any judgment, decree, order, statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties or
assets, except, with respect to clause (iii), such violations or conflicts that
would not, individually or in the aggregate, have a material adverse effect on
the business, prospects, properties, operations, condition (financial or other)
or results of operations of the Company and its subsidiaries, taken as a whole
(a "Material Adverse Effect").
(viii) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any third
party or any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions contem-
plated hereby, including the issuance, sale and delivery of the Shares to be
issued, sold and delivered by the Company hereunder, except the registration
under the Act of the Shares, approval by the National Association of Securities
Dealers, Inc. ("NASD") of the underwriting arrangements and such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits as have been duly obtained and are in full force and
effect and copies of which have been furnished to you or as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(ix) All of the outstanding shares of Common Stock
are duly and validly authorized and issued,
5
6
are fully paid and nonassessable and were not issued and are not now in
violation of or subject to any preemptive or similar rights. The Shares, when
issued, delivered and sold in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable, and will not have been issued in
violation of or be subject to any preemptive or similar rights. The Company
had, at June 30, 1998, an authorized and outstanding capitalization as set
forth in the Registration Statement and the Prospectus. The Common Stock, the
Firm Shares and the Additional Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(x) Schedule II attached hereto sets forth a
true, complete and correct list of (i) the names of the Company's subsidiaries,
(ii) the jurisdiction of incorporation of each such subsidiary and (iii) the
percentage of shares of issued capital stock of each such subsidiary owned by
the Company. Except as described in the Prospectus, all of the shares of
issued capital stock of each subsidiary as set forth on Schedule II hereto, are
owned directly or indirectly by the Company, free and clear of any lien,
encumbrance, claim, security interest, restriction on transfer, stockholders'
agreement, voting trust or other defect of title whatsoever.
(xi) All of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and
issued, fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(xii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware. The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so
qualified or in good standing which would not have a Material Adverse Effect.
Each subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation. Each subsidiary of the Company is duly qualified and in good
standing as a
6
7
foreign corporation in each jurisdiction in which the character or location of
its properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to be so
qualified or in good standing which will not in the aggregate result in a
Material Adverse Effect. Each of the Company and its subsidiaries has all
requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits,
including without limitation licenses from the insurance departments of the
various states where the Company or the subsidiaries conduct insurance agency
business (collectively "Licenses"), of and from, and have made all filings with
and satisfied all eligibility and other similar requirements imposed by all
federal, state, local and other governmental authorities, in each case as is
required to own, lease and operate its properties and conduct its business as
now being conducted and as described in the Registration Statement and the
Prospectus, and each such License is in full force and effect, except to the
extent that, individually or in the aggregate, the failure to obtain any such
License or to keep such License in effect or to make any such declaration,
registration or filing or satisfy any such requirement would not result in a
Material Adverse Effect.
(xiii) Except as described in the Prospectus, there
is no litigation or governmental action, suit, proceeding or investigation to
which the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is subject or which is
pending or, to the actual knowledge of the Company, threatened against the
Company or any of its subsidiaries which might result in any Material Adverse
Change or which is required to be disclosed in the Registration Statement and
the Prospectus. There are no contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which are not described or filed as
required by the Act and the Regulations.
(xiv) Except as described in the Prospectus, there
are no contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like payment.
7
8
(xv) The Company has not taken and will not take,
directly or indirectly, any action designed to cause or result in, or which
constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares.
(xvi) The financial statements, including the notes
thereto, and supporting schedules included in the Registration Statement and
the Prospectus present fairly the financial position of the Company as of the
respective dates indicated and the results of its operations for the respective
periods specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis; the
supporting schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein; and the
other financial and statistical information and data with respect to the
Company and its subsidiaries set forth in the Registration Statement have been
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(xvii) The pro forma financial statements of the
Company and its subsidiaries and the related notes thereto included in the
Registration Statement present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein.
(xviii) Except as described in the Prospectus, no
holder of securities of the Company has any rights to the registration of
securities of the Company because of the filing of the Registration Statement
or otherwise in connection with the sale of the Shares contemplated hereby.
8
9
(xix) Neither the Company nor any of its subsidiaries
is and, after giving effect to the offering and sale of the Shares and assuming
the Company's business is conducted as described in the Prospectus, none will
be, an "investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of 1940 (the
"Investment Company Act").
(xx) Neither the Company nor any of its subsidiaries
is in default (nor has any event occurred which, with notice or lapse of time
or both, would constitute a default) in the performance or observance of, or in
violation of, any obligation, agreement, covenant or condition contained in any
loan agreement, note, contract, instrument, indenture, lease, franchise,
License, mortgage, permit or other agreement to which it is a party or by which
it is bound or to which any of its properties are subject, except for such
defaults that would not, individually or in the aggregate, result in a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is, and at the
Closing Date and the Additional Closing Date, if any will be, in violation of
any provisions of its certificate of incorporation or by-laws or other
constituent documents.
(xxi) Neither the Company nor any of its subsidiaries
owns any real property; and any real property, buildings and personal property
held under lease by the Company and its subsidiaries is held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use thereof made and proposed to be made
by the Company and its subsidiaries.
(xxii) The Company and its subsidiaries own or
possess, or can acquire on reasonable terms, adequate rights to use all
patents, patent applications, trademark, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights and licenses material to
the Company and its subsidiaries taken as a whole, and have not received any
notice of any claim of conflict with, the rights of others in respect thereof
except for such claims that would not, individually or in the aggregate, result
in a Material Adverse Effect.
9
10
(xxiii) The Company and its subsidiaries have filed
all foreign, federal, state and local tax returns that are required to be filed
or have requested extensions thereof, except for those failures that would not,
individually or in the aggregate, have a Material Adverse Effect, and have paid
all taxes required to be paid by them and any other assessment, fine or penalty
levied against them, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently
being contested in good faith.
(xxiv) No labor dispute with the employees of the
Company or any subsidiary exists or, to the actual knowledge of the Company, is
imminent that might have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.
(xxv) Since the date as of which information is
given in the Prospectus through the date hereof, and except as may otherwise be
contemplated pursuant to the disclosure, or disclosed, in the Registration
Statement, neither the Company nor any subsidiary has (i) issued or granted any
securities, (ii) incurred any liability or obligation, direct or contingent,
other than liabilities and obligations which were incurred in the ordinary
course of business, or (iii) declared or paid any dividend on its capital
stock.
(xxvi) The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
and (iii) access to assets is permitted only in accordance with management's
general or specific authorization.
(xxvii) The Common Stock has been approved for
quotation, subject only to official notice of issuance, on the Nasdaq National
Market under the symbol "CLKB."
(b) The Selling Stockholder represents and warrants to, and
agrees with, each of the Underwriters and the Company that:
10
11
(i) The Selling Stockholder has entered into an
agreement (the "Lock-up Letter") to the effect that the Selling Stockholder
will not, directly or indirectly, without the prior written consent of Bear
Xxxxxxx, offer, sell, offer or agree to sell, 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 any shares of Common Stock or any securities
convertible into, exercisable for or exchangeable for shares of Common Stock,
for a period of 180 days after the date of the Prospectus except for any such
offers, sales, grants of options or other disposition referenced in or
contemplated by the Prospectus. Certificates in negotiable form representing
all of the Additional Shares to be sold by the Selling Stockholder hereunder
will be delivered to you in accordance with the instructions to be provided by
you in accordance with Section 2(c) of this Agreement.
(ii) The Selling Stockholder has, and on the
Additional Closing Date hereinafter mentioned with respect to the Additional
Shares to be sold by the Selling Stockholder, will have valid and unencumbered
title to the Additional Shares to be sold by the Selling Stockholder; the
Selling Stockholder has full right, power and authority to enter into this
Agreement and the Lock-up Letter and to sell, assign, transfer and deliver the
Additional Shares to be sold by the Selling Stockholder hereunder; and upon the
delivery of and payment for such Additional Shares to be sold by the Selling
Stockholder hereunder, the Underwriters will acquire valid and unencumbered
title to such Additional Shares purchased by them from the Selling Stockholder
hereunder.
(iii) To the extent that any statements or omissions
made in the Registration Statement, the Prospectus or any amendment or
supplement thereto and any related preliminary prospectus filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
of the Regulations) and any amendment thereof or supplement thereto, are made
in reliance upon and in conformity with information furnished to the Company by
the Selling Stockholder expressly for use therein and any information relating
to the Selling Stockholder contained therein, at the time of the effectiveness
of the Registration Statement or the
11
12
effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any, the Registration Statement and the Prospectus
and any amendments thereof and supplements thereto complied or will comply in
all material respects with the applicable provisions of the Act and the
Regulations and do not or will not contain an untrue statement of a material
fact and do not or will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein (i) in the
case of the Registration Statement, not misleading and (ii) in the case of the
Prospectus, in light of the circumstances under which they were made, not
misleading.
(iv) The Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to cause or result in, or
which constitutes or which might reasonably be expected to constitute
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Additional Shares.
(v) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court is required to be
obtained or made by the Selling Stockholder for the consummation of the
transactions contemplated by this Agreement in connection with the sale of the
Additional Shares to be sold by the Selling Stockholder, except the
registration under the Act of the Shares, approval by NASD of the underwriting
arrangements and such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits as have been duly
obtained and are in full force and effect and copies of which have been
furnished to you or as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Additional Shares by
the Underwriters.
(vi) The execution, delivery and performance of this
Agreement and the Lock-up Letter and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of the
terms
12
13
or provisions of, or constitute a default under, (A) any statute, rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over the Selling Stockholder or any of his properties or (B) any
agreement or instrument to which the Selling Stockholder is a party or by which
the Selling Stockholder is bound or to which any of the properties of the
Selling Stockholder is subject.
(vii) The Selling Stockholder agrees that the
Additional Shares to be sold by the Selling Stockholder are subject to the
interests of the Underwriters hereunder; it is intended by the Selling
Stockholder that (A) the obligations of the Selling Stockholder hereunder shall
not be terminated by operation of law, whether by the death or incapacity of
the Selling Stockholder or by the occurrence of any other event; and (B) if the
Selling Stockholder should die or become incapacitated, or if any other such
event should occur, before the delivery of the Additional Shares hereunder,
certificates representing the Additional Shares shall be delivered by or on
behalf of the Selling Stockholder in accordance with the terms and conditions
of this Agreement.
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, the Company agrees to sell to the Underwriters and
the Underwriters, severally and not jointly, agree to purchase from the
Company, at a purchase price per share of $_______, the number of Firm Shares
set forth opposite the respective names of the Underwriters in Schedule I
hereto plus any additional number of Shares which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery
of certificates for, the Shares shall be made at the office of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by you and the Company, at 10:00 A.M.
on the third or fourth business day (as permitted under Rule 15c6-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (unless
postponed in accordance with the
13
14
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 or fourth business day (as permitted under Rule
15c6-1 under the Exchange Act 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 and the Company (such time
and date of payment and delivery being herein called the "Closing Date").
Payment shall be made to the Company by wire transfer in same day funds,
against delivery to you for the respective accounts of the Underwriters of
certificates for the Firm Shares to be purchased by them. Certificates for the
Firm Shares shall be registered 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 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, the Selling Stockholder hereby
grants to the Underwriters the option to purchase up to 600,000 Additional
Shares at the same purchase price per share to be paid by the Underwriters to
the Company 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
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 Stockholder. 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 eighth 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). Certificates for the
Additional Shares to be delivered at the Additional Closing Date shall be
registered in such name or names and in such authorized denominations as you
may
14
15
request in writing at least two full business days prior to the Additional
Closing Date. The Company 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 to each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares being purchased shall be
made by wire transfer in same day funds, against delivery of the certificates
for the Additional Shares being purchased to you for the respective accounts of
the Underwriters, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other location as may be
mutually acceptable.
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. The Company, and, with respect
to subsections (g) and (j), the Selling Stockholder, severally and not jointly,
each covenant and agree with the Underwriters that:
(a) If the Registration Statement has not yet been
declared effective, the Company will use its reasonable 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
is otherwise required under Rule 424(b) or Rule 434, the Company will file the
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) or Rule 434 within the prescribed time
15
16
period and will provide evidence satisfactory to you of such timely filing. If
the Company elects to rely on Rule 434, the Company will prepare and file a
term sheet that complies with the requirements of Rule 434.
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 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 Rule 434) that differs from the prospectus 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 would, in
the judgment of the Underwriters or the Company, include an 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, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any
16
17
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 reasonably satisfactory to you) which will correct such
statement or omission and will use its reasonable best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you three
signed copies of the Registration Statement, including exhibits and all
amendments thereto, and the Company will promptly deliver to each of the
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 of effectiveness of the
Registration Statement, 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 or to execute a general consent to service of process.
(e) The Company will make generally available
(within the meaning of Section 11(a) of the Act) 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 earnings statement (in form complying with
the provisions of Rule 158 of the Regulations) covering a period of at least
twelve consecutive months beginning after the effective date of the
Registration Statement.
(f) If the Company elects to rely on Rule 462(b) of
the Regulations, the Company shall both file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., New
York time, on the date of this Agreement, and the Company shall at
17
18
the time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) of the Regulations.
(g) During the period of 180 days from the date of
the Prospectus, the Company will not, without the prior written consent of Bear
Xxxxxxx, on behalf of the Underwriters, issue, sell, offer or agree to sell,
grant any option for the sale of, or otherwise dispose (or announce any
issuance, offer, sale, grant of an option to sell 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 and all of its
stockholders not to engage in any of the aforementioned transactions on their
own behalf, other than (i) the Company's sale of Firm Shares hereunder, (ii)
the Company's grant of stock options under the Company's Stock Option Plan, as
amended, (iii) the Company's issuance of Common Stock upon the exercise of
presently outstanding stock options, (iv) the conversion of the Company's
subsidiary's 8.5% Convertible Subordinated Notes due September 2007 into
813,559 shares of Common Stock and (v) the Selling Stockholder's sale of the
Additional Shares, if any, hereunder and the other transfers of shares of
Common Stock and grants of options of Common Stock by the Selling Stockholder
and/or The Xxxxxxx Organization referenced in or contemplated by the
Prospectus.
(h) During a period of three years from the
effective date of the Registration Statement, the Company will furnish to you
copies of (i) all reports to its stockholders; and (ii) all reports, financial
statements and proxy or information statements filed by the Company with the
Commission or any national securities exchange.
(i) The Company will apply the proceeds from the
sale of the Shares as set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will not (and will cause its
subsidiaries not to) take, directly or indirectly, any action which is designed
to or which constitutes or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company or facilitate the sale or resale of the Shares.
18
19
(k) The Company will use its reasonable best efforts
to cause the Shares to be listed for quotation on the Nasdaq National Market
under the symbol "CLKB."
(l) The Company will file with the Commission such
reports as may be required pursuant to Rule 463 of the Regulations.
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 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 or supplements thereto, any Rule 462(b) Registration
Statement (including, without limitation, fees and expenses of the Company's
accountants and counsel) 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 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 Survey" and the fees of counsel for the Underwriters and such counsel's
disbursements in relation thereto, (iv) the approval of the Shares for
quotation on the Nasdaq National Market under the symbol "CLKB,"(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. The Selling Stockholder will pay or cause to be paid all costs and
expenses incident to the performance of the Selling Stockholder's obligations
hereunder other than any costs or expenses otherwise provided to be paid for in
this Section by the Company or the Underwriters, including (i) any fees and
19
20
expenses of counsel for the Selling Stockholder and (ii) all expenses and taxes
incident to the sale and delivery of the Shares to be sold by the Selling
Stockholder to the Underwriters hereunder. It is understood that, except as
provided in this Section, and Sections 7(a), 7(b) and 11(d) hereof, the
Underwriters will pay all of their own costs and expenses, including the fees
of their counsel, stock transfer taxes on resale of any of the Shares by them,
and any advertising expenses connected with any offers they may make.
6. Conditions of Underwriters' Obligations. The obligations
of the 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 Stockholder
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 Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP ("Underwriters' Counsel") pursuant to this Section 6 of any
misstatement or omission, to the performance by the Company and the Selling
Stockholder of their 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 or
Rule 434 of the Regulations, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof; and, at
or prior to the Closing Date 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 you shall have received the
opinion of Akin, Gump, Strauss, Xxxxx & Xxxx L.L.P., counsel for the Company,
dated the Closing
20
21
Date addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware. Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation.
(ii) The Company had at June 30, 1998, authorized
and outstanding capital stock as set forth in the Prospectus. The Shares to be
delivered on the Closing Date have been duly and validly authorized and, when
delivered by the Company in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive or similar rights arising pursuant to
(i) the certificate of incorporation or by-laws of the Company and (ii) the
Delaware General Corporation Law (the "DGCL"). The Common Stock, the Firm
Shares and the Additional Shares conform to the descriptions thereof contained
in the Prospectus.
(iii) The Shares to be sold under this Agreement to
the Underwriters have been approved for quotation, subject to official notice
of issuance, on the Nasdaq National Market under the symbol "CLKB."
(iv) This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(v) The execution, delivery, and performance of
this Agreement by the Company do not and will not (A) to the knowledge of such
counsel conflict with or result in a breach of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any agreement or instrument
listed as an Exhibit to the Registration Statement, or (B) violate or conflict
with any provision of the certificate of incorporation or by-laws of the
Company or the constituent documents of any
21
22
of its subsidiaries, or, (C) to the knowledge of such counsel violate or
conflict with any Applicable Laws (as hereinafter defined), except with respect
to clauses (A) and (C), such conflicts, breaches, defaults, liens, charges,
encumbrances or violations that would not, individually or in the aggregate,
have a Material Adverse Effect and except that such counsel shall express no
opinion with respect to breaches or violations of or defaults under any
covenant, restriction or provision with respect to financial ratios or tests or
any aspect of the financial condition or results of operations of any party.
The term "Applicable Laws" means those statutes, judgments, rules, regulations,
orders or decrees of any Governmental Authority (as hereinafter defined) of the
State of Delaware, the State of Texas or of the United States of America
applicable to offerings of the type contemplated by this Agreement (other than
securities and anti-fraud laws); provided that, with respect to the State of
Delaware such counsel's opinion shall be limited to matters under the DGCL.
(vi) To such counsel's knowledge, no consent,
approval, authorization or order of any Governmental Authority (as hereinafter
defined) is required for the execution and delivery of this Agreement or the
issuance, sale and delivery of the Shares to be issued, sold and delivered by
the Company hereunder, except the registration under the Act of the Shares,
approval by the NASD of the underwriting arrangements and such consents,
approvals, authorizations and orders as have been duly obtained and are in full
force and effect and copies of which have been furnished to the Underwriters or
as may be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters (as to which
such counsel need express no opinion); provided, however, that the foregoing
opinion with respect to Governmental Authorities is limited to such consents,
approvals, authorizations and orders which are required under Applicable Laws.
The term "Governmental Authority" means any governmental, legislative,
judicial, administrative or regulatory body of the State of Delaware, the State
of Texas or the United States of America; provided, that, with respect to the
State of Delaware, such opinion shall be limited to matters under the XXXX.
00
00
(vii) The Registration Statement and the Prospectus
and any amendments thereof or supplements thereto (other than the financial
statements and notes thereto and schedules and other financial and statistical
data included, as to which no opinion need be rendered) comply as to form in
all material respects with the requirements of the Act and the Regulations.
(viii) The Registration Statement has been declared
effective under the Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any post-
effective amendment thereof has been issued by the Commission nor has any
proceeding for that purpose been instituted or threatened by the Commission;
any required filing of a registration statement pursuant to Rule 462(b) of the
Regulations has been made in the manner and within the time period required by
Rule 462(b); and all filings required by Rule 424(b) of the Regulations have
been made in the manner and within the time period required by Rule 424.
(ix) The Company is not subject to registration and
regulation as an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act.
(x) The statements set forth in the Prospectus
under the caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Common Stock, under the captions "Risk
Factors--Anti-Takeover Considerations," "The Reorganization" (insofar as it
describes the Merger (as defined herein)), "Management--Stock Option Plan" and
"--Employee Stock Purchase Plan" insofar as they purport to describe certain
provisions of the laws and documents referred to therein, are correct in all
material respects.
(xi) To the knowledge of such counsel, there are no
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which are not described or filed as required by the Act
and the Regulations.
23
24
(xii) The two step merger of Xxxxx/Xxxxxx, Inc. a
Texas corporation (the "Predecessor Company") into Xxxxx/Xxxxxx, Inc. a
Delaware corporation (the "Merger") should qualify as a "reorganization" under
section 368(a) of the Code. Accordingly, CBH, Xxxxx/Xxxxxx or the Predecessor
Company should generally recognize no gain for federal income tax purposes
pursuant to the Merger.
(xiii) In addition, such opinion shall also contain
a statement that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company, the Underwriters, counsel for the Selling
Stockholder and counsel for the Underwriters at which the contents and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus and have not made any independent check or verification thereof
(except as set forth in clause (x) above), on the basis of the foregoing, no
facts have come to the attention of such counsel which have led such counsel to
believe that either the Registration Statement at the time it became effective,
or any amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of
the date of such amendment or supplement) and as of the Closing Date contained
or contains an untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and notes thereto, pro forma
financial information and schedules and other financial or statistical data
included or incorporated by reference therein).
24
25
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; and (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 counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
The opinion of such counsel may make such assumptions, qualifications,
exceptions and limitations applicable to such opinions as are reasonably
acceptable to Underwriters' Counsel.
(c) At the Closing Date you shall have received the
opinion of Xxxxx Xxxxxx, General Counsel for the Company, dated the Closing
Date addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character
or location of its properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary, except for those
failures to be so qualified or in good standing which will not in the aggregate
result in a Material Adverse Effect. Each subsidiary of the Company is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed)
or the nature or conduct of its business makes such qualification necessary,
except for those failures to be so qualified or in good standing which will not
in the aggregate result in a Material Adverse Effect. Each of the Company and
its subsidiaries has all requisite power and authority and all necessary
consents, approvals, authorizations, orders, registrations, qualifications and
25
26
Licenses, of and from, and have made all filings with and satisfied all
eligibility and other similar requirements imposed by all federal, state, local
and other governmental authorities, in each case as is required to own, lease
and operate its properties and conduct its business as now being conducted and
as described in the Registration Statement and the Prospectus, and, to such
counsel's knowledge, each such License is in full force and effect, except to
the extent that, individually or in the aggregate, the failure to obtain any
such License or to keep such License in effect or to make any such declaration,
registration or filing or satisfy any such requirement would not result in a
Material Adverse Effect on the Company's authority to own, lease and operate
its properties and conduct its business as described in the Prospectus.
(ii) All of the outstanding shares of Common Stock
are duly and validly authorized and issued, are fully paid and nonassessable
and were not issued and are not now in violation of or subject to any
preemptive or similar rights arising pursuant to (i) the certificate of
incorporation or by-laws of the Company, (ii) the laws of the State of Delaware
or (iii), to the knowledge of such counsel, any contract or agreement entitling
any person to acquire Common Stock upon the issuance of the Shares. All of the
issued shares of capital stock of each subsidiary of the Company which is a
corporation have been duly and validly authorized and issued, fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights arising pursuant to (i) the certificate of incorporation or by-laws of
the Company, (ii) the laws of the State of Delaware or (iii), to the knowledge
of such counsel, any contract or agreement entitling any person to acquire
Common Stock upon the issuance of the Shares. Except as described in the
Prospectus, all of the shares of issued capital stock of each subsidiary of the
Company as set forth on Schedule II hereto, are owned directly or indirectly by
the Company, free and clear of any lien, encumbrance, claim, security interest,
restriction on transfer, stockholders' agreement, voting trust or other defect
of title whatsoever.
(iii) To such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding or investigation
before any court or before or
26
27
by any public, regulatory or governmental agency or body pending or threatened
against, or involving the properties or business of, the Company or any of its
subsidiaries, which is of a character required to be disclosed in the
Prospectus which has not been properly disclosed therein.
(iv) The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated hereby by
the Company do not and will not, to such counsel's knowledge, conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to, any agreement, instrument, franchise, license
or permit known to such counsel to which the Company or any of its subsidiaries
is a party or by which any of such entities or their respective properties or
assets may be bound (other than contracts or agreements listed as Exhibits to
the Registration Statement, as to which such counsel need not opine).
(v) To the knowledge of such counsel, neither the
Company nor any of its subsidiaries is in default (nor has any event occurred
which, with notice or lapse of time or both, would constitute a default) in the
performance or observance of, or in violation of, any obligation, agreement,
covenant or condition contained in any loan agreement, note, contract,
instrument, indenture, lease, franchise, License, mortgage, permit or other
agreement to which it is a party or by which it is bound or to which any of its
properties are subject, except for such defaults that would not, individually
or in the aggregate, result in a Material Adverse Effect.
(vi) To the knowledge of such counsel, neither the
Company nor any of its subsidiaries is, and at the Closing Date and the
Additional Closing Date, if any, will be, in violation of any provisions of its
certificate of incorporation or by-laws or other constituent documents.
27
28
(vii) The statements set forth in the Prospectus
under the captions "Risk Factors--Federal Tax Legislation," "--Prior Subchapter
S Status," "--Government Regulation," "The Reorganization,"
"Business--Government Regulation," "--Ancillary Business Arrangements" and
"Certain Relationships and Related Transactions" insofar as they purport to
describe certain provisions of the existing laws and documents referred to
therein, are correct in all material respects.
(viii) In addition, such opinion shall also contain
a statement that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company, the Underwriters, counsel for the Selling
Stockholder and counsel for the Underwriters at which the contents and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus and have not made any independent check or verification thereof
(except as set forth in clause (vii) above), on the basis of the foregoing, no
facts have come to the attention of such counsel which have led such counsel to
believe that either the Registration Statement at the time it became effective,
or any amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of
the date of such amendment or supplement) and as of the Closing Date contained
or contains an untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and notes thereto, pro forma
financial information and schedules and other financial or statistical data
included or incorporated by reference therein).
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
28
29
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; and (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 counsel is in form satisfactory to such counsel and, in their
opinion, you and they are justified in relying thereon. The opinion of such
counsel may make such assumptions, qualifications, exceptions and limitations
applicable to such opinions as are reasonably acceptable to Underwriters'
Counsel.
(d) At the Additional Closing Date you shall have
received the opinion of Vedder, Price, Xxxxxxx & Kammholz, counsel to the
Selling Stockholder, to the effect that:
(i) The Selling Stockholder is the record owner
and to the best of such counsel's knowledge the beneficial owner of the
Additional Shares to be sold by the Selling Stockholder. At the Additional
Closing Date the Selling Stockholder had full right, power and authority to
enter into this Agreement and the Lock-up Letter; and upon payment for the
Additional Shares to be sold by the Selling Stockholder, and delivery of
certificates evidencing such Additional Shares, in accordance with the terms of
this Agreement, and assuming the Underwriters have no notice of an adverse
claim and purchase the Additional Shares in good faith, the Underwriters will
have acquired good and marketable title to the Additional Shares purchased by
them from the Selling Stockholder free and clear of all liens, pledges,
encumbrances or rights of third parties.
(ii) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any third
party or any court or any
29
30
public, governmental or regulatory agency or body having jurisdiction over the
Selling Stockholder or any of his respective properties or assets is required
for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, including the issuance,
sale and delivery of the Additional Shares to be issued, sold and delivered by
the Selling Stockholder hereunder, except the registration under the Act of the
Additional Shares, approval by the National Association of Securities Dealers,
Inc. ("NASD") of the underwriting arrangements and such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits as have been duly obtained and are in full force and effect and copies
of which have been furnished to you or as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Additional Shares by the Underwriters.
(iii) The execution, delivery and performance of
this Agreement and the Lock-up Letter and the consummation of the transactions
herein contemplated will not (A) violate any applicable statute, rule,
regulation or any order known to us, of any governmental agency or body or any
court of the State of Illinois or the United States of America having
jurisdiction over the Selling Stockholder or any of his properties, or (B)
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any agreement or instrument filed as an exhibit to
the Registration Statement to which the Selling Stockholder is a party or by
which the Selling Stockholder is bound or to which any of the properties of the
Selling Stockholder is subject, provided that such counsel may state that they
are expressing no opinion in this clause (A) with respect to the state
securities or blue sky laws.
(iv) Each of this Agreement and the Lock-up Letter
has been duly executed and delivered by the Selling Stockholder.
(e) 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
30
31
Closing Date 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 shall have furnished to Underwriters'
Counsel such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(f) At such Closing Date you shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated such 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 such Closing Date the representations and warranties of the
Company set forth in Section 1 hereof are accurate, (iii) as of such Closing
Date 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 and its subsidiaries have not sustained any material loss or
interference with their respective businesses 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, except in each case as described in or
contemplated by the Prospectus.
(g) At the Additional Closing Date, you shall have
received a certificate executed by the Selling Stockholder, dated the
Additional Closing Date, to the effect that (i) as of the Additional Closing
Date, the representations and warranties of the Selling Stockholder set forth
in Section 1(b) hereof are accurate and (ii) as of the Additional Closing Date,
the obligations of the Selling Stockholder to be performed hereunder on or
prior thereto have been duly performed.
(h) At the time this Agreement is executed and at
the Closing Date, you shall have received a letter, from Ernst & Young LLP,
dated as of the date of this Agreement and as of the Closing Date,
respectively, 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 and its subsidiaries within the
meaning of the Act and the Regulations and stating that the
31
32
information required by Item 509 of Regulation S-K ("Regulation S-K") is
correct insofar as it relates to them; (ii) stating that, in their opinion, the
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; (iii) they consent to the use of their report concerning the financial
statements in the Prospectus and to all references to such accountants therein,
including their designation as experts under the caption "Experts" therein;
(iv) on the basis of their limited review in accordance with standards
established by the American Institute of Certified Public Accountants of any
interim unaudited financial statements of the Company, a reading of the minutes
of meetings and consents of the stockholders and boards of directors of the
Company and its subsidiaries and the committees of such boards subsequent to
the date of the most recent audited consolidated balance sheet of the Company
and its subsidiaries included in the Registration Statement and the Prospectus,
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 the date
of the most recent audited consolidated balance sheet of the Company and its
subsidiaries included in the Registration Statement and the Prospectus 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 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 the Regulations or that such
unaudited financial statements are not fairly presented in conformity with GAAP
applied on a basis substantially consistent with that of the audited financial
statements included in the Registration Statement and the Prospectus; (B) with
respect to the period subsequent to the date of the most recent balance sheet
of the Company included in the Registration Statement and the Prospectus there
were, as of the date of the most recent available monthly 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
32
33
capital stock or any increase in 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,
increases 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 the date following the date of the most recent
balance sheet of the Company included in the Registration Statement and the
Prospectus to the date of the most recent available monthly 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 the Prospectus disclose have occurred or may
occur or which are set forth in such letter; and (v) stating that they have
compared specific dollar amounts, numbers of shares, percentages of revenues
and earnings, and other financial information pertaining to the Company and its
subsidiaries 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.
(i) At the time this Agreement is executed and at
the Closing Date, you shall have received a letter, from Xxxx Xxxxxx Xxxxxxx
LLP, 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 were for the period of time
covered by their audit independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
Regulations and stating that
33
34
the information required by Item 509 of Regulation S-K is correct insofar as it
relates to them; (ii) stating that, in their opinion, the 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
(iii) they consent to the use of their report concerning the financial
statements in the Prospectus and to all references to such accountants therein,
including their designation as experts under the caption "Experts" therein.
(j) At the time this Agreement is executed and at
the Closing Date, you shall have received a letter, from McGladrey & Xxxxxx,
LLP, 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 were for the period of time
covered by their audit independent certified public accountants with respect to
Business Compensation Strategies Group ("BCS") and its subsidiaries within the
meaning of the Act and the Regulations and stating that the information
required by Item 509 of Regulation S-K is correct insofar as it relates to
them; (ii) stating that, in their opinion, the financial statements and
schedules of BCS 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; (iii) they consent to
the use of their report concerning the financial statements in the Prospectus
and to all references to such accountants therein, including their designation
as experts under the caption "Experts" therein; (iv) on the basis of their
limited review in accordance with standards established by the American
Institute of Certified Public Accountants of any interim unaudited financial
statements of BCS, nothing has come to their attention that would cause them to
believe that the unaudited financial statements and schedules of BCS 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 the Regulations or that such unaudited financial statements are not fairly
presented in conformity with GAAP applied on a basis substantially consistent
with that of the audited financial statements included in the Registration
Statement and the Prospectus; and (v)
34
35
stating that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, and other financial information
pertaining to BCS and its subsidiaries 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
BCS and its subsidiaries or from schedules furnished by BCS, 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.
(k) Prior to the Closing Date the Company and the
Selling Stockholder shall have furnished to you such further information,
certificates and documents as you may reasonably request.
(l) You shall have received from each stockholder
and each person who is a director or officer of the Company an agreement to the
effect that such person will not, directly or indirectly, without the prior
written consent of Bear Xxxxxxx, on behalf of the Underwriters, offer, sell,
offer or agree to sell, 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 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 180 days after the date of the Prospectus, other than, in the case
of the Selling Stockholder, the sale of the Additional Shares.
(m) At the Closing Date, the Shares shall have been
approved for quotation on the Nasdaq National Market under the symbol "CLKB"
upon notice of issuance.
(n) The Selling Stockholder shall have delivered to
you on or prior to the Additional Closing Date a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form
or statement specified by Treasury Department regulations).
35
36
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 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 Exchange
Act, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including, but not limited to, attorneys' fees 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), 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
36
37
furnished to the Company by or on behalf of any Underwriter through Bear
Xxxxxxx expressly for use therein; provided further, that with respect to any
preliminary prospectus, such indemnity shall not inure to the benefit of any
Underwriter (or the benefit of any person controlling such Underwriter) if the
person asserting any such losses, liabilities, claims, damages or expenses
purchased Shares that are the subject thereof from such Underwriter and if such
person was not sent or given a copy of the Prospectus at or prior to the
written confirmation of the sale of such Shares to such person in any case
where sending or giving a copy of the Prospectus is required by the Act and the
untrue statement or omission contained in such preliminary prospectus was
corrected in the Prospectus and if the Company shall have fully complied in all
material respects with Sections 4(a) through 4(c) hereof. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have including under this Agreement.
(b) The Selling Stockholder agrees to indemnify and
hold harmless each Underwriter, the Company, 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
or any Underwriter within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever (including, but not limited to, attorneys' fees 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), 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 therein of a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but
37
38
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 information relating to or provided to the Company by the
Selling Stockholder expressly for use therein. Notwithstanding the foregoing
provisions of this subsection 7(c), any Selling Stockholder's aggregate
liability under this subsection 7(c) shall be limited to an amount equal to the
product of the number of Additional Shares sold by the Selling Stockholder
pursuant to this Agreement, if any, and the initial public offering price of
the Shares as set forth in the Prospectus. This indemnity will be in addition
to any liability which the Selling Stockholder may otherwise have including
under this Agreement.
(c) Each Underwriter severally, and not jointly,
agrees to indemnify and hold harmless the Company, the Selling Stockholder,
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 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 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
38
39
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 Bear Xxxxxxx
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 and
the Selling Stockholder acknowledge that the statements set forth in the last
paragraph of the cover page, in the stabilization legend on the inside cover
page and in the third and seventh paragraphs under the caption "Underwriting"
in the Prospectus constitute the only information furnished to the Company in
writing by or on behalf of any Underwriter through Bear, Xxxxxxx 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.
(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 reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof,
39
40
other than the reasonable costs of investigation, unless the indemnifying party
does not so assume the defense thereof if given the opportunity to do so.
Notwithstanding the 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
have 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, 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. No indemnifying party shall,
without the prior written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to any litigation, pending or threatened, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or
potential party thereto), unless such settlement, compromise or consent (i)
includes an unconditional written release in form and substance satisfactory to
the indemnified party of such indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
40
41
8. Contribution.
(a) In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company, the Selling Stockholder
and the Underwriters 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 and the
Selling Stockholder any contribution received by the Company or the Selling
Stockholder from persons, other than the Underwriters, who may also be liable
for contribution, including persons 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, the Selling Stockholder and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company, the Selling Stockholder and the
Underwriters 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, the
Selling Stockholder and the Underwriters 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, the Selling Stockholder and the Underwriters
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 the Selling Stockholder and (z) the underwriting discounts and
commissions
41
42
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company,
the Selling Stockholder and of the Underwriters 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, the Selling
Stockholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholder and the Underwriters 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. The
Company and the Selling Stockholder shall be severally and not jointly liable
for the amounts to be contributed by any of them pursuant to the provisions of
this Section 8. Notwithstanding the provisions of this Section 8, (i) 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, (ii) in no case shall the Selling Stockholder be liable
or responsible for any amount in excess of an amount equal to the product of
the number of Additional Shares sold by the Selling Stockholder pursuant to
this Agreement, if any, and the initial public offering price of the Shares as
set forth in the Prospectus and (iii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 8 and the
preceding sentence, 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
42
43
as such Underwriter, 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) and (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,
notify each 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.
(b) The obligations of the Company and the Selling Stockholder
provided for in Section 7 and Section 8 shall be in addition to any liability
which the Company and the Selling Stockholder may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters provided for in Section 7 and Section 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and shall
extend, upon the such terms and conditions, to each director of the Company, to
each officer of the Company who has signed the Registration Statement and to
each person, if any, who controls the Company within the meaning of the Act.
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, as the case may be, which
43
44
all Underwriters have agreed to purchase hereunder, then such Firm Shares or
Additional 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
Schedule I hereto bear to the aggregate number of Firm Shares set forth
opposite the names of the non-defaulting Underwriters.
(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 Selling Stockholder to sell the Additional
Shares, shall thereupon terminate, without liability on the part of the Company
or the Selling Stockholder with respect thereto (except in each case as
provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters, the Company and the Selling
Stockholder 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 or the Selling Stockholder (in the case of the Additional
Shares) 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
reasonable opinion of Underwriters'
44
45
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 or Additional Shares.
10. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Underwriters,
the Company and the Selling Stockholder contained in this Agreement, including
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 Selling Stockholder, the Company, any of its officers and
directors or any controlling person thereof, and shall survive delivery of and
payment for the Shares to and by the 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 Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the
later of when (i) you and the Company 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, the Selling Stockholder 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 Stockholder or by
you notifying the Company and the Selling Stockholder. 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.
45
46
(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 securities in general; or (ii) if trading on the New
York Stock Exchange or the Nasdaq National Market shall have been suspended, 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 Stock
Exchange or the Nasdaq National Market by the New York Stock Exchange or Nasdaq
National Market 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 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) (A) if the
United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (B) if there shall have been such
change in political, financial or economic conditions if the effect of any such
event in (A) or (B) as in your judgment makes it impracticable or 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, 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) Section 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 Underwriters set forth herein is not
satisfied or
46
47
because of any refusal, inability or failure on the part of the Company 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 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, or telexed or telegraphed and
confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000, Attention:_____________; if sent to the
Company, shall be mailed, delivered, or telegraphed and confirmed in writing to
the Company, Xxxxx/Xxxxxx Holdings, Inc. 0000 Xxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000-0000, Attention: Xxxxxx Xxxx; if sent to the Selling
Stockholder, shall be mailed, delivered, or telegraphed and confirmed in
writing to W. Xxx Xxxxxxx, Xxxxx/Xxxxxx, Inc., 000 X. Xxxxxxxx Xxxx Xx., Xxxxx
000, Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000, with a copy to: Xxxxxxx X. Block, Esq.,
Vedder, Price, Xxxxxxx & Kammholz, 000 X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000.
13. Parties. This Agreement shall inure solely to the
benefit of, and shall be binding upon, the Underwriters, the Selling
Stockholder 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 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.
47
48
15. Counterparts. This Agreement may be executed in one
or more counterparts and, when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
16. Authority. The Representatives represent and warrant
that they have been authorized by the several Underwriters to execute and
deliver this Agreement on their behalf and to act for them in the manner
provided by this agreement.
48
49
If the foregoing correctly sets forth the understanding among
you, the Company and the Selling Stockholder, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
Xxxxx/Xxxxxx Holdings, Inc.
By
------------------------------
Name:
Title:
------------------------------
W. Xxx Xxxxxxx, in his
individual capacity
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
CONNING & COMPANY
XXXXX XXXXXXX INC.
By: BEAR, XXXXXXX & CO. INC.
By
---------------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
49
50
SCHEDULE I
Maximum Number of
Number of Firm Additional Shares
Name of Underwriter Shares to be Purchased to be Purchased
------------------- ---------------------- ---------------
Bear, Xxxxxxx & Co. Inc.
Xxxxx Xxxxxxx Inc.
Conning & Company
Total. . . . . .
-------------- ----------------
-------------- ----------------
50
51
SCHEDULE II
[List of subsidiaries of the Company, together with ownership percentages]
Name % Ownership
---- -----------
Xxxxx/Xxxxxx, Inc., a Delaware corporation 100%
51
