EXHIBIT 1.1
_________ Shares of Common Stock
OPEN SOLUTIONS INC.
UNDERWRITING AGREEMENT
May __, 2004
BEAR, XXXXXXX & CO. INC.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
PIPER JAFFRAY& CO.
WACHOVIA CAPITAL MARKETS, LLC
As Representatives (the "Representatives") of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Open Solutions Inc., a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 1,000,000 shares (the "Company
Shares") of its common stock, par value .01 per share (the "Common Stock"). The
stockholders of the Company listed on Schedule I hereto (the "Selling
Stockholders") severally and not jointly propose to sell to the Underwriters an
aggregate of __________ shares of Common Stock (the "Selling Stockholders'
Shares" and, together with the Company Shares, the "Firm Shares"). For the sole
purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, the Company also proposes to issue
and sell to the Underwriters up to an additional __________ shares (the
"Additional Shares") of Common Stock. The Firm Shares and any Additional Shares
purchased by the Underwriters are referred to herein as the "Shares". The Shares
are more fully described in the Registration Statement and Prospectus referred
to below. Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx") is acting as lead manager in
connection with the offering and sale of the Shares (the "Offering").
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-114704), and amendments thereto, and related preliminary prospectuses for
the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of the Shares which
registration statement, as so amended (including post-effective amendments, if
any), has been declared effective by the Commission and copies of which have
heretofore been delivered to the Underwriters. The registration statement, as
amended at the time it became effective, including the exhibits and information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A or 434(d) under the Securities Act, is
hereinafter referred to as the "Registration Statement." If the Company has
filed or is required pursuant to the terms hereof to file a registration
statement pursuant to Rule 462(b) under the Securities Act increasing the size
of the Offering by registering additional shares of Common Stock (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference herein
to the term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission. All of the
Shares have been registered under the Securities Act pursuant to the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. No stop order suspending the effectiveness of
either the Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission. The Company, if required by the rules and
regulations of the Commission (the "Rules and Regulations") or by the Securities
Act, proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act ("Rule 424(b)"). The prospectus, in the form in which
it is to be filed with the Commission pursuant to Rule 424(b), or, if the
prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
prospectus in the form included as part of the Registration Statement at the
time the Registration Statement became effective, is hereinafter referred to as
the "Prospectus," except that if any revised prospectus or prospectus supplement
shall be provided to the Underwriters by the Company for use in connection with
the Offering which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b)), the term "Prospectus" shall also refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the time
it is first provided to the Underwriters for such use. Any preliminary
prospectus or prospectus subject to completion included in the Registration
Statement or filed with the Commission pursuant to Rule 424 under the Securities
Act is hereafter called a "Preliminary Prospectus." All references in this
agreement (this "Agreement") to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing shall be deemed to include any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System (the "XXXXX System").
(b) At the time of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 under the
Securities Act ("Rule 434"), when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Securities Act and the Rules
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and Regulations and did not and will not contain an untrue statement of a
material fact and did not and will not omit to state any material fact required
to be stated therein or necessary in order to make the statements therein (i) in
the case of the Registration Statement, not misleading and (ii) in the case of
the Prospectus or any related Preliminary Prospectus, in light of the
circumstances under which they were made, not misleading. When any related
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) under the Securities Act) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the
Securities Act and the Rules and Regulations and did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Company will comply with the requirements
of Rule 434 and the Prospectus shall not be "materially different," as such term
is used in Rule 434, from the Prospectus included in the Registration Statement
at the time it became effective. No representation and warranty is made in this
subsection (b), however, with respect to any information contained in or omitted
from the Registration Statement or the Prospectus or any related Preliminary
Prospectus or any amendment thereof or supplement thereto in reliance upon and
in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through Bear Xxxxxxx specifically for use therein. The
parties acknowledge and agree that such information provided by or on behalf of
any Underwriter consists solely of the statements set forth in the first
paragraph under the subcaption "Commissions and Discounts," in the last
paragraph under the subcaption "No Sales of Similar Securities," in the first
two paragraphs under the subcaption "Price Stabilization, Short Positions" and
under the subcaptions "Passive Market Making" and "Other Relationships" under
the caption "Underwriting" in the Prospectus.
(c) PricewaterhouseCoopers LLP, who have certified the
financial statements and supporting schedules and information of (i) the Company
and its subsidiaries and (ii) Liberty FiTech Systems, Inc., each of which are
included in the Registration Statement, and whose reports appear in the
Registration Statement or the Prospectus, are independent public accountants as
required by the Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the Rules and Regulations.
(d) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as set forth
in the Registration Statement and the Prospectus, the Company has not declared,
paid or made any dividends or other distributions of any kind on or in respect
of its capital stock and there has been no material adverse change or any
development involving a prospective material adverse change, whether or not
arising from transactions in the ordinary course of business, in or affecting
(i) the business, condition (financial or otherwise), results of operations,
stockholders' equity or properties of the Company and each subsidiary of the
Company listed on Exhibit A hereto (collectively, the "Subsidiaries"); (ii) the
long-term debt or capital stock of the Company or any of its Subsidiaries; or
(iii) the Offering or any other transaction contemplated by this Agreement, the
Registration Statement or the Prospectus with respect to the Offering (any of
the events described in clauses (i) through (iii), a "Material Adverse Change").
Since the date of the latest
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balance sheet presented in the Registration Statement and the Prospectus,
neither the Company nor any Subsidiary has incurred or undertaken any
liabilities or obligations, whether direct or indirect, liquidated or
contingent, matured or unmatured, or entered into any transactions which are
material to the Company and the Subsidiaries individually or taken as a whole,
except for liabilities, obligations and transactions which are disclosed in the
Registration Statement and the Prospectus.
(e) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column headed "Actual"
under the caption "Capitalization" and, after giving effect to the Offering and
the other transactions contemplated by this Agreement, the Registration
Statement and the Prospectus with respect to the Offering, will be as set forth
in the column headed "As Adjusted" under the caption "Capitalization". All of
the issued and outstanding shares of capital stock of the Company, including the
Selling Stockholders' Shares, are fully paid and non-assessable and have been
duly and validly authorized and issued, in compliance with all applicable state,
federal and foreign securities laws and not in violation of or subject to any
preemptive or similar right that does or will entitle any person, upon the
issuance or sale of any security, to acquire from the Company or any Subsidiary
any Common Stock or other security of the Company or any Subsidiary or any
security convertible into, or exercisable or exchangeable for, Common Stock or
any other such security (each a "Relevant Security"), except for such rights as
may have been fully satisfied or waived prior to the effectiveness of the
Registration Statement. The Shares to be delivered on the Closing Date and the
Additional Closing Date, if any (as hereinafter respectively defined), have been
duly and validly authorized and, when delivered in accordance with this
Agreement, will be duly and validly issued, fully paid and non-assessable, will
have been issued in compliance with all applicable state, federal and foreign
securities laws and will not have been issued in violation of or subject to any
preemptive or similar right that does or will entitle any person to acquire any
Relevant Security from the Company or any Subsidiary upon issuance or sale of
Shares in the Offering. The Common Stock and the Shares conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus. Except as disclosed in the Registration Statement and the
Prospectus, neither the Company nor any Subsidiary has outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, or any contracts or commitments to issue or sell, any Relevant
Security.
(f) The Subsidiaries are the only subsidiaries of the Company
within the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity except as disclosed in the Prospectus. All of the
issued shares of capital stock of or other ownership interests in each
Subsidiary have been duly and validly authorized and issued and are fully paid
and non-assessable and are owned directly or indirectly by the Company free and
clear of all liens, encumbrances, equities, defects or claims.
(g) Each of the Company and the Subsidiaries has been duly
organized and validly exists as a corporation, partnership or limited liability
company in good standing under the laws of its jurisdiction of organization.
Each of the Company and the Subsidiaries is duly qualified to do business and is
in good standing as a foreign corporation, partnership or limited liability
company in each jurisdiction in which the character or location of its
properties
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(owned, leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in good
standing which (individually or in the aggregate) would not reasonably be
expected to have a material adverse effect on (i) the business, condition
(financial or otherwise), results of operations, stockholders' equity or
properties of the Company and the Subsidiaries; (ii) the long-term debt or
capital stock of the Company or any of its Subsidiaries; or (iii) the Offering
or any other transaction contemplated by this Agreement, the Registration
Statement or the Prospectus in connection with the Offering (a "Material Adverse
Effect"). Each of the Company and the Subsidiaries has all requisite power and
authority, and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses, filings and permits (collectively, the
"Consents") of, with and from all judicial, regulatory and other legal or
governmental agencies and bodies and all third parties, foreign and domestic, to
own, lease and operate its properties and conduct its business as it is now
being conducted and as disclosed in the Registration Statement and the
Prospectus, and each such Consent is valid and in full force and effect except
for those failures to obtain such Consents that would not, individually or in
the aggregate, result in a Material Adverse Effect. Neither the Company nor any
Subsidiary has received notice of any investigation or proceedings which would
reasonably be expected to result in the revocation of any such Consent. Each of
the Company and the Subsidiaries is in compliance with all applicable laws,
rules, regulations, ordinances, directives, judgments, decrees and orders,
foreign and domestic, except where failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. No
Consent contains a materially burdensome restriction not adequately disclosed in
the Registration Statement and the Prospectus.
(h) The Company has full right, power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus. This Agreement and the transactions contemplated
by this Agreement, the Registration Statement and the Prospectus have been duly
and validly authorized by the Company. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(i) The execution, delivery, and performance of this Agreement
and consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus do not and will not (i) conflict with,
require consent under or result in a breach of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement, instrument, franchise, license or permit to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or their respective properties, operations or assets may be bound or
(ii) violate or conflict with any provision of the certificate or articles of
incorporation, by-laws, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents of the
Company or any Subsidiary, or (iii) violate
5
or conflict with any law, rule, regulation, ordinance, directive, judgment,
decree or order of any judicial, regulatory or other legal or governmental
agency or body, domestic or foreign, except (in the case of clauses (i) and
(iii) above) as would not, individually or in the aggregate, result in a
Material Adverse Effect. No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance of this
Agreement or consummation of the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered hereunder, except the
registration under the Securities Act of the Shares, which has become effective,
and such Consents as may be required under state securities or blue sky laws or
the by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution of the Shares by
the Underwriters, each of which has been obtained and is in full force and
effect.
(j) Except as disclosed in the Registration Statement and the
Prospectus, there is no judicial, regulatory or other legal or governmental
proceeding or other litigation pending to which the Company or any Subsidiary is
a party or of which any property, operations or assets of the Company or any
Subsidiary is the subject which, if determined adversely to the Company or any
Subsidiary, would not, individually or in the aggregate, result in a Material
Adverse Effect; to the best of the Company's knowledge, no such proceeding or
litigation is threatened or contemplated.
(k) The financial statements, including the notes thereto, and
the supporting schedules included in the Registration Statement and the
Prospectus present fairly in all material respects the financial position as of
the dates indicated and the cash flows and results of operations for the periods
specified of the Company and its consolidated subsidiaries and of Liberty FiTech
Systems, Inc. Except as otherwise stated in the Registration Statement and the
Prospectus, said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except that interim financial information is
subject to normal year-end audit adjustments); and the supporting schedules
included in the Registration Statement and the Prospectus present fairly in all
material respects the information required to be stated therein. No other
financial statements or supporting schedules are required to be included in the
Registration Statement. The other financial and statistical information included
in the Registration Statement and the Prospectus present fairly in all material
respects the information included therein and have been prepared on a basis
consistent with that of the financial statements that are included in the
Registration Statement and the Prospectus and the books and records of the
respective entities presented therein.
(l) There are no pro forma or as adjusted financial statements
which are required to be included in the Registration Statement and the
Prospectus in accordance with Regulation S-X which have not been included as so
required. The pro forma financial information included in the Registration
Statement and the Prospectus have been properly compiled and prepared in
accordance with the applicable requirements of the Securities Act and the Rules
and Regulations.
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(m) The assumptions used in preparing the pro forma financial
information included in the Registration Statement and the Prospectus provide a
reasonable basis for presenting the significant effects directly attributable to
the transactions or events described therein; the related adjustments made in
the preparation of such pro forma financial information give appropriate effect
to those assumptions; and such pro forma financial information reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(n) The Common Stock has been approved for quotation on The
NASDAQ National Market (the "NASDAQ"), and the Company has taken no action
designed to terminate, or likely to have the effect of terminating, the
quotation of the Common Stock on the NASDAQ, nor has the Company received any
notification that the NASDAQ is contemplating terminating such quotation.
(o) The statistical (not including any statistical data
derived from the financial statements), industry-related and market-related data
included in the Registration Statement and the Prospectus are based on or
derived from sources which the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from which they are
derived.
(p) The Company and its Subsidiaries maintain a system of
internal accounting and other controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accounting for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(q) Neither the Company nor any of its affiliates (within the
meaning of Rule 144 under the Securities Act) has taken, directly or indirectly,
any action which constitutes or is designed to cause or result in, or which
might reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
(r) The Company has not prior to the date hereof made any
offer or sale of any securities which would be "integrated" for purposes of the
Securities Act or Rules and Regulations with the offer and sale of the Shares
pursuant to the Registration Statement. Except as disclosed in the Registration
Statement and the Prospectus, the Company has not sold or issued any Relevant
Security during the six-month period preceding the date of the Prospectus,
including but not limited to any sales pursuant to Rule 144A or Regulation D or
S under the Securities Act, other than shares of Common Stock issued in
connection with the Company's initial public offering and pursuant to employee
benefit plans, qualified stock option plans or the employee compensation plans
or pursuant to outstanding options, rights or warrants as described in the
Registration Statement and the Prospectus.
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(s) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
(t) The Company is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus in connection with the Offering, and
after giving effect to application of the net proceeds of the Offering, will not
be, subject to registration as an "investment company" under the Investment
Company Act of 1940, as amended, and is not and will not be an entity
"controlled" by an "investment company" within the meaning of such act.
(u) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or the Rules and Regulations and
which have not been so described or filed.
(v) No relationship, direct or indirect, exists between or
among any of the Company or any affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Securities
Act or the Rules and Regulations to be described in the Registration Statement
or the Prospectus which is not so described as required. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by the Company to or
for the benefit of any of the officers or directors of the Company or any of
their respective family members, except as disclosed in the Registration
Statement and the Prospectus.
(w) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings or payments with respect to the Company
or any of its officers, directors, stockholders, employees, Subsidiaries or
affiliates that may affect the Underwriters' compensation as determined by the
NASD.
(x) The Company and each Subsidiary owns or leases all such
tangible real and personal properties as are necessary to the conduct of its
business as presently operated and as proposed to be operated as described in
the Registration Statement. The Company and each Subsidiary have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
liens, encumbrances, equities, defects and claims except such as are described
in the Registration Statement and the Prospectus or such as do not (individually
or in the aggregate) materially affect the value of such property or materially
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; and any real property and buildings
8
held under lease or sublease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are
not material to, and do not materially interfere with, the use made and proposed
to be made of such property and buildings by the Company and the Subsidiaries.
Neither the Company nor any Subsidiary has received any notice of any claim
adverse to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held
under lease or sublease by the Company or any Subsidiary.
(y) Except as otherwise disclosed in the Registration
Statement, the Company and each Subsidiary (i) owns or possesses adequate right
to use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses,
formulae, customer lists, and know-how and other intellectual property
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, "Intellectual Property")
necessary for the conduct of their respective businesses as being conducted and
as described in the Registration Statement and Prospectus, except where the
failure to own or possess such rights would not, individually or in the
aggregate, result in a Material Adverse Effect, and (ii) have no reason to
believe that the conduct of their respective businesses does or will conflict
with, and have not received any notice of any claim of conflict with, any such
right of others. To the best of the Company's knowledge, all material technical
information developed by and belonging to the Company which has not been
patented and which the Company considers to be its trade secrets has been kept
confidential. Except as otherwise disclosed in the Registration Statement,
neither the Company nor any of its subsidiaries has granted or assigned to any
other person or entity any right to manufacture, have manufactured, assemble or
sell the current products and services of the Company or those products and
services described in the Registration Statement and Prospectus. To the
Company's knowledge, there is no infringement by third parties of any such
Intellectual Property; there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the Company's
or any Subsidiary's rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such
claim; and there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others that the Company infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other fact which
would form a reasonable basis for any such claim.
(z) The Company and each Subsidiary carry, or are covered by,
insurance in such amounts and covering such risks as the Company reasonably
considers adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries, all of which insurance is in full force and effect.
(aa) Each of the Company and the Subsidiaries has accurately
prepared and timely filed all material federal, state and other tax returns that
are required to be filed by it (or has received timely extensions therefore) and
has paid or made provision for the payment of all material taxes, assessments,
governmental or other similar charges, including without limitation, all sales
and use taxes and all taxes which the Company or any Subsidiary is obligated to
withhold from amounts owing to employees, creditors and third parties, with
respect to the
9
periods covered by such tax returns (whether or not such amounts are shown as
due on any tax return). No deficiency assessment with respect to a proposed
adjustment of the Company's or any Subsidiary' federal, state, local or foreign
taxes is pending or, to the best of the Company's knowledge, threatened. The
Company believes that the accruals and reserves on the books and records of the
Company and the Subsidiaries in respect of tax liabilities for any taxable
period not finally determined are adequate to meet any assessments and related
liabilities for any such period and, since December 31, 2002, the Company and
the Subsidiaries have not incurred any liability for taxes other than in the
ordinary course of its business or as otherwise disclosed in the Registration
Statement. There is no tax lien, whether imposed by any federal, state or other
taxing authority, outstanding against the assets, properties or business of the
Company or any Subsidiary.
(bb) No labor disturbance by the employees of the Company or
any Subsidiary exists or, to the best of the Company's knowledge, is imminent
and the Company is not aware of any existing or imminent labor disturbances by
the employees of any of its or any Subsidiary's principal suppliers,
manufacturers', customers or contractors, which, in either case (individually or
in the aggregate), could reasonably be expected to have a Material Adverse
Effect.
(cc) No "prohibited transaction" (as defined in either Section
406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")), "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or other event of the kind described in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under Section
4043 of ERISA has been waived) has occurred with respect to any employee benefit
plan for which the Company or any Subsidiary would have any liability which
could (individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect; each employee benefit plan for which the Company or any
Subsidiary would have any liability is in compliance in all material respects
with applicable law, including (without limitation) ERISA and the Code, except
for any failure to so comply that would not, individually or in the aggregate,
result in a Material Adverse Effect; the Company has not incurred and does not
expect to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from any "pension plan"; and each plan for which
the Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified and, to the knowledge of the Company,
and nothing has occurred, whether by action or by failure to act, which could
cause the loss of such qualification.
(dd) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company (or, to the Company's knowledge, any other entity for whose acts or
omissions the Company is or may be liable) upon any other property now or
previously owned or leased by the Company or any Subsidiary, or upon any other
property, which would be a violation of or give rise to any liability under any
applicable law, rule, regulation, order, judgment, decree or permit relating to
pollution or protection of human health and the environment ("Environmental
Law"), except for violations and liabilities which would not, individually or in
the aggregate, result in a Material Adverse
10
Effect. There has been no disposal discharge, emission or other release of any
kind onto such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which the
Company or any Subsidiary has knowledge, except as would not, individually or in
the aggregate, result in a Material Adverse Effect. The Company has not agreed
to assume, undertake or provide indemnification for any liability of any other
person under any Environmental Law, including any obligation for cleanup or
remedial action, except as would not, individually or in the aggregate, result
in a Material Adverse Effect. There is no pending or, to the best of the
Company's knowledge, threatened, administrative, regulatory or judicial action,
claim or notice of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any Subsidiary.
(ee) Neither the Company, any Subsidiary nor, to the Company's
knowledge, any of its employees or agents has 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 similar public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(ff) Neither the Company nor any Subsidiary (i) is in
violation of its certificate or articles of incorporation, by-laws effective as
of the Closing Date, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents, (ii) is in
default under, and no event has occurred which, with notice or lapse of time or
both, would constitute a default under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or (iii)
is in violation in any respect of any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal
or governmental agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that would not, individually or in
the aggregate, result in a Material Adverse Effect and except (in the case of
clause (ii) alone) for any lien, charge or encumbrance disclosed in the
Registration Statement and the Prospectus.
Any certificate signed by or on behalf of the Company and delivered
to you or to counsel for the Underwriters' on the Closing Date and the
Additional Closing Date, if any (as hereinafter respectively defined), shall be
deemed to be a representation and warranty by the Company to each Underwriter as
to the matters covered thereby.
2. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to, and agrees with, each
of the Underwriters that:
(a) Such Selling Stockholder has full right, power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus. This Agreement and the transactions
contemplated by this Agreement, the Registration Statement and the Prospectus
have been duly and validly authorized by such Selling Stockholder. This
Agreement has been duly and validly executed and delivered by such Selling
Stockholder
11
and constitutes the legal, valid and binding obligation of such Selling
Stockholder, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) Such Selling Stockholder has full right, power and
authority to execute and deliver a Custody Agreement and Power of Attorney
substantially in the form of Exhibits B and C hereto (such Selling Stockholder's
"Custody Agreement" and "Power of Attorney", respectively), to perform its
obligations thereunder and to consummate the transactions contemplated by its
Custody Agreement and Power of Attorney. The Custody Agreement and Power of
Attorney and the transactions contemplated by the Custody Agreement and Power of
Attorney have been duly and validly authorized by such Selling Stockholder. The
Custody Agreement and Power of Attorney have each been duly and validly executed
and delivered by such Selling Stockholder and constitute the legal, valid and
binding obligation of such Selling Stockholder, enforceable in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Counterparts of such Selling Stockholder's
Custody Agreement, duly signed by (i) the Company, as custodian (in such
capacity, the "Custodian") and (ii) Xxxxx Xxxxxxxxx, Xx. and Xxxx X. Xxxxxxxx as
such Selling Stockholders' attorney-in-fact (in such capacity, the
"Attorney-In-Fact") have been delivered to the Company and Bear Xxxxxxx on or
prior to the date of this Agreement.
(c) Such Selling Stockholder agrees that the Shares to be sold
by such Selling Stockholder, whether or not on deposit with the Custodian, are
subject to the interests of the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of such
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Custody Agreement or Power of Attorney, by any act of
such Selling Stockholder, by operation of law or by the occurrence of any other
event. If such Selling Stockholder should die or become incapacitated, or if any
other event should occur affecting the legal status or capacity of such Selling
Stockholder before the delivery of the Shares to be sold by a Selling
Stockholder hereunder, the documents evidencing the Shares to be sold by such
Selling Stockholder then on deposit with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such event had not occurred, regardless of whether or not the Custodian shall
have received notice thereof.
(d) Such Selling Stockholder has, and on the Closing Date will
have, good and marketable title to, and is the lawful owner of, the Selling
Stockholders' Shares to be sold by such Selling Stockholder hereunder, and upon
sale and delivery of, and payment for, such Shares as provided herein, such
Selling Stockholder will convey to the Underwriters good and marketable title to
such Selling Stockholders' Shares, free and clear of all liens, encumbrances,
equities, defects and claims. Certificates for all of the Selling Stockholders'
Shares to be sold by such Selling Stockholder pursuant to this Agreement, in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures guaranteed, have
been placed in custody with the Custodian with
12
irrevocable conditional instructions to deliver such Shares to the Underwriters
pursuant to this Agreement.
(e) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance by the Selling
Stockholder of this Agreement or its Custody Agreement or Power of Attorney, or
consummation of the transactions contemplated herein or therein, including the
sale and delivery of the Selling Stockholders' Shares to be sold and delivered
hereunder, except the registration under the Securities Act of such Selling
Stockholders' Shares and such Consents as may be required under state securities
or blue sky laws and the rules of the NASD in connection with the purchase and
distribution of such Selling Stockholder's Shares by the Underwriters, each of
which has been obtained and is in full force and effect.
(f) The execution, delivery and performance of this Agreement,
the Power of Attorney and the Custody Agreement by such Selling Stockholder and
consummation of any of the other transactions contemplated herein and therein by
the Selling Stockholder or the fulfillment of the terms hereof by the Selling
Stockholder do not and will not (i) conflict with, require consent under or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of such Selling
Stockholder pursuant to any indenture, mortgage, deed of trust, loan agreement
or other agreement, instrument, franchise, license or permit to which such
Selling Stockholder is party or by which such Selling Stockholder or its
properties or assets may be bound, or (ii) violate or conflict with any
provision of the certificate or articles of incorporation, by-laws, certificate
of formation, limited liability company agreement, partnership agreement or
other organizational documents of such Selling Stockholder, if any, or (iii)
violate or conflict with any law, rule regulation, ordinance, directive, decree
or order of any judicial, regulatory or other legal or governmental agency or
body, domestic or foreign.
(g) Except as disclosed in the Registration Statement and the
Prospectus, such Selling Stockholder does not have any right to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by such Selling Stockholder, and any such waiver remains in
full force and effect.
(h) Such Selling Stockholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares that are to be sold
by the Company or any other Selling Stockholder to the Underwriters pursuant to
this Agreement; and such Selling Stockholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(i) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between such
Selling
13
Stockholder and any person that would give rise to a valid claim against the
Company or any Underwriter for a brokerage commission, finder's fee or other
like payment in connection with the transactions contemplated by this Agreement,
the Registration Statement of the Prospectus or, to such Selling Stockholder's
knowledge, any arrangements, agreements, understandings or payments with respect
to the Company or any of its officers, directors, stockholders, employees,
Subsidiaries or affiliates that may affect the Underwriters' compensation as
determined by the NASD.
(j) The information in the Registration Statement and the
Prospectus under the caption "Principal and Selling Stockholders" which
specifically relates to such Selling Stockholder does not, and will not on the
Closing Date, contain 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, in the light of the circumstances under which they were
made, not misleading. In the event there is any change in the information under
the caption "Principal and Selling Stockholders" which specifically relates to
such Selling Stockholder from the first business day after the date of this
Agreement and from time to time thereafter for such period as in the opinion of
counsel for the Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, such Selling Stockholder
will immediately notify the Underwriters of such change.
(k) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action which constitutes or is designed to cause or
result in, or which might reasonably be expected to constitute, cause or result
in, the stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(l) Such Selling Stockholder has not distributed and will not
distribute, prior to the later of the Additional Closing Date, if any, and the
completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares by the Selling
Stockholders other than a Preliminary Prospectus, the Prospectus or the
Registration Statement.
(m) The representations and warranties of such Selling
Stockholder in its Custody Agreement and Power of Attorney are, and on the
Closing Date will be, true and correct.
Any certificate signed by or on behalf of the Selling Stockholders
and delivered to you or to counsel for the Underwriters on the Closing Date
shall be deemed to be a representation and warranty by such Selling Stockholder
to each Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees, and each Selling Stockholder (severally and not
jointly) agrees, to sell to each Underwriter and each Underwriter, severally and
not jointly, agrees to purchase from the Company, at a purchase price per share
of $____, the number of Firm Shares set forth opposite
14
their respective names on Schedule I hereto together with any additional number
of Shares which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.
(b) Payment of the purchase price for, and delivery of
certificates representing, the Firm Shares shall be made at the office of Xxxxxx
& Xxxxxxx LLP ("Underwriters' Counsel"), or at such other place as shall be
agreed upon by Bear Xxxxxxx and the Company, at 10:00 A.M., New York City time,
on the third or fourth business day (as permitted under Rule 15c6-1 under the
Exchange Act) (unless postponed in accordance with the provisions of Section 10
hereof) following the date of the effectiveness of the Registration Statement
(or, if the Company has elected to rely upon Rule 430A under the Securities Act,
the third or fourth business day (as permitted under Rule 15c6-1 under the
Exchange Act) after the determination of the public offering price of the
Shares), or such other time not later than ten business days after such date as
shall be agreed upon by Bear Xxxxxxx and the Company (such time and date of
payment and delivery being herein called the "Closing Date").
Payment of the purchase price for the Firm Shares shall be made by
wire transfer in same day funds to or as directed by the Company and the
Custodian (pursuant to each Selling Stockholder's Custody Agreement and Power of
Attorney), as the case may be, upon delivery of certificates for the Firm Shares
to Bear Xxxxxxx through the facilities of The Depository Trust Company for the
respective accounts of the several Underwriters. Each Selling Stockholder hereby
agrees that (i) it will pay all stock transfer taxes, stamp duties and other
similar taxes, if any, payable upon the sale or delivery of the Firm Shares to
be sold by the Selling Stockholders to the several Underwriters, or otherwise in
connection with the performance of such Selling Stockholder's obligations
hereunder and (ii) the Custodian is authorized to deduct for such payment any
such amounts from the proceeds to such Selling Stockholder hereunder and to hold
such amounts for the account of such Selling Stockholder with the Custodian
under the Custody Agreement and Power of Attorney. Certificates for the Firm
Shares shall be registered in such name or names and shall be in such
denominations as Bear Xxxxxxx may request at least two business days before the
Closing Date. The Company will permit Bear Xxxxxxx to examine and package such
certificates for delivery at least one full business day prior to the Closing
Date.
(c) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants to the Underwriters,
acting severally and not jointly, the option to purchase up to __________
Additional Shares at the same purchase price per share to be paid by the
Underwriters for the Firm Shares as set forth in Section 3(a) above, for the
sole purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters. This option may be exercised at any time and from time to time, in
whole or in part on one or more occasions, on or before the thirtieth day
following the date of the Prospectus, by written notice from Bear Xxxxxxx to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised and the date and time, as reasonably
determined by Bear Xxxxxxx, when the Additional Shares are to be delivered (any
such date and time being herein sometimes referred to as the "Additional Closing
Date"); provided, however, that no Additional Closing Date shall occur earlier
than the Closing Date or earlier than the second full business day after the
date on which the option shall have been exercised nor later than the eighth
full business day after the date on which the option shall have been exercised
(unless such time and date are
15
postponed in accordance with the provisions of Section 10 hereof). Upon any
exercise of the option as to all or any portion of the Additional Shares, each
Underwriter, acting severally and not jointly, agrees to purchase from the
Company the number of Additional Shares that bears the same proportion of the
total number of Additional Shares then being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number increased as set forth in Section 10 hereof) bears to the total
number of Firm Shares that the Underwriters have agreed to purchase hereunder,
subject, however, to such adjustments to eliminate fractional shares as Bear
Xxxxxxx in its sole discretion shall make.
(d) Payment of the purchase price for, and delivery of
certificates representing, the Additional Shares shall be made at the office of
Underwriters' Counsel, or at such other place as shall be agreed upon by Bear
Xxxxxxx and the Company, at 10:00 A.M., New York City time, on the Additional
Closing Date (unless postponed in accordance with the provisions of Section 10
hereof), or such other time as shall be agreed upon by Bear Xxxxxxx and the
Company.
Payment of the purchase price for the Additional Shares shall be
made by wire transfer in same day funds to or as directed by the Company upon
delivery of certificates for the Additional Shares to Bear Xxxxxxx through the
facilities of The Depository Trust Company for the respective accounts of the
several Underwriters. Certificates for the Additional Shares shall be registered
in such name or names and shall be in such denominations as Bear Xxxxxxx may
request at least two business days before the Additional Closing Date. The
Company will permit Bear Xxxxxxx to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date.
4. Offering. Upon authorization of the release of the Firm Shares by
Bear Xxxxxxx, the Underwriters propose to offer the Shares for sale to the
public upon the terms and conditions set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with
the Underwriters that:
(a) The Registration Statement and any amendments thereto have
been declared effective, and if Rule 430A is used or the filing of the
Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will
file the Prospectus (properly completed if Rule 430A has been used) pursuant to
Rule 424(b) within the prescribed time period and will provide evidence
satisfactory to Bear Xxxxxxx of such timely filing. If the Company elects to
rely on Rule 434, the Company will prepare and file a term sheet that complies
with the requirements of Rule 434, and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the Prospectus included in
the Registration Statement at the time it became effective.
The Company will notify you promptly (and, if requested by Bear
Xxxxxxx, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the Company's
intention to file or prepare any supplement or amendment to the Registration
Statement or the Prospectus, (iv) of the mailing or the delivery to the
Commission for filing of
16
any amendment of or supplement to the Registration Statement or the Prospectus,
including but not limited to Rule 462(b) under the Securities Act, (v) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, it being understood
that the Company shall make every commercially reasonable effort to avoid the
issuance of any such stop order, (vi) of the receipt of any comments from the
Commission, and (vii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement to which Bear Xxxxxxx shall reasonably object in writing after being
timely furnished in advance a copy thereof. The Company will provide Bear
Xxxxxxx with copies of all such amendments, filings and other documents a
sufficient time prior to any filing or other publication thereof to permit Bear
Xxxxxxx a reasonable opportunity to review and comment thereon.
(b) The Company shall comply with the Securities Act to permit
completion of the distribution as contemplated in this Agreement, the
Registration Statement and the Prospectus. If at any time when a prospectus
relating to the Shares is required to be delivered under the Securities Act in
connection with the sales of Shares, any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would, in the judgment
of the Underwriters or the Company, include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
existing at the time of delivery to the purchaser, not misleading, or if to
comply with the Securities Act or the Rules and Regulations it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement the Company will notify you promptly and prepare and file with the
Commission, subject to Section 5(a) hereof, an appropriate amendment or
supplement (in form and substance satisfactory to Bear Xxxxxxx) which will
correct such statement or omission and will use its best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to each of you and
Underwriters' Counsel a signed or conformed copy of the Registration Statement,
as initially filed and all amendments thereto, including all consents and
exhibits filed therewith, and will maintain in the Company's files manually
signed copies of such documents for at least five years after the date of
filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any Preliminary Prospectus, the Prospectus, the Registration
Statement and all amendments of and supplements to such documents, if any, as
you may reasonably request. As promptly as possible on the business day next
succeeding the date of this Agreement and from time to time thereafter, the
Company will furnish the Underwriters with copies of the Prospectus in New York
City in such quantities as you may reasonably request.
17
(d) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430 and
Section 5(b) of the Securities Act.
(e) The Company will use its commercially reasonable efforts,
in cooperation with Bear Xxxxxxx, at or prior to the time of effectiveness of
the Registration Statement, to qualify the Shares for offering and sale under
the securities laws relating to the offering or sale of the Shares of such
jurisdictions, domestic or foreign, as Bear Xxxxxxx may designate and to
maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to become subject to taxation, to qualify as a foreign
corporation or to execute a general consent to service of process in such
jurisdiction.
(f) The Company will make generally available to its security
holders and to the Underwriters as soon as practicable, but in any event not
later than 45 days after the end of the first fiscal quarter ending after the
first anniversary of the effective date of the Registration Statement (as
defined in Rule 158(c) under the Securities Act), an earnings statement of the
Company and the Subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158).
(g) During the period of 90 days from the date of the
Prospectus, without the prior written consent of Bear Xxxxxxx, the Company (i)
will not, directly or indirectly, issue, offer, sell, agree to issue, offer or
sell, solicit offers to purchase, grant any call option, warrant or other right
to purchase, purchase any put option or other right to sell, pledge, borrow or
otherwise dispose of any Relevant Security, or make any announcement of any of
the foregoing, (ii) will not establish or increase any "put equivalent position"
or liquidate or decrease any "call equivalent position" (in each case within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder) with respect to any Relevant Security, and (iii) will
not otherwise enter into any swap, derivative or other transaction or
arrangement that transfers to another, in whole or in part, any economic
consequence of ownership of a Relevant Security, whether or not such transaction
is to be settled by delivery of Relevant Securities, other securities, cash or
other consideration; and the Company will assist the Underwriters in obtaining
an undertaking in substantially the form of Annex III hereto of each of its
officers, directors and stockholders listed on Schedule II attached hereto not
to engage in any of the aforementioned transactions on their own behalf, other
than the sale of Shares as contemplated by this Agreement, the Company's
issuance of Common Stock upon (i) the conversion or exchange of convertible or
exchangeable securities outstanding on the date hereof; (ii) the exercise of
currently outstanding options; (iii) the grant and exercise of options under, or
the issuance and sale of shares pursuant to, employee stock option plans in
effect on the date hereof, each as described in the Registration Statement and
the Prospectus, and (iv) the issuance by the Company of securities in order to
acquire assets or equity of one or more businesses by merger, asset purchase,
stock purchase or otherwise in an aggregate amount not to exceed five percent
(5%) of the outstanding shares of common stock of the Company as of the Closing
Date; provided that each person who receives any securities pursuant to this
clause (iv) executes and delivers to the Underwriters an undertaking in
substantially the form of Annex III hereto for the remainder of the
90-day-period referred to therein. The Company will not file a registration
statement
18
under the Securities Act in connection with any transaction by the Company or
any person that is prohibited pursuant to the foregoing, except for registration
statements on Form S-8 relating to employee benefit plans or Form S-4 relating
to corporate reorganizations or other transactions under Rule 145.
(h) During the period of five years from the effective date of
the Registration Statement, the Company will furnish to Bear Xxxxxxx and, upon
request, any other Representative copies of all reports or other communications
(financial or other) furnished to security holders or from time to time
published or publicly disseminated by the Company, and will deliver to Bear
Xxxxxxx and, upon request, any other Representative (i) as soon as they are
available, copies of any reports, financial statements and proxy or information
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed (unless
available on the XXXXX System); and (ii) such additional information concerning
the business and financial condition of the Company as the Representative may
from time to time reasonably request (such financial information to be on a
consolidated basis to the extent the accounts of the Company and the
Subsidiaries are consolidated in reports furnished to its security holders
generally or to the Commission), provided that Bear Xxxxxxx or such
Representative agree to keep such additional information confidential (and to
cause its employees and agents to do the same) prior to its publication or
public dissemination by the Company unless otherwise required by applicable law.
(i) The Company will apply the net proceeds from the sale of
the Shares substantially as set forth under the caption "Use of Proceeds" in the
Prospectus.
(j) The Company will use its best efforts to file a
Notification Form: Listing of Additional Shares with the NASDAQ Stock Market
with respect to the Shares, if necessary.
(k) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act, will file all documents
required to be filed with the Commission pursuant to the Securities Act and the
Rules and Regulations within the time periods required thereby.
(l) The Company will use its commercially reasonable efforts
to do and perform all things required to be done or performed under this
Agreement by the Company prior to the Closing Date or the Additional Date, as
the case may be, and to satisfy all conditions precedent to the delivery of the
Firm Shares and the Additional Shares.
(m) The Company will not take, and will cause its affiliates
(within the meaning of Rule 144 under the Securities Act) not to take, directly
or indirectly, any action which constitutes or is designed to cause or result
in, or which might reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
6. Payment of Expenses. Whether or not the transactions contemplated
by this Agreement, the Registration Statement and the Prospectus are consummated
or this Agreement is terminated, the Company hereby agrees to pay all costs and
expenses incident to
19
the performance of its obligations hereunder, including the following: (i) all
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and any
and all amendments and supplements thereto and the mailing and delivering of
copies thereof to the Underwriters and dealers; (ii) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Securities Act and the Offering; (iii) the
cost of producing this Agreement and any agreement among Underwriters, blue sky
survey, closing documents and other instruments, agreements or documents
(including any compilations thereof) in connection with the Offering; (iv) all
expenses in connection with the qualification of the Shares for offering and
sale under state securities or blue sky laws as provided in Section 5(e) hereof,
including the fees and disbursements of counsel for the Underwriters in
connection with such qualification or offering and in connection with any blue
sky survey (which fees and disbursements shall not exceed $7,500); (v) the
filing fees incident to securing any required review by the NASD of the terms of
the Offering, including the fees and disbursements of counsel for the
Underwriters in connection with, such filing (which fees and disbursements shall
not exceed $20,000); (vi) all fees and expenses in connection with listing the
Shares on the NASDAQ; (vii) all travel expenses of the Company's officers and
employees and any other expense of the Company incurred in connection with
attending or hosting meetings with prospective purchasers of the Shares; and
(viii) any stock transfer taxes incurred in connection with this Agreement or
the Offering. The Company also will pay or cause to be paid: (x) the cost of
preparing stock certificates representing the Shares; (y) the cost and charges
of any transfer agent or registrar for the Shares; and (z) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 6. It is understood,
however, that except as provided in this Section, and Sections 8, 9 and 12
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel and stock transfer taxes on resale of any of the
Shares by them. Notwithstanding anything to the contrary in this Section 6, in
the event that this Agreement is terminated pursuant to Section 7 or 12(b)
hereof, or subsequent to a Material Adverse Change, the Company will pay all
reasonable out-of-pocket expenses of the Underwriters (including but not limited
to reasonable fees and disbursements of counsel to the Underwriters) incurred in
connection herewith.
7. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company and each of the Selling Stockholder herein contained,
as of the date hereof and as of the Closing Date (for purposes of this Section 7
"Closing Date" shall refer to the Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished
to you or to Underwriters' Counsel pursuant to this Section 7 of any
misstatement or omission, to the performance by the Company and each of the
Selling Stockholders of their respective obligations hereunder, and to each of
the following additional conditions:
(a) The Registration Statement shall have become effective and
all necessary regulatory or stock exchange approvals shall have been received
not later than 5:30 P.M., New York time, on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by Bear
Xxxxxxx; if the Company shall have elected to rely upon Rule 430A or Rule 434
under the Securities Act, the Prospectus shall have been filed with the
20
Commission in a timely fashion in accordance with Section 5(a) hereof and a form
of the Prospectus containing information relating to the description of the
Shares and the method of distribution and similar matters shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the favorable
written opinion of Xxxx and Xxxx LLP, counsel for the Company and certain of the
Selling Stockholders, dated the Closing Date and addressed to the Underwriters
in the form attached hereto as Annex I.
(c) At the Closing Date you shall have received the favorable
written opinion of [________], counsel for certain of the Selling Stockholders,
dated the Closing Date and addressed to the Underwriters in the form attached
hereto as Annex II.
(d) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be reasonably
satisfactory in form and substance to Bear Xxxxxxx and to Underwriters' Counsel,
and the Underwriters shall have received from Underwriters' Counsel a favorable
written opinion, dated as of the Closing Date, with respect to the issuance and
sale of the Shares, the Registration Statement and the Prospectus and such other
related matters as Bear Xxxxxxx may require, and the Company shall have
furnished to Underwriters' Counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company, dated
the Closing Date, to the effect that (i) the condition set forth in subsection
(a) of this Section 7 has been satisfied, (ii) as of the date hereof and as of
the Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are true and correct, (iii) as of the Closing Date all
agreements, conditions and obligations of the Company to be performed or
complied with hereunder on or prior thereto have been duly performed or complied
with in all material respects, (iv) the Company and the Subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, (v) no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof has been issued and no
proceedings therefor have been initiated or threatened by the Commission and
(vi) subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus there has not been any Material
Adverse Change, except in each case as disclosed in the Prospectus.
(f) At the Closing Date you shall have received a certificate
of the Selling Stockholders, dated the Closing Date, to the effect that such
Selling Stockholder has examined the Registration Statement, the Prospectus and
any supplement to the Prospectus and this Agreement and (i) as of the date
hereof and as of the Closing Date, the representations and warranties of such
Selling Stockholder set forth in Section 2 hereof are true and correct and (ii)
as of the Closing Date all agreements, conditions and obligations of such
Selling Stockholder to
21
be performed or complied with hereunder on or prior thereto have been duly
performed or complied with in all material respects.
(g) At the time this Agreement is executed and at the Closing
Date, you shall have received a comfort letter, from PricewaterhouseCoopers LLP,
independent public accountants (within the meaning of the Securities Act) for
the Company, dated, respectively, as of the date of this Agreement and as of the
Closing Date addressed to the Underwriters and in form and substance reasonably
satisfactory to the Underwriters and Underwriters' Counsel.
(h) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any of the Subsidiaries or any change
or development involving a change, whether or not arising from transactions in
the ordinary course of business, in the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or prospects
of the Company and the Subsidiaries, individually or taken as a whole, including
but not limited to the occurrence of any fire, flood, storm, explosion, accident
or other calamity at any of the properties owned or leased by the Company or any
of its Subsidiaries, the effect of which, in any such case described above, is,
in the reasonable judgment of Bear Xxxxxxx, so material and adverse as to make
it impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any supplement).
(i) You shall have received a duly executed lock-up agreement
from the directors, officers and the Selling Stockholders listed on Schedule II
hereto, in each case substantially in the form attached hereto as Annex II.
(j) At the Closing Date, the Company shall have made all
necessary filings (if any) for quotation of the Shares on the NASDAQ.
(k) Prior to the Closing Date, the NASD shall have confirmed
that it has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of Prospectuses on the next
business day succeeding the date of this Agreement.
(m) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the
Closing Date, prevent the issuance or sale of the Shares; and no injunction or
order of any federal, state or foreign court shall have been issued that would,
as of the Closing Date, prevent the issuance or sale of the Shares.
(n) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
22
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 7 shall not be reasonably
satisfactory in form and substance to Bear Xxxxxxx and to Underwriters' Counsel,
all obligations of the Underwriters hereunder may be cancelled by Bear Xxxxxxx
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Shares may be cancelled by Bear Xxxxxxx
at, or at any time prior to, the Additional Closing Date. Notice of such
cancellation shall be given to the Company in writing, or by telephone. Any such
telephone notice shall be confirmed promptly thereafter in writing.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to reasonable attorneys' fees and other
expenses incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim, and any and all amounts paid
in settlement of any claim or litigation in accordance with the terms of this
Agreement), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, as originally filed or
any amendment thereof, or any related Preliminary Prospectus or the Prospectus,
or in any supplement thereto or amendment thereof or (ii) the omission or
alleged omission to state in the Registration Statement, as originally filed or
any amendment thereof, or any related Preliminary Prospectus or the Prospectus,
or in any supplement thereto or amendment thereof, a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that (i) the Company will not be liable in any such case to
the extent but only to the extent that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, as originally filed or any amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through Bear Xxxxxxx
expressly for use therein and (ii) with respect to any untrue statement or
omission of material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this section shall not inure to the benefit of any
Underwriter from whom the person asserting any such loss, claim, damage,
liability or action purchased the securities concerned, to the extent that any
such loss, claim, damage, liability or action of such Underwriter occurs under
the circumstance where it shall have been determined by a court of competent
jurisdiction in a decision not subject to further appeal that (w) the Company
had furnished copies of the Prospectus, as amended or supplemented, to the
Representatives in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the time at which written confirmation of the sale of
such securities was delivered by the Underwriter, (x) delivery of the
Prospectus, as amended or supplemented, was required by the Securities Act to be
made to such person at such time, (y) the untrue statement or omission of a
material fact contained in the Preliminary Prospectus was corrected in the
Prospectus as amended or supplemented, and (z) the
23
Underwriter did not send or give to such person, at or prior to the written
confirmation of the sale of such securities to such person, a copy of the
Prospectus as amended or supplemented. The parties agree that such information
provided by or on behalf of any Underwriter through Bear Xxxxxxx consists solely
of the material referred to in the last sentence of Section 1(b) hereof. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including but not limited to other liability under this
Agreement.
(b) Each of the Selling Stockholders, jointly with the Company
and severally, shall indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to reasonable attorneys' fees and other expenses
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim, and any and all amounts paid in
settlement of any claim or litigation in accordance with the terms of this
Agreement), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon (i) a breach by such Selling Stockholder of the
representations and warranties contained in Section 2 hereof and (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such Selling Stockholder specifically for use therein. This indemnity
agreement will be in addition to any liability which each of the Selling
Stockholders may otherwise have, including but not limited to other liability
under this Agreement; provided, however, that in no case shall any Selling
Stockholder be liable or responsible for any amount in excess of the product of
(i) the number of Shares sold by such Selling Stockholder, and (ii) the public
offering price of the Shares as set forth in the Prospectus, net of underwriting
discounts and commissions.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, the Selling Stockholders and each other person, if any, who controls
the Company or any Selling Stockholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to reasonable attorneys' fees and other expenses incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim, and any and all amounts paid in settlement of any
claim or litigation in accordance with the terms of this Agreement), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, as originally filed or any
24
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through Bear Xxxxxxx
specifically for use therein, it being expressly understood and agreed by the
parties that, such information provided by or on behalf of any Underwriter
through Bear Xxxxxxx consists solely of the information set forth in the last
sentence of Section 1(b) hereof; provided, however, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder. This indemnity will be in addition to any liability which
any Underwriter may otherwise have, including but not limited to other liability
under this Agreement.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of any claims or the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 8 to the extent that it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in the
defense of such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided however, that
counsel to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by one of
the indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to have charge of the
defense of such action within a reasonable period of time after notice of
commencement of the action, (iii) the indemnifying party does not diligently
defend the action after assumption of the defense, or (iv) such indemnified
party or parties shall have reasonably concluded that there are defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses shall be borne by the indemnifying parties. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate counsel (plus local
counsel) for all such indemnified parties. No indemnifying party shall, without
the prior written
25
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 8 or Section 9 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
9. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 8 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Selling Stockholders (collectively, the "Sellers") and the Underwriters
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Sellers, any contribution received by
the Sellers from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, officers
of the Company who signed the Registration Statement and directors of the
Company) as incurred to which the Sellers and one or more of the Underwriters
may be subject, in such proportions as is appropriate to reflect the relative
benefits received by the Sellers and the Underwriters from the Offering or, if
such allocation is not permitted by applicable law, in such proportions as are
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Sellers and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Sellers and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the Offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Sellers bears to (y) the underwriting discount or commissions
received by the respective Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of each of the Sellers
and of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sellers or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Sellers and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or
26
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 9,
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation, and (iii) no Selling
Stockholder shall be required to contribute an amount in excess of the product
of (A) the number of Shares sold by such Selling Stockholder, and (B) the public
offering price of the Shares as set forth in the Prospectus, net of underwriting
discounts and commissions. For purposes of this Section 9, each person, if any,
who controls an Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls any Seller within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company and any Selling Stockholder, as applicable, subject in each case to
clauses (i) and (ii) of the immediately preceding sentence. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 9 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
Section 9 are several in proportion to the respective number of Shares to be
purchased by each of the Underwriters hereunder and not joint.
10. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
(the "Default Shares") do not (after giving effect to arrangements, if any, made
by Bear Xxxxxxx pursuant to subsection (b) below) exceed in the aggregate 10% of
the number of Firm Shares or Additional Shares, each non-defaulting Underwriter,
acting severally and not jointly, agrees to purchase from the Company that
number of Default Shares that bears the same proportion of the total number of
Default Shares then being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto bears to the
aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as Bear Xxxxxxx in its sole discretion shall make.
(b) In the event that the aggregate number of Default Shares
exceeds 10% of the number of Firm Shares or Additional Shares, as the case may
be, Bear Xxxxxxx may in its discretion arrange for itself or for another party
or parties (including any non-defaulting Underwriter or Underwriters who so
agree) to purchase the Default Shares on the terms contained herein. In the
event that within five calendar days after such a default Bear Xxxxxxx
27
does not arrange for the purchase of the Default Shares as provided in this
Section 10(b), this Agreement or, in the case of a default with respect to the
Additional Shares, the obligations of the Underwriters to purchase and of the
Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company or the Selling Stockholders with respect
thereto (except in each case as provided in Sections 6, 8, 9, 11 and 12(d)) or
the Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company and the Selling Stockholders for damages occasioned
by its or their default hereunder.
(c) In the event that any Default Shares are to be purchased
by the non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, Bear Xxxxxxx or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may be for a
period, not exceeding five business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents and arrangements, and the Company agrees to file promptly
any amendment or supplement to the Registration Statement or the Prospectus
which, in the reasonable opinion of Underwriters' Counsel, may thereby be made
necessary or advisable. The term "Underwriter" as used in this Agreement shall
include any party substituted under this Section 10 with like effect as if it
had originally been a party to this Agreement with respect to such Firm Shares
and Additional Shares.
11. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters, the Company and
the Selling Stockholders contained in this Agreement or in certificates of
officers of the Company or any Subsidiary or any Selling Stockholder submitted
pursuant hereto, including the agreements contained in Section 6, the indemnity
agreements contained in Section 8 and the contribution agreements contained in
Section 9, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
thereof or by or on behalf of the Company, any of its officers and directors or
any controlling person thereof, or by or on behalf of the Selling Stockholders
and shall survive delivery of and payment for the Shares to and by the
Underwriters. The representations contained in Section 1, Section 2 and the
agreements contained in Sections 6, 8, 9, 11 and 12(d) hereof shall survive any
termination of this Agreement, including termination pursuant to Section 10 or
12 hereof.
12. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of
(i) receipt by Bear Xxxxxxx and the Company of notification of the effectiveness
of the Registration Statement or (ii) the execution of this Agreement. If either
the public offering price or the purchase price per Share has not been agreed
upon prior to 5:00 P.M., New York City time, on the fifth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company, the Selling
Stockholders or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying you or by Bear Xxxxxxx notifying the Company. Notwithstanding any
termination of this Agreement, the provisions of this Section 12 and of Sections
1, 2, 6, 8, 9 and 13 through 18, inclusive, shall be in full force and effect at
all times after the execution hereof.
28
(b) Bear Xxxxxxx shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of Bear Xxxxxxx will in the immediate future materially disrupt, the
market for the Company's securities or securities in general; or (B) if trading
on The New York Stock Exchange ("the NYSE") or the NASDAQ shall have been
suspended or been made subject to material limitations, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the NYSE or the NASDAQ or by order of
the Commission or any other governmental authority having jurisdiction; or (C)
if a banking moratorium has been declared by any state or federal authority or
if any material disruption in commercial banking or securities settlement or
clearance services shall have occurred; or (D) in the reasonable judgment of
Bear Xxxxxxx, any Material Adverse Change shall have occurred since the
respective dates as of which information is given in the Prospectus; or (E) (i)
if there shall have occurred any outbreak or escalation of hostilities or acts
of terrorism involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been any other
calamity or crisis or any change in political, financial or economic conditions
if the effect of any such event in (i) or (ii), in the judgment of Bear Xxxxxxx,
makes it impracticable or inadvisable to proceed with the offering, sale and
delivery of the Firm Shares or the Additional Shares, as the case may be, on the
terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 12
shall be in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than pursuant to (i) notification by Bear Xxxxxxx
as provided in Section 12(a) hereof or (ii) Section 10(b) hereof), or if the
sale of the Shares provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth herein is not satisfied or
because of any refusal, inability or failure on the part of the Company or any
Selling Stockholder to perform any agreement herein or comply with any provision
hereof, the Company and the Selling Stockholders will, subject to demand by Bear
Xxxxxxx, reimburse the Underwriters for all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
13. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co.
Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Capital
Markets, with a copy to Underwriters' Counsel at the address, and to the
attention of the persons, set forth in the Registration Statement;
(b) if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to the Company and its counsel at the respective
addresses, and to the attention of the respective persons, set forth in the
Registration Statement;
29
(c) if sent to any Selling Stockholder, shall be mailed,
delivered, or faxed and confirmed in writing to such Selling Stockholder at the
respective address set forth in the records of the Transfer Agent with a copy to
its counsel at such address as such Selling Stockholder shall notify the parties
in writing;
provided, however, that any notice to an Underwriter pursuant to Section 8 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to Bear Xxxxxxx, which address
will be supplied to any other party hereto by Bear Xxxxxxx upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
14. Parties. This Agreement shall insure solely to the benefit of,
and shall be binding upon, the Underwriters, the Company and the Selling
Stockholders and the controlling persons, directors, officers, employees and
agents referred to in Sections 8 and 9 hereof, and their respective successors
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and said controlling persons and their respective successors,
officers, directors, heirs and legal representatives, and it is not for the
benefit of any other person, firm or corporation. The term "successors and
assigns" shall not include a purchaser, in its capacity as such, of Shares from
any of the Underwriters.
15. Governing Law and Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. Each of the Company and each Selling Stockholder irrevocably
(a) submits to the jurisdiction of any court of the State of New York or the
United State District Court for the Southern District of the State of New York
for the purpose of any suit, action, or other proceeding arising out of this
Agreement, or any of the agreements or transactions contemplated by this
Agreement, the Registration Statement and the Prospectus (each, a "Proceeding"),
(b) agrees that all claims in respect of any Proceeding may be heard and
determined in any such court, (c) waives, to the fullest extent permitted by
law, any immunity from jurisdiction of any such court or from any legal process
therein, (d) agrees not to commence any Proceeding other than in such courts,
and (e) waives, to the fullest extent permitted by law, any claim that such
Proceeding is brought in an inconvenient forum. EACH OF THE COMPANY (ON BEHALF
OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS
RESPECTIVE EQUITY HOLDERS AND CREDITORS) AND EACH SELLING STOCKHOLDER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
30
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
18. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature pages follow]
31
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us. Any person executing and
delivering this Agreement as Attorney-in-Fact for a Selling Stockholder
represents by so doing that he has been duly appointed as Attorney-in-Fact by
such Selling Stockholder pursuant to a validly existing and binding
Power-of-Attorney which authorizes such Attorney-in-Fact to take such action.
Very truly yours,
OPEN SOLUTIONS INC.
By:
---------------------------------------
Name:
Title:
SELLING STOCKHOLDERS
------------------------------------------
Xxxxx Xxxxxxxxx, Xx.
------------------------------------------
Xxxx X. Xxxxxxxx
Axiom Venture Partners, L.P.
Axiom Venture Partners III Limited Partnership
Aetna Life Insurance Company
Connecticut Innovations, Incorporated
Fair Xxxxx Corporation
Key Principal Partners LLC
Banking Spectrum Services, Inc.
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxx,
Trustees of the Xxxxxxxxx Family 2003 Trust
By:
---------------------------------------
Name:
As Attorney-in-Fact acting on behalf of
each of the Selling Stockholders named
above.
NY\886160.5
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXX XXXXXXX & CO.
WACHOVIA CAPITAL MARKETS, LLC
By: Bear, Xxxxxxx & Co. Inc.
By:
---------------------------------------
Name:
Title:
On behalf of itself and the other
Underwriters named in Schedule I hereto.
SCHEDULE I
Underwriters
Number of Additional
Total Number of Firm Shares to be Purchased if
Name of Underwriter Shares to be Purchased Option is Fully Exercised
------------------- ---------------------- -------------------------
Bear, Xxxxxxx & Co. Inc.
Friedman, Billings, Xxxxxx & Co.,
Inc.
Xxxxx Xxxxxxx & Co.
Wachovia Capital Markets, LLC
Total.....
====================== =========================
Selling Stockholders
Name of Selling Stockholder Total Number of Firm Shares to be Purchased
--------------------------- -------------------------------------------
Xxxxx Xxxxxxxxx, Xx.
Xxxx X. Xxxxxxxx
Axiom Venture Partners, L.P.
Axiom Venture Partners III Limited
Partnership
Aetna Life Insurance Company
Connecticut Innovations, Incorporated
Fair Xxxxx Corporation
Key Principal Partners LLC
Banking Spectrum Services, Inc.
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxxx and Xxxxxxx X.
Xxxxx, Trustees of the Xxxxxxxxx
Family 2003 Trust
SCHEDULE II
Axiom Venture Partners, L.P.
Axiom Venture Partners III Limited Partnership
Aetna Life Insurance Company
Connecticut Innovations, Incorporated
Fair Xxxxx Corporation
Key Principal Partners LLC
Banking Spectrum Services, Inc.
Xxxxx Xxxxxxxxx, Xx.
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx Xxxx
Xxxxxx X. XxXxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxx
Xxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxx, Trustees of the Xxxxxxxxx Family 2003
Trust
EXHIBIT A
Subsidiaries
MAXXAR Corporation
EXHIBIT B
Form of Custody Agreement
1
EXHIBIT C
Form of Power of Attorney
1
ANNEX I
Form of Opinion of Xxxx and Xxxx LLP
1
ANNEX II
Form of Opinion of Counsel to Selling Stockholders
1
ANNEX III
Form of Lock-Up Agreement
May __, 2004
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxx Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx & Co.
Wachovia Capital Markets, LLC
As Representatives of the several
Underwriters referred to below
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
Open Solutions Inc. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed public
offering (the "Offering") by Open Solutions Inc., a Delaware corporation (the
"Company"), of its common stock, $.01 par value (the "Stock").
In order to induce you and the other underwriters for which you act as
representatives (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, Xxxxxxx & Co.
Inc. ("Bear Xxxxxxx") on behalf of the Underwriters, during the period from the
date hereof until ninety (90) days from the date of the final prospectus for the
Offering (the "Lock-Up Period"), the undersigned (a) will not, directly or
indirectly, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, pledge, borrow
or otherwise dispose of any Relevant Security (as defined below), and (b) will
not establish or increase any "put equivalent position" or liquidate or decrease
any "call equivalent position" with respect to any Relevant Security (in each
case within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act")), or otherwise enter into any swap, derivative or other transaction or
arrangement that transfers to another, in whole or in part, any economic
consequence of ownership of a Relevant Security, whether or not such transaction
is to be settled by delivery of Relevant Securities, other securities, cash or
other consideration. As used herein "Relevant Security" means the Stock, any
other equity security of the Company or any of its subsidiaries and any security
convertible into, or exercisable or exchangeable for, any Stock or other such
equity security.
Notwithstanding the foregoing, (a)(i) the undersigned may transfer
Relevant Securities by bona fide gift, will or intestate succession, (ii) the
undersigned may transfer Relevant Securities to any trust for the direct or
indirect benefit of the undersigned or an immediate family member (i.e. any
relationship by blood, marriage or adoption, not more remote than first cousin)
and (iii) if the undersigned is a partnership, limited liability company or
corporation, the undersigned may make a general distribution of Relevant
Securities to its partners, members or shareholders, (b) this Agreement shall
not restrict the sale or other disposition of Relevant Securities that are
acquired by the undersigned in the open market after the Offering is priced and
(c) the undersigned may sell the Stock set forth opposite the undersigned's name
on Schedule I to the Underwriting Agreement to be entered into among the
Company, the Underwriters and the selling stockholders named therein, provided,
as to clauses (a) and (b) above, (x) that each resulting transferee of Relevant
Securities executes and delivers to you an agreement satisfactory to you
certifying that such transferee is bound by the terms of this Agreement and has
been in compliance with the terms hereof since the date first above written as
if it had been an original party hereto and (y) that any such sale or other
disposition fully complies with, and is not required to be disclosed or reported
under, applicable law (including but not limited to Section 16 under the
Exchange Act).
The undersigned hereby authorizes the Company during the Lock-Up Period to
cause any transfer agent for the Relevant Securities to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities. The undersigned hereby further agrees
that, without the prior written consent of Bear Xxxxxxx, during the Lock-up
Period the undersigned (x) will not file or participate in the filing with the
Securities and Exchange Commission of any registration statement, or circulate
or participate in the circulation of any preliminary or final prospectus or
other disclosure document with respect to any proposed offering or sale of a
Relevant Security and (y) will not exercise any rights the undersigned may have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
This Agreement shall terminate and be of no further force and effect upon
the earlier to occur of (a) the termination of the Offering and (b) in the event
the Company has not consummated the Offering by June 30, 2004.
2
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _____________________________
Name: _____________________________
Title (if applicable): _______________________
3
