1
DRAFT 01/15/97
2,900,000 Shares(*)
DELTEK SYSTEMS, INC.
Common Stock
UNDERWRITING AGREEMENT
, 1997
XXXXXXXXXX SECURITIES
XXXXXXX XXXXX & COMPANY, L.L.P.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. Introductory. Deltek Systems, Inc., a Virginia
corporation (the "Company"), proposes to issue and sell 1,700,000 shares of its
authorized but unissued Common Stock, par value $0.001 per share (the "Common
Stock"), the principal shareholders named in Schedule B annexed hereto (the
"Principal Selling Shareholders"), and certain other shareholders of the Company
named in Schedule B annexed hereto (the "Other Selling Shareholders" and
together with the Principal Selling Shareholders, the "Selling Shareholders")
propose to sell an aggregate of 1,200,000 shares of the Company's issued and
outstanding Common Stock to the several underwriters named in Schedule A annexed
hereto (the "Underwriters"), for whom you are acting as Representatives. Said
aggregate of 2,900,000 shares are herein called the "Firm Common Shares." In
addition, the Principal Selling Shareholders and the Other Selling Shareholder
identified in Schedule B propose to grant to the Underwriters an option to
purchase up to 435,000 additional shares of Common Stock (the "Optional
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* Plus an option to purchase from the Company up to 435,000 additional
shares of Common Stock to cover over-allotments, if any.
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Common Shares"), as provided in Section 5 hereof. The Firm Common Shares and, to
the extent such option is exercised, the Optional Common Shares are hereinafter
collectively referred to as the "Common Shares."
The Company has entered into a Tax Indemnification Agreement dated ,
1997 (the "Tax Agreement") with the Company's shareholders that provides for
income taxes attributable to periods prior to the date (the "Termination Date")
that the Company terminates its status as an S Corporation under Subchapter S of
the Internal Revenue Code, as amended, to be borne by such shareholders and for
income taxes attributable to periods beginning on and after the Termination Date
to be borne by the Company. The Tax Agreement will become effective on the First
Closing Date (as hereinafter defined).
You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and each of the Selling Shareholders hereby confirm
their respective agreements with respect to the purchase of the Common Shares by
the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company and the
Principal Selling Shareholders. The Company and each of the Principal Selling
Shareholders represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-18247)
with respect to the Common Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder,
and has been filed with the Commission. The Company has prepared and has
filed or proposes to file prior to the effective date of such registration
statement an amendment or amendments to such registration statement, which
amendment or amendments have been or will be similarly prepared. There
have been delivered to you two signed copies of such registration
statement and amendments, together with two copies of each exhibit filed
therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for
each of the Underwriters. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such registration
statement, a further amendment thereto, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and
424(b) of the Rules and Regulations, or (iii) a term sheet (the "Term
Sheet") as described
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in and in accordance with Rules 434 and 424(b) of the Rules and
Regulations. As filed, the final prospectus, if one is used, or the Term
Sheet and Preliminary Prospectus (as hereinafter defined), if a final
prospectus is not used, shall include all Rule 430A Information (as
hereinafter defined) and, except to the extent that you shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not
completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus (as hereinafter defined)) as the Company
shall have previously advised you in writing would be included or made
therein.
The term "Registration Statement" as used in this Agreement
shall mean such registration statement at the time such registration
statement becomes effective and, in the event any post-effective amendment
thereto becomes effective prior to the First Closing Date (as hereinafter
defined), shall also mean such registration statement as so amended;
provided, however, that such term shall also include (i) all Rule 430A
Information deemed to be included in such registration statement at the
time such registration statement becomes effective as provided by Rule
430A of the Rules and Regulations and (ii) a registration statement, if
any, filed pursuant to Rule 462(b) of the Rules and Regulations relating
to the Common Shares. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time
it becomes effective that omits Rule 430A Information. The term
"Prospectus" as used in this Agreement shall mean either (i) the
prospectus relating to the Common Shares in the form in which it is first
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, or (ii) if a Term Sheet is not used and no filing pursuant to
Rule 424(b) of the Rules and Regulations is required, the form of final
prospectus included in the Registration Statement at the time such
registration statement becomes effective, or (iii) if a Term Sheet is
used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together
with the Preliminary Prospectus included in the Registration Statement at
the time it becomes effective. The term "Rule 430A Information" means
information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of
the Act and the Rules and Regulations and, as of its date, has not
included any untrue statement of a material fact or omitted to state a
material fact necessary to make
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the statements therein, in the light of the circumstances under which they
were made, not misleading; and at the time the Registration Statement
becomes effective, and at all times subsequent thereto up to and including
each Closing Date hereinafter mentioned, the Registration Statement and
the Prospectus, and any amendments or supplements thereto, will contain
all material statements and information required to be included therein by
the Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations, and
neither the Registration Statement nor the Prospectus, nor any amendment
or supplement thereto, will include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, no representation or warranty contained in this subsection 2(b)
shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof.
(c) The Company does not own or control, directly or
indirectly, any corporation, association or other entity. The Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Virginia, with full power and
authority (corporate and other) to own and lease its properties and
conduct its business as described in the Prospectus; the Company is in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of its business, all of which are valid and in full force and
effect; the Company is duly qualified to do business and in good standing
as a foreign corporation in each jurisdiction in which the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to so qualify
would not have a material adverse effect upon the Company; and no
proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power
and authority or qualification.
(d) The Company has authorized and outstanding capital stock
as set forth under the heading "Capitalization" in the Prospectus; the
issued and outstanding shares of Common Stock have been duly authorized
and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform to the description
thereof contained in the Prospectus. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the
Company, and the related notes thereto, included in the Prospectus, the
Company does not have outstanding any options to purchase, or any
preemptive rights or
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other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock option
and other stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth in the Prospectus accurately
and fairly presents the information required to be shown with respect to
such plans, arrangements, options and rights.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable, and will conform to the description thereof
contained in the Prospectus. No preemptive rights or other rights to
subscribe for or purchase exist with respect to the issuance and sale of
the Common Shares by the Company pursuant to this Agreement. No
shareholder of the Company has any right which has not been waived to
require the Company to register the sale of any shares owned by such
shareholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the transfer and
sale of the Common Shares to be sold by the Selling Shareholders or the
issuance and sale of the Common Shares to be sold by the Company as
contemplated herein.
(f) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding obligation of the Company
in accordance with its terms. The making and performance of this Agreement
by the Company and the consummation of the transactions herein
contemplated will not violate any provisions of the certificate of
incorporation or bylaws, or other organizational documents, of the
Company, and will not conflict with, result in the breach or violation of,
or constitute, either by itself or upon notice or the passage of time or
both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Company is a party or by which the Company or any of its properties may be
bound or affected, any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company
or any of its properties. No consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with the Act, the Blue Sky laws
applicable to the public offering of the Common Shares by the several
Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
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(g) To the best knowledge of the Company and the Principal
Selling Shareholders, Xxxxxx Xxxxxxxx LLP, who have expressed their
opinion with respect to the financial statements filed with the Commission
as a part of the Registration Statement and included in the Prospectus and
in the Registration Statement, are independent accountants as required by
the Act and the Rules and Regulations.
(h) The financial statements of the Company, and the related
notes thereto, included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the respective
dates of such financial statements, and the results of operations and
changes in financial position of the Company for the respective periods
covered thereby. Such statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent accountants named in
subsection 2(g). No other financial statements or schedules are required
to be included in the Registration Statement. The selected financial data
set forth in the Prospectus under the captions "Capitalization" and
"Selected Financial Data" fairly present the information set forth therein
on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to
defaults which individually or in the aggregate would not be material to
the Company, the Company is not in violation or default of any provision
of its certificate of incorporation or bylaws, or other organizational
documents, or in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which it is a
party or by which it or any of its properties are bound; and there does
not exist any state of facts which constitutes an event of default on the
part of the Company or which, with notice or lapse of time or both, would
constitute such an event of default.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The contracts so described
in the Prospectus are in full force and effect on the date hereof; and the
Company, and to the best of the Company's knowledge, no other party is, in
breach of or default under any of such contracts.
(k) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened
to which the Company is or may be a party or of which property owned or
leased by the Company is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or
proceedings might, individually or in
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the aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or which could reasonably be expected to result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company;
and no labor disturbance by the employees of the Company exists or is
imminent which could reasonably be expected to affect adversely such
condition, properties, business, results of operations or prospects. The
Company is not a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
(l) The Company has good and marketable title to all the
properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property by
the Company. The Company holds its leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company. Except as disclosed in the
Prospectus, the Company owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted.
(m) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as
described in or specifically contemplated by the Prospectus: (i) the
Company has not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or
written agreement or other transaction which is not in the ordinary course
of business or which could result in a material reduction in the future
earnings of the Company; (ii) the Company has not sustained any material
loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by
insurance; (iii) other than described in the Prospectus, the Company has
not paid or declared any dividends or other distributions with respect to
its capital stock and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there has
not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder and upon the exercise of options described in the
Registration Statement) or indebtedness material to the Company (other
than in the ordinary course of business); and (v) there has not been any
material adverse change in the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company has sufficient trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to
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conduct its businesses as now conducted; the expiration of any trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals or
governmental authorizations would not have a material adverse effect on
the condition (financial or otherwise), business, results of operations or
prospects of the Company; and the Company has no knowledge of any material
infringement by it of trademark, trade name rights, patent rights, mask
works, copyrights, licenses, trade secret or other similar rights of
others, and there is no claim being made against the Company regarding
trademark, trade name, patent, mask work, copyright, license, trade secret
or other infringement which could be reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company.
(o) The Company has not been advised, and has no reason to
believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure
to be so in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of
the Company.
(p) The Company has filed all necessary federal, state and
foreign income and franchise tax returns and have paid all taxes shown as
due thereon; and the Company has no knowledge of any tax deficiency which
has been or might be asserted or threatened against the Company which
could materially and adversely affect the business, operations or
properties of the Company.
(q) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute
prior to the First Closing Date any offering material in connection with
the offering and sale of the Common Shares other than the Prospectus, the
Registration Statement and the other materials permitted by the Act.
(s) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not
limited to, insurance covering real and personal property owned or leased
by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in
full force and effect.
(t) The Company has not at any time during the last five years
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii)
made any payment to any federal or state governmental officer or official,
or other person charged with
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similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Common Shares.
(v) The Common Stock has been approved for quotation as a
national market system security on The Nasdaq Stock Market upon notice of
issuance.
(w) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba in violation of Section 517.075 of the Florida Statutes.
(x) The Company and the Principal Shareholders and, to the
best knowledge of the Company and the Principal Shareholders, each other
shareholder of the Company has the full legal right, power and authority
to enter into the Tax Agreement and to perform the transactions
contemplated thereby. The Tax Agreement has been duly authorized and
executed by the Company and each of the shareholders of the Company
(including the Principal Shareholders) and constitutes a valid and binding
obligation of each of the Company and the Principal Shareholders,
enforceable in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting creditor's
rights generally or by general equitable principles. The making and
performance of the Tax Agreement by the Company and the shareholders of
the Company (including the Principal Shareholders) and the consummation of
the transactions therein contemplated will not violate any provision of
the certificate of incorporation or bylaws, or other organization
documents, of the Company, and will not conflict with, result in the
breach or violation or, or constitute, either by itself or upon notice or
the passage of time or both, a default under any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company or the Principal Shareholders is a party or by which
the Company or its properties or the Principal Shareholders may be bound
or affected, any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company it any of its
properties or the Principal Shareholders. No consent, approval or
authorization or order of any court, regulatory body, administrative
agency or other governmental body is required for the delivery by the
Company or the Principal Shareholders of the Tax Agreement or the
consummation of the transactions contemplated thereby.
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SECTION 3. Representations, Warranties and Covenants of the Selling
Shareholders.
(a) Each of the Selling Shareholders represents and warrants
to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and on the First
Closing Date hereinafter mentioned will have, good and marketable
title to the Common Shares proposed to be sold by such Selling
Shareholder hereunder on such Closing Date and full right, power and
authority to enter into this Agreement and to sell, assign, transfer
and deliver such Common Shares hereunder, free and clear of all
voting trust arrangements, liens, encumbrances, equities, security
interests, restrictions and claims whatsoever; and upon delivery of
and payment for such Common Shares hereunder, the Underwriters will
acquire good and marketable title thereto, free and clear of all
liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever.
(ii) Such Selling Shareholder has executed and delivered
a Custody Agreement and Power of Attorney (the "Shareholders
Agreement") and in connection herewith such Selling Shareholder
further represents, warrants and agrees that such Selling
Shareholder has deposited in custody, under the Shareholders
Agreement, with the agent named therein (the "Agent") as custodian,
certificates in negotiable form for the Common Shares to be sold
hereunder by such Selling Shareholder, for the purpose of further
delivery pursuant to this Agreement. Such Selling Shareholder agrees
that the Common Shares to be sold by such Selling Shareholder on
deposit with the Agent are subject to the interests of the Company
and the Underwriters, that the arrangements made for such custody
are to that extent irrevocable, and that the obligations of such
Selling Shareholder hereunder shall not be terminated, except as
provided in this Agreement or in the Shareholders Agreement, by any
act of such Selling Shareholder, by operation of law, by the death
or incapacity of such Selling Shareholder or by the occurrence of
any other event. If such Selling Shareholder should die or become
incapacitated, or if any other event should occur, before the
delivery of the Common Shares hereunder, the documents evidencing
Common Shares then on deposit with the Agent shall be delivered by
the Agent in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Agent shall have received
notice thereof. This Agreement and the Shareholders Agreement have
been duly executed and delivered by or on behalf of such Selling
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Shareholder and the form of such Shareholders Agreement has been
delivered to you.
(iii) The performance of this Agreement and the
Shareholders Agreement and the consummation of the transactions
contemplated hereby and by the Shareholders Agreement will not
result in a breach or violation by such Selling Shareholder of any
of the terms or provisions of, or constitute a default by such
Selling Shareholder under, any indenture, mortgage, deed of trust,
trust (constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder or any
of its properties is bound, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency or
body applicable to such Selling Shareholder or any of its
properties.
(iv) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action 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 Common Shares.
(v) Each Preliminary Prospectus and the Prospectus,
insofar as it has related to such Selling Shareholder, has conformed
in all material respects to the requirements of the Act and the
Rules and Regulations and has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein not misleading in light of the circumstances
under which they were made; and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, as it
relates to such Selling Shareholder, will include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(vi) Such Selling Shareholder is not aware that any of
the representations and warranties set forth in Section 2 above is
untrue or inaccurate in any material respect.
(b) Each of the Selling Shareholders agrees with the Company
and the Underwriters not, for a period from the date of filing of the
Registration Statement through the date 180 days following the date of the
final Prospectus relating to the public offering of the Common Stock, sell
(including, without limitation, any short sale), offer to sell, contract
to sell, pledge or otherwise dispose of any of the Common Stock, or any
options or warrants to purchase any of the Common Stock, or any securities
convertible into or exchangeable for any
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of the Common Stock, owned directly by the undersigned or with respect to
which the undersigned has the power of disposition, in any such case
whether now owned or hereafter acquired, other than (i) pursuant to the
Underwriting Agreement, (ii) as a bona fide gift or gifts, provided that
the undersigned provides prior written notice of such gift or gifts to the
Representatives and the donee or donees thereof agree to be bound by the
restrictions set forth herein or (iii) with the prior written consent of
Xxxxxxxxxx Securities, which consent may be withheld at the sole
discretion of Xxxxxxxxxx Securities.
SECTION 4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and to the Selling Shareholders that the information set forth (i)
on the cover page of the Prospectus with respect to price, underwriting
discounts and commissions and terms of offering and (ii) under "Underwriting" in
the Prospectus was furnished to the Company by and on behalf of the Underwriters
for use in connection with the preparation of the Registration Statement and the
Prospectus and is correct in all material respects. The Representatives
represent and warrant that they have been authorized by each of the other
Underwriters as the Representatives to enter into this Agreement on its behalf
and to act for it in the manner herein provided.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, (i) the Company agrees to
issue and sell to the Underwriters 1,700,000 of the Firm Common Shares, and (ii)
the Selling Shareholders agree, severally and not jointly, to sell to the
Underwriters in the respective amounts set forth in Schedule B hereto, an
aggregate of 1,200,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Shareholders, respectively, the number of Firm Common Shares described below.
The purchase price per share to be paid by the several Underwriters to the
Company and to the Selling Shareholders, respectively, shall be $_________ per
share.
The obligation of each Underwriter to the Company shall be to
purchase from the Company that number of full shares which (as nearly as
practicable, as determined by you) bears to 1,700,000 the same proportion as the
number of shares set forth opposite the name of such Underwriter in Schedule A
hereto bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Shareholders shall be to purchase from the Selling
Shareholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,200,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased
by the Underwriters and payment therefor shall be made at the offices of
Xxxxxxxxxx Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such
other place as may
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be agreed upon by the Company and the Representatives) at such time and date,
not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after 4:30 P.M. Washington D.C. Time, the fourth)
full business day following the first date that any of the Common Shares are
released by you for sale to the public, as you shall designate by at least 48
hours' prior notice to the Company (or at such other time and date, not later
than one week after such third or fourth, as the case may be, full business day
as may be agreed upon by the Company and the Representatives) (the "First
Closing Date"); provided, however, that if the Prospectus is at any time prior
to the First Closing Date recirculated to the public, the First Closing Date
shall occur upon the later of the third or fourth, as the case may be, full
business day following the first date that any of the Common Shares are released
by you for sale to the public (as set forth above) or the date that is 48 hours
after the date that the Prospectus has been so recirculated. If the
Representatives so elect, delivery of the Firm Common Shares sold by the Company
may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Company and the Selling Shareholders to you, for the
respective accounts of the Underwriters with respect to the Firm Common Shares
to be sold by the Company and by the Selling Shareholders against payment by
you, for the accounts of the several Underwriters, of the purchase price
therefor by wire transfer payable to the order of the Company and of the Agent
in proportion to the number of Firm Common Shares to be sold by the Company and
the Selling Shareholders, respectively. The certificates for the Firm Common
Shares shall be registered in such names and denominations as you shall have
requested at least two full business days prior to the First Closing Date, and
shall be made available for checking and packaging on the business day preceding
the First Closing Date at a location in New York, New York, as may be designated
by you. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters. If the Representatives so elect, delivery of the Firm Common
Shares sold by the Selling Shareholders may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Principal Selling Shareholders and the Other Selling Shareholder
identified in Schedule B hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 435,000 Optional
Common Shares at the purchase price per share to be paid for the Firm Common
Shares, for use solely in covering any over-allotments made by you for the
account of the Underwriters in the sale and distribution of the Firm Common
Shares. The option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the first date that any of the Common Shares are
released by you for sale to the public, upon notice by you to the Principal
Selling
13.
14
Shareholders and the Other Selling Shareholder identified in Schedule B setting
forth the aggregate number of Optional Common Shares as to which the
Underwriters are exercising the option, the names and denominations in which the
certificates for such shares are to be registered and the time and place at
which such certificates will be delivered. Such time of delivery (which may not
be earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Principal
Selling Shareholders and the Other Selling Shareholder identified in Schedule B
pursuant to such notice of exercise by a fraction, the numerator of which is the
number of Firm Common Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is 2,900,000
(subject to such adjustments to eliminate any fractional share purchases as you
in your discretion may make). The number of Optional Common Shares to be sold by
each Principal Selling Shareholder and the Other Selling Shareholder identified
in Schedule B shall be determined by multiplying the total number of Optional
Common Shares to be sold by all such persons by a fraction, the numerator of
which is the number of Firm Common Shares to be sold by such person as set forth
opposite his name in Schedule B and the denominator of which is 1,200,000
(subject to such adjustments to eliminate any fractional share purchases as you
in your discretion may make). Certificates for the Optional Common Shares will
be made available for checking and packaging on the business day preceding the
Second Closing Date at a location in New York, New York, as may be designated by
you. The manner of payment for and delivery of the Optional Common Shares shall
be the same as for the Firm Common Shares purchased from the Principal Selling
Shareholders and the Other Selling Shareholder identified in Schedule B as
specified in the two preceding paragraphs. At any time before lapse of the
option, you may cancel such option by giving written notice of such cancellation
to the Company. If the option is cancelled or expires unexercised in whole or in
part, the Company will deregister under the Act the number of Optional Common
Shares as to which the option has not been exercised. Notwithstanding the
foregoing, in the event that the Registration Statement is amended or the
Prospectus is supplemented between the date hereof and any Closing Date, the
Underwriters shall have the right to delay the Closing Date to a date which will
allow the Underwriters the time necessary to distribute the Prospectus as
amended or supplemented. If the Representatives so elect, delivery of the
Optional Common Shares may be made by credit through full fast transfer to the
accounts at The Depository Trust Company designated by the Representatives.
You have advised the Company and the Selling Shareholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by
14.
15
the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Common Shares as
soon after the effective date of the Registration Statement as in the judgment
of the Representatives is advisable and at the public offering price set forth
on the cover page of and on the terms set forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the
time and date that this Agreement is executed and delivered by the parties
hereto, to become effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A of the Rules and Regulations, or
the filing of the Prospectus is otherwise required under Rule 424(b) of
the Rules and Regulations, the Company will file the Prospectus, properly
completed, pursuant to the applicable paragraph of Rule 424(b) of the
Rules and Regulations within the time period prescribed and will provide
evidence satisfactory to you of such timely filing. The Company will
promptly advise you in writing (i) of the receipt of any comments of the
Commission, (ii) of any request of the Commission for amendment of or
supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have
become effective and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the Commission shall
enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been
furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or which is not in compliance with the Act and the
Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to cause
the same to become effective as promptly as possible. The Company will
fully and completely comply
15.
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with the provisions of Rule 430A of the Rules and Regulations with respect
to information omitted from the Registration Statement in reliance upon
such Rule.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or
supplements, would 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 not misleading, or if it is necessary at any
time to amend the Prospectus, including any amendments or supplements, to
comply with the Act or the Rules and Regulations, the Company will
promptly advise you thereof and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment or supplement which
will effect such compliance and will use its best efforts to cause the
same to become effective as soon as possible; and, in case any Underwriter
is required to deliver a prospectus after such nine-month period, the
Company upon request, but at the expense of such Underwriter, will
promptly prepare such amendment or amendments to the Registration
Statement and such Prospectus or Prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after
the end of the first quarter ending after one year following the effective
date of the Registration Statement (as defined in Rule 158(c) of the Rules
and Regulations, the "Effective Date"), the Company will make generally
available to its security holders an earnings statement (which need not be
audited) covering a period of 12 consecutive months beginning after the
effective date of the Registration Statement which will satisfy the
provisions of the last paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you and the Selling
Shareholders or mail to your order copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as available and in
such quantities as you and the Selling Shareholders may request, for the
purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in
order to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as you designate, will comply with such laws and will
continue such qualifications,
16.
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registrations and exemptions in effect so long as reasonably required for
the distribution of the Common Shares. The Company shall not be required
to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise you promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the
Common Shares for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification,
registration or exemption, the Company, with your cooperation, will use
its best efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request of any
Representative, to each of the other Underwriters: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report
of the Company containing the balance sheet of the Company as of the close
of such fiscal year and statements of income, shareholders' equity and
cash flows for the year then ended and the opinion thereon of the
Company's independent public accountants; (ii) as soon as practicable
after the filing thereof, copies of each proxy statement, Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other report filed by the Company with the Commission, the NASD or any
securities exchange; and (iii) as soon as available, copies of any report
or communication of the Company mailed generally to holders of its Common
Stock.
(h) During the period of 180 days after the first date that
any of the Common Shares are released by you for sale to the public,
without the prior written consent of Xxxxxxxxxx Securities (which consent
may be withheld at the sole discretion of Xxxxxxxxxx Securities), the
Company will not, other than pursuant to the stock option plans and stock
purchase plan disclosed in the Prospectus, issue, offer, pledge, sell,
grant options to purchase or otherwise dispose of, directly or indirectly,
any of the Company's equity securities or any other securities convertible
into or exchangeable with its Common Stock or other equity security.
(i) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements
under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or
register its Common Stock for sale in non-issuer transactions under (or
obtain exemptions from the application of) the Blue Sky laws of the State
of California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with
such Blue Sky laws and will
17.
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continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(k) The Company will use its best efforts to maintain the
Common Stock as a national market system security on The Nasdaq Stock
Market.
(l) The Company will not amend, modify or terminate the Tax
Agreement without the prior written consent of the Representatives.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and, unless otherwise paid by the Company, the Selling
Shareholders agree to pay in such proportions as they may agree upon among
themselves all costs, fees and expenses incurred in connection with the
performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel and the Company's independent accountants, (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws, (vii) the filing fee
of the National Association of Securities Dealers, Inc., and (viii) all other
fees, costs and expenses referred to in Item 13 of the Registration Statement.
The Underwriters may deem the Company to be the primary obligor with respect to
all costs, fees and expenses to be paid by the Company and by the Selling
Shareholders. Except as provided in this Section 7, Section 9 and Section 11
hereof, the Underwriters shall pay all of their own expenses, including the fees
and disbursements of their counsel (excluding those relating to qualification,
registration or exemption under the Blue Sky laws and the Blue Sky memorandum
referred to above). This Section 7 shall not affect
18.
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any agreements relating to the payment of expenses between the Company and the
Selling Shareholders.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Shareholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. (or, in the case of a registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations relating to the
Common Shares, not later than 10:00 P.M.), Washington, D.C. Time, on the
date of this Agreement, or at such later time as shall have been consented
to by you; if the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) of the Rules and Regulations, the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b) of the Rules and Regulations; and prior to such
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the
knowledge of the Company, the Selling Shareholders or you, shall be
contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as
of which information is given in the Registration Statement and
Prospectus, (i) there shall not have been any change in the capital stock
other than pursuant to the issuance or exercise of options under the stock
option plans disclosed in the Prospectus of the Company or any material
change in the indebtedness (other than in the ordinary course of business)
of the Company, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material oral or written
agreement or other transaction shall have been entered into by the
Company, which is not in the ordinary course of business or which could
reasonably be expected to result in a material reduction in the future
earnings of the Company, (iii) no loss or damage (whether or not insured)
to the property of the Company shall have been sustained which materially
and adversely affects the condition (financial or otherwise), business,
results of operations or prospects of the Company, (iv) no legal or
governmental action, suit or proceeding affecting
19.
20
the Company which is material to the Company or which affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material
change in the condition (financial or otherwise), business, management,
results of operations or prospects of the Company which makes it
impractical or inadvisable in the judgment of the Representatives to
proceed with the public offering or purchase the Common Shares as
contemplated hereby.
(c) There shall have been furnished to you, as Representatives
of the Underwriters, on each Closing Date, in form and substance
satisfactory to you, except as otherwise expressly provided below:
(i)Opinion of Xxxx Xxxx Xxxx & Freidenrich, a
professional corporation, securities counsel for the Company and the
Selling Shareholders, addressed to the Underwriters and dated the
First Closing Date, or the Second Closing Date (in the latter case
with respect to the Company and the Principal Shareholders only), as
the case may be, to the effect that:
(1) (a) The Registration Statement has become
effective under the Act, and, to the best of such counsel's
knowledge, no stop order proceeding suspending the
effectiveness of the Registration Statement or preventing the
use of the Prospectus has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated by the Commission; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b); and
(b) The Registration Statement, the
Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules included therein
and other financial data derived therefrom as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the
Rules and Regulations;
(2) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement have been duly
authorized, executed and delivered by or on behalf of each of
the Selling Shareholders; the Agent has been duly and validly
authorized to act as the custodian of the Common Shares to be
sold by each such Selling Shareholder; and the performance of
this Agreement and the Shareholders Agreement and the
consummation
20.
21
of the transactions herein contemplated by the Selling
Shareholders will not result in a breach of, or constitute a
default under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which any of the
Selling Shareholders is a party or by which any of the Selling
Shareholders or any of their properties may be bound, or
violate any statute, judgment, decree, order, rule or
regulation known to such counsel of any court or governmental
body having jurisdiction over any of the Selling Shareholders
or any of their properties; and to the best of such counsel's
knowledge, no approval, authorization, order or consent of any
court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery
of this Agreement or the Shareholders Agreement or the
consummation by the Selling Shareholders of the transactions
contemplated by this Agreement, except such as have been
obtained and are in full force and effect under the Act and
such as may be required under the rules of the NASD and
applicable Blue Sky laws;
(3) To the best of such counsel's knowledge, the
Selling Shareholders have full right, power and authority to
enter into this Agreement and the Shareholders Agreement and
to sell, transfer and deliver the Common Shares to be sold on
such Closing Date by such Selling Shareholders hereunder and
good and marketable title to such Common Shares so sold, free
and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, voting trusts, or other
defects of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona fide
purchasers) who have purchased such Common Shares hereunder;
and
(4) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement are valid and binding
agreements of each of the Selling Shareholders in accordance
with their terms except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and except with respect to those provisions
relating to indemnities or contributions for liabilities under
the Act, as to which no opinion need be expressed.
In rendering such opinion, such counsel may rely as to matters
of local law, on opinions of local counsel, and as to matters of fact, on
certificates of the Selling Shareholders and of officers of the Company
and of governmental
21.
22
officials, in which case their opinion is to state that they are so doing
and that, in their opinion, the Underwriters are justified in relying on
such opinions or certificates and copies of said opinions or certificates
are to be attached to the opinion. Such counsel shall also include a
statement to the effect that nothing has come to such counsel's attention
that would lead such counsel to believe that either at the effective date
of the Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus contains any untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(ii) Opinion of Xxxxx & Xxxxxx, P.C., counsel for the
Company and the Selling Shareholders, addressed to the Underwriters
and dated the First Closing Date, or the Second Closing Date (in the
latter case with respect to the Company and the Principal
Shareholders only), as the case may be, to the effect that:
(1) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Virginia, is duly qualified to do
business as a foreign corporation and is in good standing in
all other jurisdictions where the ownership or leasing of
properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure
to so qualify would not have a material adverse effect on the
Company, and has full corporate power and authority to own its
properties and conduct its business as described in the
Registration Statement;
(2) The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus and conforms as to legal
matters in all material respects to the description thereof
contained in the Registration Statement and the Prospectus
under the caption "Description of Capital Stock"; all
necessary and proper corporate proceedings have been taken in
order to authorize validly such authorized Common Stock; all
outstanding shares of Common Stock (including the Firm Common
Shares and any Optional Common Shares) have been duly and
validly issued, are fully paid and nonassessable, have been
issued in compliance with federal and state securities laws,
were not issued in violation of or subject to any preemptive
rights provided by law or by the Company's Articles of
Incorporation or Bylaws or, to the best of such counsel's
knowledge, any other rights to subscribe for or purchase any
securities and conform to the description thereof contained in
the Prospectus; without limiting the foregoing, there are no
preemptive rights
22.
23
provided by law or by the Company's Articles of Incorporation
or Bylaws or, to the best of such counsel's knowledge, any
other rights to subscribe for or purchase any of the Common
Shares to be sold by the Company hereunder;
(3) The Company does not own or control, directly
or indirectly, any corporation, association or other entity;
(4) The certificates evidencing the Common Shares
to be delivered hereunder are in due and proper form under
Virginia law, and when duly countersigned by the Company's
transfer agent and registrar, and delivered to you or upon
your order against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement,
the Common Shares represented thereby will be duly authorized
and validly issued, fully paid and nonassessable, will not
have been issued in violation of or subject to any preemptive
rights provided by law or by the Company's Articles of
Incorporation or Bylaws or, to the best of such counsel's
knowledge, any other rights to subscribe for or purchase
securities and will conform in all respects to the description
thereof contained in the Prospectus;
(5) Except as disclosed in or specifically
contemplated by the Prospectus, to the best of such counsel's
knowledge, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans
or arrangements to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for
capital stock of the Company;
(6) (a) To the best of such counsel's knowledge,
there are no franchises, leases, contracts, agreements or
documents of a character required to be disclosed in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not disclosed
or filed, as required; and
(b) To the best of such counsel's knowledge,
there are no legal or governmental actions, suits or
proceedings pending or threatened against the Company which
are required to be described in the Prospectus which are not
described as required;
(7) The Company has full right, power and
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the several
Underwriters; this
23.
24
Agreement has been duly and validly authorized by all
necessary corporate action by the Company, has been duly and
validly executed and delivered by and on behalf of the
Company, and is a valid and binding agreement of the Company
in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and except as to those provisions
relating to indemnity or contribution for liabilities arising
under the Act as to which no opinion need be expressed; and no
approval, authorization, order, consent, registration, filing,
qualification, license or permit of or with any court,
regulatory, administrative or other governmental body or
agency is required for the execution and delivery of this
Agreement by the Company or the consummation of the
transactions contemplated by this Agreement, except such as
have been obtained and are in full force and effect under the
Act and such as may be required under applicable Blue Sky laws
in connection with the purchase and distribution of the Common
Shares by the Underwriters and the clearance of such offering
with the NASD;
(8) The execution and performance of this
Agreement and the Tax Agreement by the Company and the
consummation of the transactions herein contemplated will not
conflict with, result in the breach of, or constitute, either
by itself or upon notice or the passage of time or both, a
default under, any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument
known to such counsel to which the Company or the Principal
Shareholders is a party or by which the Company or any of its
or their property may be bound or affected which is material
to the Company or the Principal Shareholders, or violate any
of the provisions of the certificate of incorporation or
bylaws, or other organizational documents, of the Company or,
to the best of such counsel's knowledge, violate any statute,
judgment, decree, order, rule or regulation of any court or
governmental body having jurisdiction over the Company or the
Principal Shareholders or any of its or their property;
(9) The Company is not in violation of its
certificate of incorporation or bylaws, or other
organizational documents, or to the best of such counsel's
knowledge, in breach of or default with respect to any
provision of any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument
known to such counsel to which the Company is a party or by
which it or any of its properties may be bound or affected,
24.
25
except where such default would not materially adversely
affect the Company; and, to the best of such counsel's
knowledge, the Company is in compliance with all laws, rules,
regulations, judgments, decrees, orders and statutes of any
court or jurisdiction to which they are subject, except where
noncompliance would not materially adversely affect the
Company;
(10) To the best of such counsel's knowledge, no
holders of securities of the Company have rights which have
not been waived to the registration of shares of Common Stock
or other securities, because of the filing of the Registration
Statement by the Company or the offering contemplated hereby;
(11) Each of the Company and the Principal
Shareholders has full right, power and authority to enter into
the Tax Agreement; the Tax Agreement has been duly and validly
authorized by all necessary corporate action by the Company
and the Principal Shareholders, has been duly and validly
executed and delivered by and on behalf of the Company and the
Principal Shareholders, and is a valid and binding agreement
of each of the Company and the Principal Shareholders in
accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally; and no approval, authorization,
order, consent, registration, filing, qualification, license
or permit of or with any court, regulatory, administrative or
other governmental body is required for the execution and
delivery of the Tax Agreement by the Company or the Principal
Shareholders or the consummation of the transactions
contemplated by the Tax Agreement; and
(12) No transfer taxes are required to be paid in
connection with the sale and delivery of the Common Shares to
the Underwriters hereunder.
In rendering such opinion, such counsel may rely as to matters
of local law, on opinions of local counsel, and as to matters of fact, on
certificates of the Selling Shareholders and of officers of the Company
and of governmental officials, in which case their opinion is to state
that they are so doing and that, in their opinion, the Underwriters are
justified in relying on such opinions or certificates and copies of said
opinions or certificates are to be attached to the opinion. Such counsel
shall also include a statement to the effect that nothing has come to such
counsel's attention that would lead such counsel to believe that either at
the effective date of the Registration Statement or at the applicable
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Closing Date the Registration Statement or the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(iii) Such opinion or opinions of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters dated the First Closing
Date or the Second Closing Date, as the case may be, with respect to
the incorporation of the Company, the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement, the
validity of the Common Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably require,
and the Company and the Selling Shareholders shall have furnished to
such counsel such documents and shall have exhibited to them such
papers and records as they may reasonably request for the purpose of
enabling them to pass upon such matters. In connection with such
opinions, such counsel may rely on representations or certificates
of officers of the Company and governmental officials.
(iv) A certificate of the Company executed by the
Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the First Closing Date or
the Second Closing Date, as the case may be, to the effect that:
(1) The representations and warranties of the
Company set forth in Section 2 of this Agreement are true and
correct as of the date of this Agreement and as of the First
Closing Date or the Second Closing Date, as the case may be,
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or any
Preliminary Prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the respective
signers, no proceedings for that purpose have been instituted
or are pending or contemplated under the Act;
(3) Each of the respective signers of the
certificate has carefully examined the Registration Statement
and the Prospectus; in his opinion and to the best of his
knowledge, the Registration Statement and the Prospectus and
any amendments or
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supplements thereto contain all statements required to be
stated therein regarding the Company and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(4) To the best of his knowledge, since the
initial date on which the Registration Statement was filed, no
agreement, written or oral, transaction or event has occurred
which should have been set forth in an amendment to the
Registration Statement or in a supplement to or amendment of
any prospectus which has not been disclosed in such a
supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, and except as disclosed in or contemplated by the
Prospectus, to the best of his knowledge, there has not been
any material adverse change or a development involving a
material adverse change in the condition (financial or
otherwise), business, properties, results of operations,
management or prospects of the Company; and no legal or
governmental action, suit or proceeding is pending or, to the
best of his knowledge, threatened against the Company which is
material to the Company, whether or not arising from
transactions in the ordinary course of business, or which may
adversely affect the transactions contemplated by this
Agreement; since such dates and except as so disclosed, to the
best of his knowledge, the Company has not entered into any
oral or written agreement or other transaction which is not in
the ordinary course of business or which could reasonably be
expected to result in a material reduction in the future
earnings of the Company or incurred any material liability or
obligation, direct, contingent or indirect, made any change in
its capital stock, made any material change in its short-term
debt or funded debt or repurchased or otherwise acquired any
of the Company's capital stock; and other than as described in
the Prospectus the Company has not declared or paid any
dividend, or made any other distribution, upon its outstanding
capital stock payable to shareholders of record on a date
prior to the First Closing Date or Second Closing Date; and
(6) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus and except as disclosed in or contemplated by the
Prospectus, the Company has not sustained a material loss or
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damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(v) On the First Closing Date, a certificate, dated such
Closing Date and addressed to you, signed by or on behalf of each of
the Selling Shareholders to the effect that the representations and
warranties of such Selling Shareholder in this Agreement are true
and correct, as if made at and as of the First Closing Date and such
Selling Shareholder has complied with all the agreements and
satisfied all the conditions on his part to be performed or
satisfied prior to the First Closing Date.
(vi) On the date before this Agreement is executed and
also on the First Closing Date and the Second Closing Date, a letter
addressed to you, as Representatives of the Underwriters, from
Xxxxxx Xxxxxxxx LLP, independent accountants, the first one to be
dated the date of this Agreement, the second one to be dated the
First Closing Date and the third one (in the event of a Second
Closing) to be dated the Second Closing Date, in form and substance
satisfactory to you.
(vii) On or before the First Closing Date, letters from
each of the Selling Shareholders, each holder of 30,000 shares or
more of the Company's Common Stock and each director and officer of
the Company, in form and substance satisfactory to you, confirming
that for a period of 180 days after the first date that any of the
Common Shares are released by you for sale to the public, such
person will not directly or indirectly offer to sell, pledge, sell
or contract to sell or otherwise dispose of any shares of Common
Stock or any right to acquire such shares or securities convertible
into or exchangeable for any shares of Common Stock without the
prior written consent of Xxxxxxxxxx Securities, which consent may be
withheld at the sole discretion of Xxxxxxxxxx Securities.
(viii) The Common Stock shall have been approved for
quotation as a national market system security on The Nasdaq Stock
Market upon notice of issuance.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Underwriters. The Company
shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to the Representatives or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by the Company to the Underwriters as to the statements made therein.
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If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company and the Selling Shareholders without liability on
the part of any Underwriter, the Company or the Selling Shareholders except for
the expenses to be paid or reimbursed by the Company and by the Selling
Shareholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding
any other provisions hereof, if this Agreement shall be terminated by you
pursuant to Section 8, or if the sale to the Underwriters of the Common Shares
at the First Closing is not consummated because of any refusal, inability or
failure on the part of the Company or the Selling Shareholders to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Common Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph charges and telephone charges relating directly to
the offering contemplated by the Prospectus. Any such termination shall be
without liability of any party to any other party except that the provisions of
this Section , Section 7 and Section 11 shall at all times be effective and
shall apply.
SECTION 10. Effectiveness of Registration Statement. You, the
Company and the Selling Shareholders will use your, its and their best efforts
to cause the Registration Statement to become effective, to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
and, if such stop order be issued, to obtain as soon as possible the lifting
thereof.
SECTION 11. Indemnification.
(a)(1) The Company and each of the Principal Selling
Shareholders, jointly and severally, agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which
such Underwriter or such controlling person may become subject,
under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the
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omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in
any of them not misleading, or arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of
the Company or the Principal Selling Shareholders contained herein
or any failure of the Company or the Principal Selling Shareholders
to perform their respective obligations hereunder or under law; and
will reimburse each Underwriter and each such controlling person for
any legal and other expenses as such expenses are reasonably
incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action;
provided, however, that neither the Company nor the Principal
Selling Shareholders will be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof.
The indemnity agreement provided in this Section 11(a)(1) with
respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses,
claims, damages, liabilities or expenses based upon any untrue
statement or alleged untrue statement of any material fact or any
omission or alleged omission to state therein a material fact
purchased Common Shares if a copy of the Prospectus in which such
untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been delivered to such person within
the time required by the Act and the Rules and Regulations
thereunder, unless such failure is the result of noncompliance by
the Company with Section 6(e) hereof. The Company and the Principal
Selling Shareholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to
their respective amounts of such liability for which they each shall
be responsible. In addition to its other obligations under this
Section 11(a)(1), the Company and the Principal Selling Shareholders
agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or
omission, or any inaccuracy in the representations and warranties of
the Company or the Principal Selling Shareholders herein or failure
to perform its obligations hereunder, all as described in this
Section 11(a)(1), it will reimburse each Underwriter on a quarterly
basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and
enforceability of
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the Company's or the Principal Selling Shareholders' obligation to
reimburse each Underwriter for such expenses and the possibility
that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company together with
interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America
NT&SA, San Francisco, California (the "Prime Rate"). Any such
interim reimbursement payments which are not made to an Underwriter
within 30 days of a request for reimbursement, shall bear interest
at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Company or
the Principal Selling Shareholders may otherwise have.
(2)Each of the Other Selling Shareholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning
of the Act against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act, the Exchange
Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the
statements in any of them not misleading. In addition, each of the
Other Selling Shareholders, severally and not jointly, agree to
indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act
against any losses, claims, damages, liabilities or expenses, to
which such Underwriter or such controlling person may become
subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based in
whole or in part on any inaccuracy in the representations and
warranties of the Other Selling Shareholders contained herein or any
failure of the Other Selling Shareholders to perform their
respective obligations hereunder or under
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law; and will reimburse each Underwriter and each such controlling
person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person
in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Other Selling Shareholders will
not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with the information furnished to
the Company pursuant to Section 4 hereof. The indemnity agreement
provided in this Section 11(a)(2) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages,
liabilities or expenses based upon any untrue statement or alleged
untrue statement of any material fact or any omission or alleged
omission to state therein a material fact purchased Common Shares if
a copy of the Prospectus in which such untrue statement or alleged
untrue statement or omission or alleged omission was corrected had
not been delivered to such person within the time required by the
Act and the Rules and Regulations thereunder, unless such failure is
the result of noncompliance by the Company with Section 6(e) hereof.
The Other Selling Shareholders may agree, as among themselves and
without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for
which they each shall be responsible. In addition to its other
obligations under this Section 11(a)(2), the Other Selling
Shareholders agree that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any
alleged statement or omission, or any inaccuracy in the
representations and warranties of the Other Selling Shareholders
herein or failure to perform its obligations hereunder, all as
described in this Section 11(a)(2), they will reimburse each
Underwriter on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Other Selling Shareholders'
obligation to reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Other
Selling Shareholders together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to an Underwriter within
30
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days of a request for reimbursement, shall bear interest at the
Prime Rate from the date of such request. This indemnity agreement
will be in addition to any liability which the Other Selling
Shareholders may otherwise have. Notwithstanding anything else
herein, in no event shall the liability of any Other Selling
Shareholder for indemnification under this Section 11(a)(2) or for
breach of representations or warranties under this Agreement exceed
the proceeds received by such Other Selling Shareholder from the
Underwriters in the offering.
(b) Each Underwriter will severally indemnify and hold
harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, the Selling Shareholders and each
person, if any, who controls the Company or any Selling Shareholder within
the meaning of the Act, against any losses, claims, damages, liabilities
or expenses to which the Company, or any such director, officer, Selling
Shareholder or controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such Underwriter),
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are
based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment 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 such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with the information furnished
to the Company pursuant to Section 4 hereof; and will reimburse the
Company, or any such director, officer, Selling Shareholder or controlling
person for any legal and other expense reasonably incurred by the Company,
or any such director, officer, Selling Shareholder or controlling person
in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In
addition to its other obligations under this Section 11(b), each
Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 11(b) which relates to
information furnished to the Company pursuant to Section 4 hereof, it will
reimburse the Company (and, to the extent applicable, each officer,
director, controlling person or Selling Shareholder) on a quarterly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a
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judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling
Shareholder) for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Company (and, to the extent applicable,
each officer, director, controlling person or Selling Shareholder) shall
promptly return it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within 30 days of
a request for reimbursement, shall bear interest at the Prime Rate from
the date of such request. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section , notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise than under the
indemnity agreement contained in this Section or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action
is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may
wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed such counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall
not be liable for the expenses of more
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than one separate counsel, approved by the Representatives in the case of
paragraph (a)(1) or (a)(2), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under
paragraphs (a)(1), (a)(2), (b) or (c) in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Selling
Shareholders and the Underwriters from the offering of the Common Shares
or (ii) 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, the Selling Shareholders and the
Underwriters in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted
in such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The respective relative benefits
received by the Company, the Selling Shareholders and the Underwriters
shall be deemed to be in the same proportion, in the case of the Company
and the Selling Shareholders as the total price paid to the Company and to
the Selling Shareholders, respectively, for the Common Shares sold by them
to the Underwriters (net of underwriting commissions but before deducting
expenses), and in the case of the Underwriters as the underwriting
commissions received by them bears to the total of such amounts paid to
the Company and to the Selling Shareholders and received by the
Underwriters as underwriting commissions. The relative fault of the
Company, the Selling Shareholders and 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 or the inaccurate or the alleged inaccurate representation
and/or warranty relates to information supplied by the Company, the
Selling Shareholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred
to above shall be deemed to include, subject to the limitations set forth
in subparagraph (c) of this Section 11, any legal or other fees or
expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth
in
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subparagraph (c) of this Section 11 with respect to notice of commencement
of any action shall apply if a claim for contribution is to be made under
this subparagraph (d); provided, however, that no additional notice shall
be required with respect to any action for which notice has been given
under subparagraph (c) for purposes of indemnification. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 11 were determined
solely 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 this
subparagraph (d). Notwithstanding the provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter
in connection with the Common Shares underwritten by it and distributed to
the public. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute pursuant to this Section 11
are several in proportion to their respective underwriting commitments and
not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections
11(a)(1), 11(a)(2) and 11(b) hereof, including the amounts of any
requested reimbursement payments and the method of determining such
amounts, shall be settled by arbitration conducted under the provisions of
the Constitution and Rules of the Board of Governors of the New York Stock
Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the
NASD. Any such arbitration must be commenced by service of a written
demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said
demand or notice is authorized to do so. Such an arbitration would be
limited to the operation of the interim reimbursement provisions contained
in Sections 11(a)(1), 11(a)(2) and 11(b) hereof and would not resolve the
ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of such Sections 11(a)(1),
11(a)(2) and 11(b) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Shareholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for all
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Representatives of all such shares in accordance with the terms
hereof. If any Underwriter or Underwriters default in their obligations to
purchase Common Shares
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hereunder on either the First or Second Closing Date and the aggregate number of
Common Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase on such Closing Date does not exceed 10% of the total number
of Common Shares which the Underwriters are obligated to purchase on such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and the aggregate
number of Common Shares with respect to which such default occurs is more than
the above percentage and arrangements satisfactory to the Representatives and
the Company for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Shareholders except for the expenses to be paid by the Company and the
Selling Shareholders pursuant to Section 7 hereof and except to the extent
provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section . Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California Time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California Time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 14. Termination. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof:
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(a) This Agreement may be terminated by the Company by notice
to you and the Selling Shareholders or by you by notice to the Company and
the Selling Shareholders at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination
shall be without liability on the part of the Company or the Selling
Shareholders to any Underwriter (except for the expenses to be paid or
reimbursed by the Company and the Selling Shareholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof) or of any Underwriter to the Company or the Selling Shareholders
(except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred
or shall have accelerated or escalated to such an extent, as, in the
judgment of the Representatives, to affect adversely the marketability of
the Common Shares, (iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material respect any
statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements
or information contained therein not misleading in any material respect,
or (iv) if there shall be any action, suit or proceeding pending or
threatened, or there shall have been any development or prospective
development involving particularly the business or properties or
securities of the Company or the transactions contemplated by this
Agreement, which, in the reasonable judgment of the Representatives, may
materially and adversely affect the Company's business or earnings and
makes it impracticable or inadvisable to offer or sell the Common Shares.
Any termination pursuant to this subsection (b) shall be without liability
on the part of any Underwriter to the Company or the Selling Shareholders
or on the part of the Company or the Selling Shareholders to any
Underwriter (except for expenses to be paid or reimbursed by the Company
and the Selling Shareholders pursuant to Sections 7 and 9 hereof and
except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California
Time, on the tenth full business day after the Registration Statement
shall have become effective if the initial public offering price of the
Common Shares shall not then
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as yet have been determined as provided in Section 5 hereof. Any
termination pursuant to this subsection (c) shall without liability on the
part of any Underwriter to the Company or the Selling Shareholders or on
the part of the Company or the Selling Shareholders to any Underwriter
(except for expenses to be paid or reimbursed by the Company and the
Selling Shareholders pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof).
SECTION 15. Failure of the Selling Shareholders to Sell and Deliver.
If one or more of the Selling Shareholders shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by such Selling
Shareholders at the First Closing Date under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the Selling Shareholders, either (i) terminate this Agreement without any
liability on the part of any Underwriter or, except as provided in Sections 7, 9
and 11 hereof, the Company or the Selling Shareholders, or (ii) purchase the
shares which the Company and other Selling Shareholders have agreed to sell and
deliver in accordance with the terms hereof. In the event of a failure by one or
more of the Selling Shareholders to sell and deliver as referred to in this
Section , either you or the Company shall have the right to postpone the Closing
Date for a period not exceeding seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected.
SECTION 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in
writing and, if sent to the Representatives shall be mailed, delivered or
telegraphed and confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxxxx, with a copy to Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, Attention: Xxxxxx X. Xxxxxxxxxx, Esq.; and if sent to the Company or the
Selling Shareholders shall be mailed, delivered or telegraphed and confirmed to
the Company at Deltek Systems, Inc., 0000 Xxxxxxxxxx Xxxxx, XxXxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. xx Xxxxx, with a copy to Xxxx Xxxx Xxxx &
Freidenrich, a Professional Corporation, 000 Xxxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Esq. and Xxxxx & Xxxxxx, P.C.,
0000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxx, Esq. The Company, the Selling Shareholders or you may change
the address for receipt of communications hereunder by giving notice to the
others.
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SECTION 18. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 19. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Xxxxxxxxxx Securities, as Representatives, will be binding upon
all the Underwriters.
SECTION 20. Partial Unenforceability. The invalidity or
unenforceability of any Section , paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section , paragraph or
provision hereof. If any Section , paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 21. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 22. General. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders and you.
Any person executing and delivering this Agreement as
Attorney-in-fact for the Selling Shareholders represents by so doing that he has
been duly appointed as Attorney-in-fact by such Selling Shareholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action. Any
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action taken under this Agreement by any of the Attorneys-in-fact will be
binding on all the Selling Shareholders.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company, the Selling Shareholders and
the several Underwriters including you, all in accordance with its terms.
Very truly yours,
DELTEK SYSTEMS, INC.
By:_______________________________
Xxxxxxx X. xx Xxxxx
President and Chief Executive
Officer
SELLING SHAREHOLDERS
By:_______________________________
(Attorney-in-fact)
By:_______________________________
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
XXXXXXX XXXXX & COMPANY, L.L.P.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By XXXXXXXXXX SECURITIES
By:_______________________________
Managing Director
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SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities.......................................
Xxxxxxx Xxxxx & Company, L.L.P. ............................
TOTAL......................... 2,900,000
=========
X-0
00
XXXXXXXX X
Number of Firm
Common Shares
Name of Principal Selling Shareholder to be Sold
------------------------------------- ----------
Xxxxxx xx Xxxxx ............................................
Xxxxxxx X. xx Xxxxx ........................................
---------
TOTAL......................... =========
Name of Other Selling Shareholder
---------
TOTAL ........................ =========
-----------
* Indicates an Other Selling Shareholder who has granted the Underwriters an
option to purchase Optional Common Shares.
B-1
