2,000,000 Shares
(Subject to increase of up to 300,000
additional shares to cover over-allotments)
XXXXXXX XXXXXX, INC.
A DELAWARE CORPORATION
Common Stock
(par value $0.01 per share)
UNDERWRITING AGREEMENT
May ___, 1999
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
WEDBUSH XXXXXX SECURITIES INC.
as Representatives of the several Underwriters
c/o FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Xxxxxxx-Xxxxxx, Incorporated, a Delaware corporation (the "Company"),
confirms its agreement with each of the Underwriters listed on Schedule I hereto
(collectively, the "Underwriters"), for whom Friedman, Billings, Xxxxxx & Co.,
Inc. and Wedbush Xxxxxx Securities Inc. are acting as representatives (in such
capacity, the "Representatives"), with respect to (i) the sale by the Company of
2,000,000 shares (the "Initial Shares") of Common Stock, par value $0.01 per
share, of the Company ("Common Stock"), and the purchase by the Underwriters,
acting severally and not jointly, of the respective number of shares of Common
Stock set forth opposite the names of the Underwriters in Schedule I hereto, and
(ii) the grant of the option described in Section 1(b) hereof to purchase all or
any part of 300,000 additional shares of Common Stock to cover over-allotments
(the "Option Shares"), to the Underwriters. The 2,000,000 shares of Common
Stock to be purchased by the Underwriters and all or any part of the 300,000
shares of Common Stock subject to the option described in Section l(b) hereof
are hereinafter called, collectively, the "Shares."
The Company understands that the Underwriters propose to make a public
offering of the Shares on the terms set forth in the Prospectus, as hereinafter
defined, as soon as the Underwriters deem advisable after this Agreement has
been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
Commission"), a registration statement on Form S-1 (NO. 333-74391) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder (the "Securities Act
Regulations"). The Company has prepared and filed such amendments thereto, if
any, and such amended preliminary prospectuses, if any, as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. The registration
statement has been declared effective under the Securities Act by the
Commission. The registration statement as amended at the time it became
effective (including all information deemed (whether by incorporation by
reference or otherwise) to be a part of the registration statement at the time
it became effective pursuant to Rule 430A(b) of the Securities Act Regulations)
is hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the registration statement, or
amendments thereof or supplements thereto, before it became effective under the
Securities Act and any prospectus filed with the Commission by the Company with
the consent of the Underwriters pursuant to Rule 424(a) of the Securities Act
Regulations is hereinafter called the "Preliminary Prospectus." The term
"'Prospectus" means the final prospectus, as first filed with the Commission
pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities Act
Regulations, and any amendments thereof or supplements thereto. The Commission
has not issued any order preventing or suspending the use of any Preliminary
Prospectus.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE:
a) INITIAL SHARES. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of [$________], the Company agrees to sell to the Underwriters
2,000,000 Initial Shares, and each Underwriter agrees, severally and not
jointly, to purchase from the Company the number of Initial Shares set forth in
Schedule I opposite such Underwriter's name, plus any additional number of
Initial Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 8 hereof, subject in each case, to such adjustments
among the Underwriters as the Representatives in their sole discretion shall
make to eliminate any sales or purchases of fractional shares.
b) OPTION SHARES. In addition, upon the basis of the
warranties and representations and other terms and conditions herein set forth,
at the purchase price per share set forth in paragraph (a), the Company hereby
grants an option to purchase 300,000 shares of Common Stock to the Underwriters.
The option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to the
Company setting forth the number of Option Shares as to which the several
Underwriters are then exercising the option and the time
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and date of payment and delivery for such Option Shares. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives,
but shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Shares, the
Company will sell all or a portion of the 300,000 Option Shares, and each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Shares then being purchased which the number of
Initial Shares set forth in Schedule I opposite the name of such Underwriter
bears to the total number of Initial Shares, subject in each case to such
adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
2. PAYMENT AND DELIVERY:
a) INITIAL SHARES AND WARRANTS. Payment of the purchase price
for the Initial Shares shall be made to the Company by wire transfer of
immediately available funds or certified or official bank check payable in
federal (same-day) funds at the offices of Brobeck, Phleger, & Xxxxxxxx LLP
located at 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (unless another
place shall be agreed upon by the Representatives and the Company) against
delivery of the certificates for the Initial Shares to the Representatives for
the respective accounts of the Underwriters. Such payment and delivery shall be
made at 9:30 a.m., New York City time, on the third (fourth, if pricing occurs
after 4:30 p.m., New York City time) business day after the date hereof (unless
another time, not later than ten business days after such date, shall be agreed
to by the Representatives and the Company). The time at which such payment and
delivery are actually made is hereinafter sometimes called the "Closing Time."
Certificates for the Initial Shares shall be delivered to the Representatives in
definitive form registered in such names and in such denominations as the
Representatives shall specify. For the purpose of expediting the checking of
the certificates for the Initial Shares by the Representatives, the Company
agrees to make such certificates available to the Representatives for such
purpose at least one full business day preceding the Closing Time.
b) OPTION SHARES. In addition, payment of the purchase price
for the Option Shares shall be made to the Company by wire transfer of
immediately available funds or certified or official bank check payable in
federal (same-day) funds at the offices of Brobeck, Phleger, & Xxxxxxxx located
at 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (unless another place
shall be agreed upon by the Representatives and the Company), against delivery
of the certificates for the Option Shares to the Representatives for the
respective accounts of the Underwriters. Such payment and delivery shall be
made at 9:30 a.m., New York City time, on each Date of Delivery determined
pursuant to Section 1(b) above. Certificates for the Option Shares shall be
delivered to the Representatives in definitive form registered in such names and
in such denominations as the Representatives shall specify. For the purpose of
expediting the checking of the certificates for the Option Shares by the
Representatives, the Company agrees to make such certificates available to the
Representatives for such purpose at least one full business day preceding the
relevant Date of Delivery.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY:
I. The Company represents and warrants to the Underwriters that:
a) the Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; the outstanding shares of capital
stock of the Company and all of its subsidiaries (as identified in Schedule II
hereto) (the "Subsidiaries") have been duly and validly authorized and issued
and are fully paid and non-assessable, and all of the outstanding shares of
capital stock of each of the Company's Subsidiaries are directly or indirectly
owned of record and beneficially by the Company; except as disclosed in the
Prospectus, there are no outstanding (i) securities or obligations of the
Company or any of its Subsidiaries convertible into or exchangeable for any
capital stock of the Company or any such Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from the Company or any of its Subsidiaries
any such capital stock or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company or any of its Subsidiaries to
issue any shares of capital stock, any such convertible or exchangeable
securities or obligation, or any such warrants, rights or options;
b) the Company and each of its Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full corporate power
and authority to own its respective properties and to conduct its respective
business as described in the Registration Statement and Prospectus and, in the
case of the Company, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby;
c) the Company and all of its Subsidiaries are duly qualified or
licensed by each jurisdiction in which they conduct their respective businesses
and in which the failure, individually or in the aggregate, to be so qualified
or licensed could reasonably be expected to have a material adverse effect on
the assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole (a
"Material Adverse Effect"), and the Company and its Subsidiaries are duly
qualified, and are in good standing, in each jurisdiction in which they own or
lease real property or maintain an office and in which such qualification is
necessary, except where the failure to be so qualified and in good standing
would not have a Material Adverse Effect; except as disclosed in the Prospectus,
no Subsidiary is prohibited or restricted, directly or indirectly, from paying
dividends to the Company, or from making any other distribution with respect to
such Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary any amounts which may from time to time become due under any loans or
advances to such Subsidiary from the Company or such other Subsidiary, or from
transferring any such Subsidiary's property or assets to the Company or to any
other Subsidiary, and; other than as disclosed in the Prospectus, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
d) the Company and its Subsidiaries are in compliance in all
material respects with all applicable laws, rules, regulations, orders, decrees
and judgments, including those
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relating to transactions with affiliates, except where the failure to so comply
could reasonably be expected to have a Material Adverse Effect;
e) neither the Company nor any of its Subsidiaries is in breach of
or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its respective
articles of incorporation or charter or by-laws, or in the performance or
observance of any obligation, agreement, covenant or condition contained in any
license, indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which any of them or their respective properties is bound, except
for such breaches or defaults which would not have a Material Adverse Effect,
and the execution, delivery and performance of this Agreement, and consummation
of the transactions contemplated hereby will not conflict with, or result in any
breach of, or constitute a default under (nor constitute any event which with
notice, lapse of time, or both would constitute a breach of, or default under),
(i) any provision of the articles of incorporation or charter or bylaws of the
Company or any of its Subsidiaries, or (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Subsidiaries,
except in the case of this clause (ii) for such breaches or defaults which would
not have a Material Adverse Effect; or result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or asset of the Company
or its Subsidiaries;
f) this Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general principles equity, and except to the
extent that the indemnification and contribution provisions of Section 9 hereof
may be limited by federal or state securities laws and public policy
considerations in respect thereof;
g) no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transaction
contemplated hereby, and its sale and delivery of the Shares, other than (A)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act, (B)
such approvals as have been obtained in connection with the approval of the
quotation of the Shares on the Nasdaq National Market System (the "Nasdaq") and
(C) any necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the Underwriters;
h) each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule, and
has obtained all necessary authorizations,
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consents and approvals from other persons, required in order to conduct their
respective businesses as described in the Prospectus, except to the extent that
any failure to have any such licenses, authorizations, consents or approvals, to
make any such filings or to obtain any such authorizations, consents or
approvals would not, individually or in the aggregate, have a Material Adverse
Effect; neither the Company nor any of its Subsidiaries is required by any
applicable law to obtain accreditation or certification from any governmental
agency or authority in order to provide the products and services which it
currently provides or which it proposes to provide as set forth in the
Prospectus; neither the Company nor any of its Subsidiaries is in violation of,
in default under, or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent or approval or
any federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of its Subsidiaries the
effect of which could be material and adverse to the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole; and no such
license, authorization, consent or approval contains a materially burdensome
restriction that is not adequately disclosed in the Registration Statement and
the Prospectus;
i) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
j) the Preliminary Prospectus and the Registration Statement comply
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in conformity
with the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the last sentence of the first
paragraph of Section 9(b) hereof);
k) the Preliminary Prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary
6
Prospectus and Prospectus created to be transmitted to the Commission for filing
via the Electronic Data Gathering Analysis and Retrieval System ("XXXXX"),
except to the extent permitted by Regulation S-T;
l) all legal or governmental proceedings, contracts or documents of
a character required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus have been so filed, summarized or
described as required;
m) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are reasonably likely to result in a judgment, decree, award or
order having a Material Adverse Effect;
n) the financial statements, including the notes thereto, included
in the Registration Statement and the Prospectus present fairly the consolidated
financial position of the entities to which such financial statements relate
(the "Covered Entities") as of the dates indicated and the consolidated results
of operations and changes in financial position and cash flows of the Covered
Entities for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved and in accordance with Regulation
S-X promulgated by the Commission; the financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under the captions
"Prospectus Summary - Summary Financial Information" and "Selected Financial
Information" fairly present the information shown therein and have been compiled
on a basis consistent with the financial statements included in the Registration
Statement and the Prospectus; the unaudited pro forma financial information
(including the related notes) included in the Prospectus or any Preliminary
Prospectus complies as to form in all material respects to the applicable
accounting requirements of the Securities Act and the Securities Act
Regulations, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable; such pro forma adjustments
have been properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the Covered
Entities, the financial position, results of operations and other information
purported to be shown therein at the respective dates and for the respective
periods specified;
o) Deloitte & Touche LLP, whose reports on the consolidated
financial statements of the Company and its Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, are and were
during the periods covered by their reports independent public accountants as
required by the Securities Act and the Securities Act Regulations;
p) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the
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Registration Statement or Prospectus, there has not been (A) any Material
Adverse Effect, whether or not arising in the ordinary course of business, (B)
any transaction, which is material to the Company and its Subsidiaries taken as
a whole, contemplated or entered into by the Company or any of its Subsidiaries,
(C) any obligation, contingent or otherwise, directly or indirectly incurred by
the Company or any of its Subsidiaries, which is material to the Company and its
Subsidiaries taken as a whole or (D) any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock;
q) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
r) there are no persons with registration or other similar rights to
have any equity securities, including securities which are convertible into or
exchangeable for equity securities, registered pursuant to the Registration
Statement, except for those registration or similar rights which have been
waived with respect to the offering contemplated by this Agreement, all of which
registration or similar rights described in clauses (i) and (ii) are fairly
summarized in the Prospectus;
s) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and nonassessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the articles of incorporation or
by-laws of the Company, under any agreement to which the Company or any of its
Subsidiaries is a party or otherwise;
t) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
u) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the rules
and regulations thereunder, or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD")) any member firm of the NASD;
v) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
w) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection
8
with this Agreement shall be deemed a representation and warranty by the Company
to each Underwriter as to the matters covered thereby;
x) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the articles of incorporation and by-laws of
the Company and the requirements of the Nasdaq;
y) the Company and the Subsidiaries have good and marketable title
in fee simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or such as do not materially and adversely
affect the value of such property and do not interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries; and
any real property and buildings held under lease by the Company or any
Subsidiary are held under valid, existing and enforceable leases, with such
exceptions as are disclosed in the Prospectus or are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or such Subsidiary;
z) the descriptions in the Registration Statement and the Prospectus
of the contracts, leases and other legal documents therein described present
fairly the information required to be shown, and there are no contracts, leases,
or other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required;
aa) the Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
bb) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income tax returns
required to be filed through the date hereof and have paid all taxes shown as
due thereon; and no tax deficiency has been asserted against any such entity,
nor does any such entity know of any tax deficiency which is likely to be
asserted against any such entity which if determined adversely to an, such
entity, could materially adversely affect the business, prospects, properties,
assets, results of operations or condition (financial or otherwise) of any such
entity, respectively; all tax liabilities are adequately provided for on the
respective books of such entities;
cc) each of the Company and its Subsidiaries maintain insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by
9
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company and
its Subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full force
and effect;
dd) neither the Company nor any of its Subsidiaries has violated, or
received written notice of any violation with respect to, any applicable
environmental, safety or similar law applicable to the business of the Company
or any of its Subsidiaries, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees, nor any applicable
federal or state wages and hours law, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, nor any state law precluding the denial of credit due to the
neighborhood in which a property is situated, the violation of any of which
could have a Material Adverse Effect;
ee) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of its Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of its Subsidiaries or any of the
members of the families of any of them;
ff) all securities issued by the Company, any of its Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
(ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq;
gg) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common stock in a manner in violation of the
Securities Act;
hh) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated;
ii) no relationship, direct or indirect, exists between or among the
Company or any of its Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its Subsidiaries
on the other hand, which is required by the Securities Act and the Securities
Act Regulations to be described in the Registration Statement and the Prospectus
and which is not so described;
jj) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, 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, as amended (the "Investment
Company Act");
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kk) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
Subsidiaries which are likely to have individually or in the aggregate a
Material Adverse Effect;
ll) except as disclosed in the Prospectus, all computer software
(including, without limitation software which forms a part of any hardware)
owned or used by the Company or any Subsidiary, or licensed by the Company or
any Subsidiary, as licensor or as licensee, other than any shrinkwrap software
available generally to retail customers, is "Year 2000 Compliant" (as
hereinafter defined). For purposes of this Agreement, "Year 2000 Compliant"
shall mean (i) all such software shall operate in 4-digit year format and, in
all material respects, without errors in the recognition, calculation and
processing of date data relating to century recognition, leap years, single and
multi-century formulae, date values and interfaces of date-related
functionalities; (ii) all date processing shall be conducted in a four-digit
year format and all date sorting that includes a "year field" or "year category"
shall be based upon a four-digit year format; and (iii) any date arithmetic
programs or calculators in the software shall operate in all material respects
in accordance with the related user documentation in the Year 2000, and the
years following, without degrading functionality or performance; and
4. CERTAIN COVENANTS:
The Company hereby agrees with each Underwriter:
a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as the Representatives may designate
and to maintain such qualifications in effect as long as required for the
distribution of the Shares, provided that the Company shall not be required to
qualify as a foreign corporation or to consent to the service of process under
the laws of any such state (except service of process with respect to the
offering and sale of the Shares);
b) to prepare the Prospectus in a form approved by the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) not later than 10:00 a.m. (New York City time), on the day following the
execution and delivery of this Agreement and to furnish promptly (and with
respect to the initial delivery of such Prospectus, not later than 10:00 a.m.
(New York City time) on the day following the execution and delivery of this
Agreement) to the Underwriters as many copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the version created to be transmitted to the Commission for filing
via XXXXX, except to the extent permitted by Regulation S-T;
c) to advise the Representatives promptly and (if requested by
the Representatives) to confirm such advice in writing, when the Registration
Statement has become
11
effective and when any post-effective amendment thereto becomes effective under
the Securities Act Regulations;
d) to advise the Representatives promptly, confirming such
advice in writing, of (i) the receipt of any comments from, or any request by,
the Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing;
e) so long as the Underwriters are making a market in the
Common Stock, to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) copies of all annual, quarterly and current reports
or other communications supplied to holders of shares of Common Stock when the
same are supplied to such holders, (ii) as soon as practicable after the filing
thereof, copies of all reports filed by the Company with the Commission, the
NASD or any securities exchange and (iii) such other information as the
Underwriters may reasonably request regarding the Company and its Subsidiaries;
f) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a Prospectus relating to
the Shares is required to be delivered under the Securities Act Regulations
which, in the judgment of the Company, would require the making of any change in
the Prospectus then being used so that the Prospectus would not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and, during such
time, to prepare and furnish, at the Company's expense, to the Underwriters
promptly such amendments or Supplements to such Prospectus as may be necessary
to reflect any such change and to furnish to the Underwriters a copy of such
proposed amendment or supplement before filing any such amendment or supplement
with the Commission;
g) to furnish promptly to the Representatives a signed copy of
the Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
h) to furnish to the Representatives, not less than two
business days before filing with the Commission subsequent to the effective date
of the Prospectus and during the period referred to in paragraph (f) above, a
copy of any document proposed to be filed with the Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act;
12
i) to apply the net proceeds of the sale of the Shares in
accordance with its statements under the caption "Use of Proceeds" in the
Prospectus;
j) to make generally available to its security holders as soon
as practicable, but in any event not later than the end of the fiscal quarter
first occurring after the first anniversary of the effective date of the
Registration Statement an earnings statement complying with the provisions of
Section 11(a) of the Securities Act (in form, at the option of the Company,
complying with the provisions of Rule 158 of the Securities Act Regulations,)
covering a period of 12 months beginning after the effective date of the
Registration Statement;
k) to use its best efforts to effect and maintain the quotation
of the Shares on the Nasdaq and to file with the Nasdaq all documents and
notices required by the Nasdaq of companies that have securities that are traded
in the over-the-counter market and quotations for which are reported by the
Nasdaq;
l) to engage and maintain, at its expense, a registrar and
transfer agent for the Shares;
m) to refrain during a period of 180 days from the date of the
Prospectus, without the prior written consent of Friedman, Billings, Xxxxxx &
Co., Inc. ("FBR"), which consent may be withheld in the sole discretion of FBR,
from (i) offering, pledging, selling, contracting to sell, selling any option or
contract to purchase, purchasing any option or contract to sell, granting any
option for the sale of, or otherwise disposing of or transferring, directly or
indirectly, any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, or (B) any shares of Common Stock issued
by the Company upon the exercise of an option or warrant or conversion of any
debenture of the Company outstanding on the date hereof and referred to in the
Prospectus;
n) to not itself and to use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company;
13
o) that the provisions of Sections 2, 3, and 10 of the letter
agreement dated December 15, 1998 between the Company and the Representatives
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby; and
p) if at any time during the 30-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in the
reasonable opinion of the Representatives the market price of the Common Stock
has been or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates a supplement to or amendment of the
Prospectus) and after written notice from the Representatives advising the
Company to the effect set forth above, to forthwith prepare, consult with the
Representatives concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to the Company and
Representatives, responding to or commenting on such rumor, publication or
event.
5. PAYMENT OF EXPENSES:
a) The Company agrees to pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of such copies of each thereof to the Underwriters and
to dealers (including costs of mailing and shipment as may be reasonably
requested for use in connection with the offering and sale of the Shares), (ii)
the preparation, issuance and delivery of the certificates for the Shares to the
Underwriters, including any stock or other transfer taxes or duties payable upon
the sale of the Shares to the Underwriters, (iii) the printing of this Agreement
and any dealer agreements and furnishing of copies of each to the Underwriters
and to dealers (including costs of mailing and shipment), (iv) the qualification
of the Shares for offering and sale under state laws that the Company and the
Representatives have mutually agreed are appropriate and the determination of
their eligibility for investment under state law aforesaid (including the
reasonable legal fees and filing fees and other disbursements of counsel for the
Underwriters), in an amount not to exceed $[________] assuming that the Common
Stock is approved for quotation on Nasdaq, and the printing and furnishing of
copies of any blue sky surveys or legal investment surveys to the Underwriters
and to dealers, (v) filing for review of the public offering of the Shares by
the NASD (including the legal fees and filing fees and other disbursements of
counsel for the Underwriters relating thereto), (vi) the fees and expenses of
any transfer agent or registrar for the Shares and miscellaneous expenses
referred to in the Registration Statement, (vii) the fees and expenses incurred
in connection with the inclusion of the Shaes in the NASD, (viii) making road
show presentations with respect to the offering of the Shares and (ix) the
performance of the Company's other obligations hereunder.
b) The Company agrees to reimburse the Representatives for
their reasonable out-of-pocket expenses in connection with the performance of
its activities under this Agreement, including, but not limited to, costs such
as printing, facsimile, courier service, direct
14
computer expenses, accommodations and travel, but excluding the fees and
expenses of the Underwriters' outside legal counsel and any other advisors,
accountants, appraisers, etc. (other than the fees and expenses of counsel with
respect to state securities or blue sky laws and obtaining the filing for review
of the public offering of the Shares by the NASD, all of which shall be
reimbursed by the Company pursuant to the provisions of subsection (a) above).
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS:
The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on the Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company in all
material respects on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Company of their respective
obligations hereunder in all material respects and to the satisfaction of the
following further conditions at the Closing Time or on the Date of Delivery, as
applicable:
a) The Company shall furnish to the Underwriters, at the
Closing Time and on each Date of Delivery, an opinion of White & Case LLP,
counsel for the Company and its Subsidiaries, addressed to the Underwriters and
dated the Closing Time and each Date of Delivery and in form and substance
satisfactory to Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters,
stating that:
(1) the Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; the outstanding shares of
capital stock of the Company and its Material Subsidiaries (as defined in
Schedule III hereto) have been duly and validly authorized and issued and are
fully paid and non-assessable, and all of the outstanding shares of capital
stock of the Material Subsidiaries are directly or indirectly owned of record
and beneficially by the Company; and except as disclosed in the Prospectus, to
such counsel's knowledge, there are no outstanding (i) securities or obligations
of the Company or any of its Material Subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any such
Subsidiary to issue any shares of capital stock, any such convertible or
exchangeable securities or obligation, or any such warrants, rights or options;
(2) the Company and its Material Subsidiaries each has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full corporate power
and authority to own its respective properties and to conduct its respective
business as described in the Registration Statement and Prospectus and, in the
case of the Company, to execute and deliver this Agreement and to consummate the
transactions described in this Agreement;
(3) the Company and its Material Subsidiaries are duly qualified or
licensed by each jurisdiction in which they conduct their respective businesses
and in which the failure, individually or in the aggregate, to be so licensed
could have a Material Adverse Effect, and the
15
Company and its Material Subsidiaries are duly qualified, and are in good
standing, in each jurisdiction in which they own or lease real property or
maintain an office and in which such qualification is necessary except where the
failure to be so qualified and in good standing could not reasonably be expected
to have a Material Adverse Effect; except as disclosed in the Prospectus, no
Subsidiary is prohibited or restricted, directly or indirectly, from paying
dividends to the Company, or from making any other distribution with respect to
such Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary, any amounts which may from time to time become due under any loans
or advances to such Subsidiary from the Company or such other Subsidiary, or
from transferring any such Subsidiary's property or assets to the Company or to
any other Subsidiary;
(4) to such counsel's knowledge, the Company and its Material Subsidiaries
are in compliance in all material respects with all applicable laws, orders,
rules, regulations and orders, including those relating to transactions with
affiliates, the failure of which to comply with could reasonably be expected to
have a Material Adverse Effect;
(5) to such counsel's knowledge, neither the Company nor any of its
Material Subsidiaries is in breach of, or in default under (nor has any event
occurred which with notice, lapse of time, or both would constitute a breach of,
or default), any license, indenture, mortgage, deed of trust, loan or credit
agreement or any other agreement or instrument to which the Company or any of
its Material Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected or under any law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Material
Subsidiaries, except such breaches or defaults which would not have a Material
Adverse Effect;
(6) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement do not and will not (A) conflict with, or result in any breach
of, or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of or default under), (i) any
provisions of the certificate of incorporation, charter or by-laws of the
Company or any Subsidiary, (ii) any provision of any material license,
indenture, mortgage, deed of trust, loan, credit or other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them or their respective properties or assets may be bound or affected and of
which such counsel has knowledge, (iii) any law or regulation binding upon or
applicable to the Company or any Subsidiary or any of their respective
properties or assets, or (iv) any decree, judgment or order applicable to the
Company or any Subsidiary and of which such counsel has knowledge; or (B) result
in the creation or imposition of any lien, charge, claim or encumbrance upon any
property or assets of the Company or its Material Subsidiaries;
(7) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by general principles of equity, and except that
enforceability of the indemnification and contribution provisions set forth in
Section 9 of
16
this Agreement may be limited by the federal or state securities laws of the
United States or public policy underlying such laws;
(8) no approval, authorization, consent or order of or filing with any
federal or state governmental or regulatory commission, board, body, authority
or agency is required in connection with the execution, delivery and performance
of this Agreement, or the offer, sale and delivery of the Shares by the Company
as contemplated hereby, other than such as have been obtained or made under the
Securities Act and the Securities Act Regulations, and except that such counsel
need express no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriters or any approval of the underwriting terms and
arrangements by the National Association of Securities Dealers, Inc.;
(9) the Shares have been duly authorized and when the Shares have been
issued and duly delivered against payment therefor as contemplated by this
Agreement, the Shares will be validly issued, fully paid and nonassessable, and
the Underwriters will acquire the good and marketable title to the Shares, free
and clear of any pledge, lien, encumbrance, security interest, or other claim;
(10) the issuance and sale of the Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law, under the
certificate of incorporation, charter or by-laws of the Company, or under any
agreement to which the Company or any of its Material Subsidiaries is a party
or, to such counsel's knowledge, otherwise;
(11) the Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and Prospectus;
(12) the form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the
Company;
(13) the Registration Statement has become effective under the Securities
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued and, to such counsel's knowledge, no proceedings with respect
thereto have been commenced or threatened;
(14) as of the effective date of the Registration Statement, the
Registration Statement and the Prospectus (except as to the financial
statements, the notes thereto and other financial and statistical data contained
therein, as to which such counsel need express no opinion) complied as to form
in all material respects with the requirements of the Securities Act and the
Securities Act Regulations;
(15) the statements under the captions "Business - Government Regulations,"
"Business - Legal Proceedings," "Management - Stock Option Plans," "Management -
Employment Contracts," "Description of Capital Stock," "Shares Eligible for
Future Sale" and
17
"Indemnification of Directors and Officers" in the Registration Statement and,
where applicable, the Prospectus, insofar as such statements constitute a
summary of the legal matters referred to therein, provide a fair summary of such
legal matters in all material respects;
(16) to such counsel's knowledge, there are no actions, suits or
proceedings, inquiries, or investigations pending or threatened against the
Company or any of its Material Subsidiaries or any of their respective officers
and directors or to which the properties, assets or rights of any such entity
are subject, at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority, arbitral
panel or agency which are required to be described in the Prospectus but are not
so described;
(17) to such counsel's knowledge, there are no contracts or documents of a
character which are required to be filed as exhibits to the Registration
Statement or required to be described or summarized in the Prospectus which have
not been so filed, summarized or described, and all such summaries and
descriptions, in all material respects, fairly and accurately set forth the
material provisions of such contracts and documents;
Such counsel shall state that they have participated in conferences with
officers and other representatives of the Company, independent public
accountants of the Company, representatives of the Representatives, at which the
contents of the Registration Statement and Prospectus 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 Prospectus (except as and to the extent stated in
subparagraphs (14), (15), (16) and (17) above), they have no reason to believe
that the Registration Statement, the Preliminary Prospectus or the Prospectus,
as of their respective effective or issue date, and as of the date of such
counsel's opinion, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that, in each
case, such counsel need express no view with respect to the financial statements
and the notes thereto and other financial and statistical data included in the
Registration Statement, Preliminary Prospectus or Prospectus).
b) The Representatives shall have received from Deloitte & Touche
LLP letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance satisfactory to the Representatives,
relating to the financial statements, including any pro forma financial
statements, of the Company and its Subsidiaries, and such other matters
customarily covered by comfort letters issued in connection with registered
public offerings.
c) The Representatives shall have received at the Closing Time and
on each Date of Delivery the favorable opinion of Brobeck, Phleger, & Xxxxxxxx,
dated the Closing Time or such Date of Delivery, addressed to the
Representatives and in form and substance satisfactory to the Representatives.
18
d) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
e) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
threatened, by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes, has occurred; and (ii)
the Registration Statement and the Prospectus shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
f) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) no material and unfavorable change in
the assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole
shall occur or become known, and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company or any of
its Subsidiaries.
g) The Shares shall have been approved for inclusion in the Nasdaq.
h) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
i) The Representatives shall have received lock-up agreements from
Colony Capital and each person who is an executive officer or director of the
Company, in the form of Exhibit B attached hereto, and such letter agreements
shall be in full force and effect.
j) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of its Chairman of the Board
and Chief Executive Officer, and its Vice President and Chief Financial Officer,
to the effect that, to each of such officer's knowledge, the representations and
warranties of the Company set forth in this Agreement are true and correct and
the conditions set forth in paragraphs (e), (f) and (g) have been satisfied, in
each case as of such date.
k) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus, the representations,
warranties and statement of the Company contained herein, and the performance by
the of its covenants contained herein, and the fulfillment of any conditions
contained herein, as of the Closing Time or any Date of Delivery as the
Underwriters may reasonably request.
19
l) The Company shall have performed such of its obligations under
this Agreement as are to be performed by the terms hereof at or before the
Closing Time or the relevant Date of Delivery.
7. TERMINATION:
The obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of the Representatives, at any time prior
to the Closing Time or any Date of Delivery, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if there has occurred outbreak or
escalation of hostilities or other national or international calamity or crisis
or change in economic, political or other conditions the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, impracticable to market the Shares or enforce contracts for
the sale of the Shares, or (iii) if trading in any securities of the Company has
been suspended by the Commission or by the Nasdaq, or if trading generally on
the New York Stock Exchange or in the Nasdaq market has been suspended
(including automatic halt in trading pursuant to market-decline triggers other
than those in which solely program trading is temporarily halted), or
limitations on prices for trading (other than limitations on hours or numbers of
days of trading) have been fixed, or maximum ranges for prices for securities
have been required, by such exchange or the NASD or the Nasdaq or by order of
the Commission or any other governmental authority, or (iv) a banking moratorium
shall have been declared by New York, California or United States authorities.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS:
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date the Representatives shall have the right,
within 36 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 36 hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting
20
Underwriter shall take up and pay for (in addition to the number of Shares which
it is otherwise obligated to purchase on such date pursuant to this Agreement)
the portion of the total number of Shares agreed to be purchased by the
defaulting Underwriter on such date in the proportion that its underwriting
obligations hereunder bears to the underwriting obligations of all
non-defaulting Underwriters; and (ii) if the total number of Defaulted Shares
exceeds 10% of such total, the Representatives may terminate this Agreement by
notice to the Company, without liability to any non-defaulting Underwriter.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with the like effect as, if
such substituted Underwriter had originally been named in this Agreement.
9. INDEMNITY AND CONTRIBUTION BY THE COMPANY AND THE UNDERWRITERS:
a) (i) The Company agrees to indemnify, defend and hold harmless
each Underwriter and any person who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (A) any
breach of any representation, warranty or covenant of the Company contained
herein, (B) any failure on the part of the Company to comply with any
applicable law, rule or regulation relating to the offering of securities
being made pursuant to the Prospectus, or (C) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus (the
term Prospectus for the purpose of this Section 9 being deemed to include
any Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be stated
in either such Registration Statement or Prospectus or necessary to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading, except insofar as any such loss, expense,
liability, damage or claim arises out of or is based upon
21
any untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in and in conformity with information
furnished in writing by the Underwriters (or by any person controlling an
Underwriter) through the Representatives to the Company expressly for use
in such Registration Statement or such Prospectus, PROVIDED, HOWEVER, that
the indemnity agreement contained in this subsection (a)(i) with respect to
the Preliminary Prospectus or the Prospectus shall not inure to the benefit
of any Underwriter (or to the benefit of any person controlling such
Underwriter) with respect to any person asserting any loss, expense,
liability, damage or claim which is the subject thereof if the Prospectus
or any supplement thereto corrected any such alleged untrue statement or
omission and if such Underwriter failed to send or give a copy of the
corrected Prospectus or corrected supplement thereto to such person at or
prior to the written confirmation of the sale of Shares to such person,
unless such failure resulted from noncompliance by the Company with Section
4(b) above.
b) If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company
pursuant to subsection (a) above, such Underwriter shall promptly notify
the Company in writing of the institution of such action, and the Company
shall assume the defense of such action, including the employment of
counsel and payment of expenses, PROVIDED, HOWEVER, that any failure or
delay to so notify the Company will not relieve the Company of any
obligation hereunder, except to the extent that its ability to defend is
actually impaired by such failure or delay. Such Underwriter or
controlling person 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 Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action, or the Company shall
not have employed counsel to have charge of the defense of such action
within a reasonable time or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to
those available to the Company (in which case the Company shall 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 Company and paid as incurred (it being understood, however,
that the Company shall be liable for the expenses of more than one separate
firm of attorneys for the Underwriters or controlling persons in any one
action or series of related actions in the same jurisdiction (other than
local counsel in any such jurisdiction) representing the indemnified
parties who are parties to such action). Anything in this paragraph to the
contrary notwithstanding, the Company shall be liable for any settlement of
any such claim or action effected without the its written consent.
c) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Company's directors, the
Company's officers that signed the Registration Statement, and any person
who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each an "Indemnitee"), from and
against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any
Indemnitee may
22
incur under the Securities Act, the Exchange Act or otherwise, but only
insofar as such loss, expense, liability, damage or claim arises out of or
is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by such Underwriter through the Representatives to the Company
expressly for use in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus, or arises out of or is based upon any omission
or alleged omission to state a material fact in connection with such
information required to be stated either in such Registration Statement or
Prospectus or necessary to make such information, in the light of the
circumstances under which made, not misleading. The statements set forth
under the caption "Underwriting" in the Preliminary Prospectus and the
Prospectus (to the extent such statements relate to the Underwriters)
constitute the only information furnished by or on behalf of any
Underwriter through the Representatives to the Company for purposes of
Section 3(j) and this Section 9.
d) If any action is brought against the Company, or any such person
in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company or such person shall
promptly notify the Representatives in writing of the institution of such
action and the Representatives, on behalf of the Underwriters, shall assume
the defense of such action, including the employment of counsel and payment
of expenses, PROVIDED, HOWEVER, that any failure or delay to so notify the
Representatives will not relieve the Representatives or the Underwriters of
any obligation hereunder, except to the extent that their ability to defend
is actually impaired by such failure or delay. The Company, or such person
shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the Company,
or such person unless the employment of such counsel shall have been
authorized in writing by the Representatives in connection with the defense
of such action or the Representatives shall not have employed counsel to
have charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which
are different from or additional to those available to the Underwriters (in
which case the Representatives 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 such
Underwriter and paid as incurred (it being understood, however, that the
Underwriters shall not be liable for the expenses of more than one separate
firm of attorneys in any one action or series of related actions in the
same jurisdiction (other than local counsel in any such jurisdiction)
representing the indemnified parties who are parties to such action).
Anything in this paragraph to the contrary notwithstanding, no Underwriter
shall be liable for any settlement of any such claim or action effected
without the written consent of the Representatives.
e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (c) of this
Section 9 in respect of any losses, expenses, liabilities, damages or
claims referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
23
the amount paid or payable by such indemnified party as a result of such
losses, expenses, liabilities, damages or claims (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company,
and the Underwriters from the offering of the Shares or (ii) if (but only
if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company, and of the Underwriters in connection with the
statements or omissions which resulted in such losses, expenses,
liabilities, damages or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company, and the
Underwriters shall be deemed to be in the same proportion as, the total
proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company bear to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of the Company, and of the Underwriters shall be determined
by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company, or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party under this subsection (e) as a result of the
losses, claims, damages and liabilities referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any claim or action.
f) The Company, and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in subsection (e)(i)
and, if applicable (ii), above. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
24
10. SURVIVAL:
The indemnity and contribution agreements contained in Section 9 and the
covenants, warranties and representations of the Company contained in Sections
3, 4 and 5 of this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any Underwriter, or any person who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, or by or on behalf of the Company, its
directors and officers, or any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and shall survive any termination of this Agreement or the sale and delivery of
the Shares. The Company, and each Underwriter agree promptly to notify the
others of the commencement of any litigation or proceeding against it and, in
the case of the Company, against any of the Company's officers and directors, in
connection with the sale and delivery of the Shares, or in connection with the
Registration Statement or Prospectus.
11. NOTICES:
Except as otherwise herein provided, all statements, requests, notices and
agreements shall be in writing or by telegram and, if to the Underwriters, shall
be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx & Co.,
Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Syndicate
Department; if to the Company, shall be sufficient in all respects if delivered
to the Company at the offices of the Company at 0000 Xxxxxxxx Xxxx., Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000-0000.
12. GOVERNING LAW; HEADINGS:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. PARTIES AT INTEREST:
The Agreement herein set forth has been and is made solely for the benefit
of the Underwriters, the Company, and the controlling persons, directors and
officers referred to in Sections 9 and 10 hereof, and their respective
successors, assigns, executors and administrators. No other person,
partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
25
14. COUNTERPARTS AND FACSIMILE SIGNATURES:
This Agreement may be signed by the parties in counterparts which together
shall constitute one and the same agreement among the parties. A facsimile
signature shall constitute an original signature for all purposes.
26
If the foregoing correctly sets forth the understanding among the
Company, and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this Agreement shall constitute a binding agreement
among the Company and the Underwriters.
Very truly yours,
XXXXXXX-XXXXXX, INCORPORATED
By:
-------------------------------
By:
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
WEDBUSH XXXXXX SECURITIES INC.
BY FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
--------------------------------
Title:
For itself and as Representative of the other
Underwriters named on Schedule I hereto.
27
SCHEDULE I
Number of Initial
Underwriter Shares to be Purchased
----------- ----------------------
Friedman, Billings, Xxxxxx & Co., Inc`. ............
Wedbush Xxxxxx Securities Inc.......................
Total..........................................
28
SCHEDULE II
SUBSIDIARIES
29
