EXHIBIT 1.1
6,250,000
eFunds Corporation
UNDERWRITING AGREEMENT
June __, 2000
XXXXXX BROTHERS INC.
Bear, Xxxxxxx & Co. Inc.
First Albany Corporation
Xxxx X. Xxxxxxx & Company, Incorporated
Fidelity Capital Markets, a division of
National Financial Services Corporation
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
eFunds Corporation, a Delaware corporation (the "Company"), proposes to
sell 6,250,000 shares (the "Firm Stock") of the Company's Common Stock, par
value $.01 per share (the "Common Stock"). In addition, the Company proposes to
grant to the Underwriters named in Schedule 1 hereto (the "Underwriters") an
option to purchase up to an additional 937,500 shares of the Common Stock on the
terms and for the purposes set forth in Section (the "Option Stock"). The Firm
Stock and the Option Stock, if purchased, are hereinafter collectively called
the "Stock." This is to confirm the agreement concerning the purchase of the
Stock from the Company by the Underwriters named in Schedule 1 hereto (the
"Underwriters"). The Company is a wholly owned subsidiary of Deluxe Corporation,
a Minnesota corporation ("Deluxe").
1. Representations, Warranties and Agreements of the Company and
Deluxe. The Company and Deluxe, jointly and severally, represent, warrant and
agree that:
(a) A registration statement on Form S-1, and amendments
thereto, with respect to the Stock have (i) been prepared by the
Company in conformity with the requirements of the Securities Act of
1933 (the "Securities Act") and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act
2
and (iii) become effective under the Securities Act; a second
registration statement on Form S-1 with respect to the Stock (i) may
also be prepared by the Company in conformity with the requirements of
the Securities Act and the Rules and Regulations and (ii) if to be so
prepared, will be filed with the Commission under the Securities Act
pursuant to Rule 462(b) of the Rules and Regulations on the date
hereof. Copies of the first such registration statement and the
amendments to such registration statement, together with the form of
any such second registration statement, have been delivered by the
Company to you as the representatives (the "Representatives") of the
Underwriters. As used in this Agreement, "Effective Time" means (i)
with respect to the first such registration statement, the date and the
time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission and (ii) with respect to any second registration statement,
the date and time as of which such second registration statement is
filed with the Commission, and "Effective Times" is the collective
reference to both Effective Times; "Effective Date" means (i) with
respect to the first such registration statement, the date of the
Effective Time of such registration statement and (ii) with respect to
any second registration statement, the date of the Effective Time of
such second registration statement, and "Effective Dates" is the
collective reference to both Effective Dates; "Preliminary Prospectus"
means each prospectus included in any such registration statement, or
amendments thereof, before it became effective under the Securities Act
and any prospectus filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the Rules and
Regulations; "Primary Registration Statement" means the first
registration statement referred to in this Section 1(a), as amended at
its Effective Time, "Rule 462(b) Registration Statement" means the
second registration statement, if any, referred to in this Section
1(a), as filed with the Commission, and "Registration Statements" means
both the Primary Registration Statement and any Rule 462(b)
Registration Statement, including in each case all information
contained in the final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations in accordance with Section
6(a) hereof and deemed to be a part of the Registration Statements as
of the Effective Time of the Primary Registration Statement pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules
and Regulations. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus.
(b) The Primary Registration Statement conforms (and the Rule
462(b) Registration Statement, if any, the Prospectus and any further
amendments or supplements to the Registration Statements or the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform) in all respects to the
requirements of the Securities Act and the Rules and Regulations and
does not and will not, as of the applicable effective date (as to the
Registration Statements and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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 not misleading; provided that
no representation or warranty is made as to information contained in or
omitted from the Registration Statements or the Prospectus in reliance
upon and in conformity with written information furnished to the
Company or
3
Deluxe through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in
Section 17) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and
are in good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification unless the
failure to be so qualified would render unenforceable any material
contracts entered into by it or subject it to any material liability or
disability, and have all corporate power and authority necessary to own
or hold their respective properties and to conduct the businesses in
which they are engaged; and none of the subsidiaries of the Company
(other than eFunds Corporation (the California subsidiary), Deluxe
Payment Protection Systems, Inc., Chex Systems, Inc. and iDLX
Corporation (collectively, the "Significant Subsidiaries")) is a
"significant subsidiary", as such term is defined in Rule 405 of the
Rules and Regulations.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and (except
as set forth in the Prospectus) are owned (except as required by the
laws of India) directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(f) The unissued shares of the Stock to be issued and sold by
the Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and
non-assessable; and the Stock will conform to the description thereof
contained in the Prospectus.
(g) The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of
4
their properties or assets; and except for the registration of the
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
(h) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company or Deluxe
and any person granting such person the right to require the Company or
Deluxe to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company or Deluxe to include such securities
in the securities registered pursuant to the Registration Statements or
in any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act.
(j) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statements or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
(l) Deloitte & Touche LLP, who have certified certain
financial statements of the Company, whose report appears in the
Prospectus and who have delivered the initial letter referred to in
Section 8(f) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations.
5
(m) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially
affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company
and its subsidiaries; and all material real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases (except where enforceability
is limited by laws relating to bankruptcy and general principles of
equity), with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(n) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the
Company has determined is reasonable for the conduct of their
respective businesses and the value of their respective properties.
(o) Except as disclosed in the Prospectus, the Company and
each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights
and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective
businesses will conflict with, and have not received any notice of any
claim of conflict with, any such rights of others that would be
reasonably expected to have a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole or on the ability of the parties to consummate the
transactions contemplated hereby (a "Material Adverse Effect").
(p) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property or asset of the Company or any of its subsidiaries is the
subject which would be reasonably expected to have a Material Adverse
Effect; and to the best of the Company's and Deluxe's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to
either of the Registration Statements by the Securities Act or by the
Rules and Regulations which have not been described in the Prospectus
or filed as exhibits to either of the Registration Statements or
incorporated therein by reference as permitted by the Rules and
Regulations.
(r) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the
6
Company on the other hand, which is required to be described in the
Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company or Deluxe, is imminent which
might be expected to have a Material Adverse Effect.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension 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 in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(u) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof
and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which
has had (nor does the Company or Deluxe have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, might have) a Material Adverse Effect.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material
respect, and no event has occurred which,
7
with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or condition
contained in any material 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 properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it or
its properties or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its properties or
assets or to the conduct of its business.
(y) To the knowledge of the officers of the Company, neither
the Company nor any of its subsidiaries, nor any director, officer,
agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(z) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the Company
or Deluxe, any of their predecessors in interest) at, upon or from any
of the properties now or previously owned or leased by the Company or
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not be reasonably likely to have, singularly or in
the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries
or with respect to which the Company or any of its subsidiaries or
Deluxe have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or
would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections,
escapes, dumpings and releases, a Material Adverse Effect; and the
terms "hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect to
environmental protection.
(aa) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission thereunder.
8
2. Representations, Warranties and Agreements of Deluxe. Deluxe
represents, warrants and agrees that:
(a) Deluxe has been duly incorporated and is validly existing
as a corporation in good standing under Minnesota law.
(b) All issued shares of capital stock of the Company are
owned directly or indirectly by Deluxe, free and clear of all liens,
encumbrances, equities or claims.
(c) This Agreement has been duly authorized, executed and
delivered by Deluxe; the execution, delivery and performance of this
Agreement by Deluxe and the consummation by Deluxe of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Deluxe or any of its subsidiaries is a
party or by which Deluxe or any of its subsidiaries is bound or to
which any of the property or assets of Deluxe or any of its
subsidiaries is subject, nor will such actions result in any violation
of the charter or by-laws of Deluxe or any of its subsidiaries or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over Deluxe or any of their property
or assets; and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by Deluxe and the
consummation by Deluxe of the transactions contemplated hereby.
(d) Deluxe has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the shares of the Stock.
(e) Deluxe is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which Deluxe would have any liability; Deluxe
has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue
Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for
which Deluxe would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
9
(f) Deluxe has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no tax deficiency has been
determined adversely to Deluxe or any of its subsidiaries which has had
(nor does Deluxe have any knowledge of any tax deficiency which, if
determined adversely to Deluxe or any of its subsidiaries, might have)
a Material Adverse Effect.
3. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 6,250,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 937,500 shares of Option Stock. Such option is granted solely for
the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set opposite the name of such Underwriters in
Schedule 1 hereto. The respective purchase obligations of each Underwriter with
respect to the Option Stock shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Stock other than in 100 share
amounts.
The price of both the Firm Stock and any Option Stock shall be $_____
per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
4. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus; provided, however, that no
Stock registered pursuant to the Rule 462(b) Registration Statement, if any,
shall be offered prior to the Effective Time thereof.
5. Delivery of and Payment for the Stock. Delivery of and payment for
the Firm Stock shall be made at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., New York City time,
on the fourth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer of immediately
available funds. Time shall be of the essence, and
10
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Firm Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, the Company shall make the
certificates representing the Firm Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement the option granted in Section may be exercised by written notice being
given to the Company by the Representatives. Such notice shall set forth the
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date.
On the Second Delivery Date, the Company shall deliver or cause to be delivered
the certificates representing the Option Stock to the Representatives for the
account of each Underwriter against payment to or upon the order of the Company
of the purchase price by wire transfer of immediately available funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names and
in such denominations as the Representatives shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the Second Delivery Date.
6. Further Agreements of the Company and Deluxe. Each of the Company
and, with respect to Section 6(a), 6(b), 6(c), 6(d), 6(e), 6(h), 6(i) and 6(j)
hereof, Deluxe, jointly and severally, agrees with each of the Underwriters.
(a) To prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and to file such
Rule 462(b) Registration Statement with the Commission on the date
hereof; to prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities
11
Act not later than 10:00 A.M., New York City time, on the day following
the execution and delivery of this Agreement; to make no further
amendment or any supplement to the Registration Statements or to the
Prospectus except as permitted herein; to advise the Representatives,
promptly after it receives notice thereof, of the time when any
amendment to either Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Representatives with copies thereof;
to advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statements or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representatives in New York
City such number of the following documents as the Representatives
shall reasonably request: (i) conformed copies of the Registration
Statements as originally filed with the Commission and each amendment
thereto (in each case excluding exhibits other than this Agreement and
the computation of per share earnings) and (ii) each Preliminary
Prospectus, the Prospectus (not later than 10:00 A.M., New York City
time, of the day following the execution and delivery of this
Agreement) and any amended or supplemented Prospectus (not later than
10:00 A.M., New York City time, on the day following the date of such
amendment or supplement); and, if the delivery of a prospectus is
required at any time after the Effective Time of the Primary
Registration Statement in connection with the offering or sale of the
Stock (or any other securities relating thereto) and if at such time
any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act,
to notify the Representatives and, upon their request, to prepare and
furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance;
12
(d) To file promptly with the Commission any amendment to the
Registration Statements or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission (i) any amendment to
either of the Registration Statements or supplement to the Prospectus
or (ii) any Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Representatives and
counsel for the Underwriters and obtain the consent of the
Representatives to the filing;
(f) As soon as practicable after the Effective Date of the
Primary Registration Statement, to make generally available to the
Company's security holders and to deliver to the Representatives an
earnings statement of the Company and its 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) For a period of five years following the Effective Date of
the Primary Registration Statement, to furnish to the Representatives
copies of all materials furnished by the Company to its shareholders
and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange
or automatic quotation system upon which the Common Stock may be listed
or quoted pursuant to requirements of or agreements with such exchange
or system or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions in
the United States and Canada as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Stock;
(i) For a period of 180 days from the date of the Prospectus,
not to, directly or indirectly (whether any transaction is to be
settled by delivery of Common Stock or other securities, in cash or
otherwise) offer for sale, sell or otherwise dispose of (or enter into
any transaction or device which is designed to, or could be expected
to, result in the disposition or purchase by any person at any time in
the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or substantially similar
securities (other than the Stock, shares of Common Stock distributed to
holders of Deluxe Common Stock pursuant to the exchange offer described
in the Prospectus and shares of Common Stock issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or under currently
outstanding options, warrants or rights), or sell or grant options,
rights or warrants with respect to any shares of Common Stock or
securities convertible into or
13
exchangeable for Common Stock or substantially similar securities,
other than the grant of options under option plans existing on the date
hereof, without the prior written consent of Xxxxxx Brothers Inc.; and
to cause each officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters,
in form and substance satisfactory to counsel for the Underwriters as
provided in Section 8(l) hereof, pursuant to which each such person
shall agree for a period of 180 days from the date of the Prospectus
not to, directly or indirectly (whether any transaction is to be
settled by delivery of Common Stock or other securities, in cash or
otherwise) (i) offer for sale, sell or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be
expected to, result in the disposition or purchase by any person at any
time in the future of) any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or substantially
similar securities or (ii) sell or grant options, rights or warrants
with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or substantially similar
securities, without the prior written consent of Xxxxxx Brothers Inc.
Notwithstanding the foregoing, the Company may issue shares of
Common Stock or securities convertible into or exchangeable for Common
Stock without the prior consent of Xxxxxx Brothers Inc. pursuant to an
agreement by the Company to purchase, acquire or effect the merger of
another entity into the Company if in connection therewith each initial
transferee of such Common Stock or securities convertible into Common
Stock executes and delivers to the Company an agreement stating that,
without the prior written consent of Xxxxxx Brothers Inc., such
transferee will not, directly or indirectly, (1) offer for sale, sell
or otherwise dispose of (or enter into any transaction or device which
is designed to, or could be expected to, result in the disposition or
purchase by any person at any time in the future of) any such shares of
Common Stock or securities convertible into or exchangeable for Common
Stock transferred to such person in connection with such purchase,
acquisition or merger, or (2) sell or grant options, rights or warrants
with respect to such shares of Common Stock or securities convertible
into or exchangeable for Common Stock or substantially similar
securities for a period of 180 days from the date of the Prospectus.
(j) Prior to the Effective Date of the Primary Registration
Statement, to apply for the listing of the Stock on the National Market
System and to use its best efforts to complete that listing, subject
only to official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus; and
(l) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission thereunder.
14
7. Expenses. The Company and Deluxe, jointly and severally, agree to
pay (a) the costs incident to the authorization, issuance, sale and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the preparation, printing and filing under the Securities Act of the
Registration Statements and any amendments and exhibits thereto; (c) the costs
of distributing the Registration Statements as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in each
case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (d) the costs
of reproducing and distributing this Agreement; (e) the costs of distributing
the terms of agreement relating to the organization of the underwriting
syndicate and selling group to the members thereof by mail, telex or other means
of communication; (f) the filing fees incident to securing any required review
by the National Association of Securities Dealers, Inc. of the terms of sale of
the Stock; (g) any applicable listing or other fees; (h) the fees and expenses
of qualifying the Stock under the securities laws of the several jurisdictions
as provided in Section 6(h) of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the Underwriters);
and (i) all other costs and expenses incident to the performance of the
obligations of the Company and Deluxe under this Agreement; provided that,
except as provided in this Section and in Section , the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their counsel,
any transfer taxes on the Stock which they may sell and the expenses of
advertising any offering of the Stock made by the Underwriters.
8. Conditions of Underwriters' Obligations. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company and Deluxe
contained herein, to the performance by the Company and Deluxe of their
respective obligations hereunder, and to each of the following additional terms
and conditions:
(a) The Rule 462(b) Registration Statement, if any, and the
Prospectus shall have been timely filed with the Commission in
accordance with Section ; no stop order suspending the effectiveness of
either of the Registration Statements or any part thereof shall have
been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in either of the
Registration Statements or the Prospectus or otherwise shall have been
complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that either of the
Registration Statements or the Prospectus or any amendment or
supplement thereto contains any untrue statement of a fact which, in
the opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Underwriters, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to made the statements therein not misleading.
(c) The Company and Deluxe shall have furnished to counsel for
the Underwriters all documents and information that they may reasonably
request to enable them to pass upon all corporate proceedings and other
legal matters incident to the
15
authorization, form and validity of this Agreement, the Registration
Statements and the Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby.
(d) Xxxxxx & Whitney LLP shall have furnished to the
Representatives their written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance satisfactory to the Representatives, to the effect that:
(i) The Company and each of its United States
subsidiaries have been duly incorporated and are validly
existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, and have all
corporate power and authority necessary to own or hold their
respective properties and conduct the businesses in which they
are engaged as described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the shares of Stock
being delivered on such Delivery Date) have been duly and
validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof
contained in the Prospectus; and the shares of capital stock
of each subsidiary of the Company registered as outstanding in
each Subsidiary's records have been duly and validly
authorized and issued and are fully paid, non-assessable and
(except as set forth in the Prospectus) are owned directly or
indirectly by the Company, and such counsel has no knowledge
of any liens, encumbrances, equities or claims upon the
capital stock of the subsidiaries;
(iii) The statements made in the Prospectus under the
caption "Description of Capital Stock", insofar as they
purport to constitute summaries of the terms of the Company's
Common Stock (including the Stock), constitute accurate
summaries of such Common Stock in all material respects.
(iv) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(v) The Company and each of its United States
subsidiaries have good and marketable title in fee simple to
all real property owned by them, in each case free and clear
of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially
affect the value of such property and do not materially
interfere with the use made and proposed to be made of such
property by the Company and its United States subsidiaries;
and all real property and buildings held under lease by the
Company and its United States subsidiaries
16
are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such
property and buildings by the Company and its United States
subsidiaries;
(vi) To such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property or
asset of the Company or any of its subsidiaries is the subject
which are required to be disclosed in the Prospectus;
(vii) The Primary Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Rule 462(b) Registration
Statement, if any, was filed with the Commission on the date
specified therein, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of either of the Registration Statements has
been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened by the
Commission;
(viii) The Registration Statements, as of their
respective Effective Dates, and the Prospectus, as of its
date, and any further amendments or supplements thereto, as of
their respective dates, made by the Company prior to such
Delivery Date (other than the financial statements and other
financial data contained therein, as to which such counsel
need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the
Rules and Regulations;
(ix) The statements made in the Prospectus under the
caption "Business -- Government Regulation," "Description of
Capital Stock" and "Agreements Between eFunds and Deluxe"
insofar as they purport to constitute summaries of the terms
of statutes, rules and regulations thereunder or contracts and
other documents constitute accurate summaries of the terms of
such statutes, rules and regulations, contracts and other
documents in all material respects;
(x) The statements contained in the Prospectus under
the caption "Certain United States Federal Income Tax
Consequences to Non-United States Holders", insofar as they
describe federal statutes, rules and regulations, constitute a
fair summary thereof;
(xi) To the best of such counsel's knowledge, there
are no contracts or other documents which are required to be
described in the Prospectus or filed as
17
exhibits to the Registration Statements by the Securities Act
or by the Rules and Regulations which have not been described
or filed as exhibits to the Registration Statements or
incorporated therein by reference as permitted by the Rules
and Regulations;
(xii) This Agreement has been duly authorized,
executed and delivered by the Company;
(xiii) The issue and sale of the shares of Stock
being delivered on such Delivery Date by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or
assets of the Company or any of its subsidiaries is subject,
nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets; and,
except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated hereby; and
(xiv) Except as described in the Prospectus, to such
counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the securities registered pursuant to the Registration
Statements or in any securities being registered pursuant to
any other registration statement filed by the Company under
the Securities Act.
In giving the opinion referred to in Section 8(d)(v), such counsel may
state that no examination of record titles for the purpose of such
opinion has been made, and that they are relying upon a general review
of the titles of the Company and its subsidiaries, upon opinions of
local counsel and abstracts, reports and policies of title companies
rendered or issued at or subsequent to the time of acquisition of such
property by the Company or its subsidiaries, upon opinions of counsel
to the lessors of such property and, in respect of
18
matters of fact, upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they believe
that both the Underwriters and they are justified in relying upon such
opinions, abstracts, reports, policies and certificates. Such counsel
shall also have furnished to the Representatives a written statement,
addressed to the Underwriters and dated such Delivery Date, in form and
substance satisfactory to the Representatives, to the effect that (x)
such counsel has acted as counsel to the Company and Deluxe in
connection with the preparation of the Registration Statements, and (y)
based on the foregoing, no facts have come to the attention of such
counsel which lead them to believe that the Registration Statements, as
of their respective Effective Dates, contained any untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus contains any untrue statement of a
material fact or omits 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. The
foregoing opinion and statement may be qualified by a statement to the
effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statements or the Prospectus except for the statements
made in the Prospectus under the captions "Description of Capital
Stock," "Business -- Government Regulation," "Description of Capital
Stock," "Agreements Between eFunds and Deluxe" and "Certain United
States Federal Income Tax Consequences to Non-U.S. Holders", insofar as
such statements relate to the Stock and concern legal matters.
(e) Xxxxxx & Witney LLP, counsel for Deluxe shall have
furnished to the Representatives their written opinion, addressed to
the Underwriters and dated the First Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) Deluxe has been duly incorporated and is validly
existing as a corporation in good standing under Minnesota
law; and
(ii) This Agreement has been duly authorized,
executed and delivered by Deluxe; the execution, delivery and
performance of this Agreement by Deluxe and the consummation
by Deluxe of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
statute, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such
counsel to which Deluxe or any of its subsidiaries is a party
or by which Deluxe or any of its subsidiaries is bound or to
which any of the property or assets of Deluxe or any of its
subsidiaries is subject, nor will such actions result in any
violation of the charter or by-laws of Deluxe or any of its
subsidiaries or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over Deluxe or any of its
subsidiaries or the property or assets of Deluxe or any of its
subsidiaries; and, except for the registration of the Stock
under the Securities Act and such consents, approvals,
authorizations,
19
registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by Deluxe and the
consummation of the transactions contemplated hereby;
(f) With respect to the letter of Deloitte & Touche LLP
delivered to the Representatives concurrently with the execution of
this Agreement (the "initial letter"), the Company shall have furnished
to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date
(i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes
or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more
than five days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set
forth in the initial letter.
(g) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board,
its President or a Vice President and its Chief Financial Officer
stating, as an officer of the Company, that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such
Delivery Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in
Section 8(a) have been fulfilled;
(ii) (A) Neither the Company nor any of its
subsidiaries has sustained since the date of the latest
audited financial statements included in the Prospectus any
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated
in the Prospectus or (B) since such date there has not been
any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting
the general affairs, management, financial position,
stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus; and
(iii) They have carefully examined the Registration
Statements and the Prospectus and, in their opinion (A) the
Registration Statements, as of their
20
respective Effective Dates, and the Prospectus, as of each of
the Effective Dates, did not include any untrue statement of a
material fact and did not omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective
Date of the Primary Registration Statement, no event has
occurred which should have been set forth in a supplement or
amendment to either of the Registration Statements or the
Prospectus.
(h) Deluxe shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer
stating, as an officer of Deluxe, that:
(i) The representations, warranties and agreements of
Deluxe in Section 2 are true and correct as of such Delivery
Date; Deluxe has complied with all its agreements contained
herein; and the conditions set forth in Section 8(a) have been
fulfilled; and
(ii) They have carefully examined the Registration
Statements and the Prospectus and, in their opinion (A) the
Registration Statements, as of their respective Effective
Dates, and the Prospectus, as of each of the Effective Dates,
did not include any untrue statement of a material fact and
did not omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date of the Primary
Registration Statement, no event has occurred which should
have been set forth in a supplement or amendment to either of
the Registration Statements or the Prospectus.
(i) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or
21
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the
Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(k) The National Market System shall have approved the Stock
for inclusion, subject only to official notice of issuance and evidence
of satisfactory distribution.
(l) The directors and executive officers of the Company listed
on Schedule 2 shall have entered into a written agreement in the form
of Annex A hereto (each such agreement, a "Lock-up Agreement"), and
executed originals of each Lock-up Agreement shall have been delivered
to the Representatives.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
for the Underwriters.
9. Indemnification and Contribution.
(a) The Company and Deluxe, jointly and severally, shall indemnify and
hold harmless each Underwriter, its officers and employees and each person, if
any, who controls any Underwriter within the meaning of the Securities Act, from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, either of the Registration Statements or the Prospectus, or in any
amendment or supplement thereto, (B) in any information provided to investors by
the Company in connection with the marketing of the offering of the Stock
("Marketing Information"), including any roadshow or investor presentations made
to investors by the Company (whether in person or electronically), or (C) in any
blue sky application or other document prepared or executed by the Company (or
based upon any written information furnished by the Company) specifically for
the purpose of qualifying any or all of the Stock under the securities laws of
any state or other jurisdiction (any such application, document or information
being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged
omission to state in any Preliminary
22
Prospectus, either of the Registration Statements or the Prospectus, or in any
amendment or supplement thereto, in any Marketing Information or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by any Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the Company and Deluxe shall not be liable in the
case of any matter covered by this clause (iii) to the extent that it is
determined in a final judgement by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such act or
failure to act undertaken or omitted to be taken by such Underwriter through its
gross negligence or wilful misconduct), and shall reimburse each Underwriter and
each such officer, employee and controlling person promptly upon demand for any
legal or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company and Deluxe shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, in any Marketing Information or in any Blue Sky
Application in reliance upon and in conformity with the written information
furnished to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein and described in Section 9 (e);
provided further, that the foregoing indemnity agreement with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter who it
shall be established failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the several Underwriters in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the Closing Date) to the person asserting any losses, claims, damages,
liabilities, and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and such Prospectus was required by law to
be delivered at or prior to the written confirmation of such sale to such
person. The foregoing indemnity agreement is in addition to any liability which
the Company and Deluxe may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter, provided, however, that the
foregoing indemnity supercedes any prior understanding with respect to this
offering.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and Deluxe, its officers and employees, each of its
directors and each person, if any, who controls the Company and Deluxe within
the meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company and Deluxe or any such director, officer, employee or controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, either of the
23
Registration Statements or the Prospectus, or in any amendment or supplement
thereto, (B) any Marketing Information or (C) in any Blue Sky Application or
(ii) the omission or alleged omission to state in any Preliminary Prospectus,
either of the Registration Statements or the Prospectus, or in any amendment or
supplement thereto, in any Marketing Information or in any Blue Sky Application
any material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with the written information furnished
to the Company or Deluxe through the Representatives by or on behalf of that
Underwriter specifically for inclusion therein and described in Section 9 (e),
and shall reimburse the Company, Deluxe and any such director, officer, employee
or controlling person for any legal or other expenses reasonably incurred by the
Company, Deluxe or any such director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company and Deluxe or any such director,
officer or controlling person, provided, however, that the foregoing indemnity
supercedes any prior understanding with respect to this offering.
(c) Promptly after receipt by an indemnified party under this Section 9
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 9 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 9. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company or Deluxe under this Section 9 if, in the reasonable
judgment of the Representatives, it is advisable for the Representatives and
those Underwriters, officers, employees and controlling persons to be jointly
represented by separate counsel because the Representatives shall have been
advised by counsel that there may be one or more legal defenses available to
them which are different from or additional to those available to Deluxe or the
Company, and in that event the fees and expenses of such separate counsel shall
be paid by the Company or Deluxe. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with
24
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with its written consent or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 9(a) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company
and Deluxe on the one hand and the Underwriters on the other from the offering
of the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and Deluxe on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and Deluxe, on the one hand and the Underwriters on the other with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement (before
deducting expenses) received by the Company and Deluxe, on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the shares of the Stock purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the shares of the
Stock under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. For purposes of the preceding two sentences, the net
proceeds deemed to be received by the Company shall be deemed to be also for the
benefit of Deluxe and information supplied by the Company shall also be deemed
to have been supplied by Deluxe. The Company, Deluxe and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 9(d) were to be 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 into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 9(d) shall be deemed to include, for purposes
of this Section 9(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9(d), no
25
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute as provided in this Section 9(d) are several in proportion to
their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm that the statements with respect
to the public offering of the Stock set forth on the cover page of, and under
the caption "Underwriting" in, the Prospectus are correct and constitute the
only information furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statements and the
Prospectus.
10. Directed Share Program.
It is understood that approximately 300,000 shares of the Firm Stock
("Directed Shares") will initially be reserved by the Underwriters for offer and
sale to certain directors and officers of the Company and other persons with
whom the Company has an established business relationship ("Directed Share
Participants") upon the terms and conditions set forth in the Prospectus and in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "Directed Share Program"). Under no circumstances
will any Underwriter be liable to the Company or to any Directed Share
Participant for any action taken or omitted to be taken in good faith in
connection with such Directed Share Program. To the extent that any Directed
Shares are not affirmatively reconfirmed for purchase by any Directed Share
Participant on or immediately after the date of this Agreement, such Directed
Shares may be offered to the public as part of the public offering contemplated
hereby.
The Company and Deluxe agree to pay all fees and disbursements incurred
by the Underwriters in connection with the Directed Share Program, including
counsel fees and any stamp duties or other taxes incurred by the Underwriters in
connection with the Directed Share Program.
In connection with the offer and sale of the Directed Shares, the
Company and Deluxe agree, promptly upon a request in writing, to indemnify and
hold harmless the Underwriters from and against any loss, claim, damage,
expense, liability or action which arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the approval of the Company or Deluxe for
distribution to Directed Share Participants in connection with the Directed
Share Program or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) arises out of the failure of any Directed Share Program
particpant to pay for and accept delivery (iii) of Directed Shares that the
26
Directed Share Participant agreed to purchase or is otherwise related to the
Directed Share Program, other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted directly from the bad faith or gross negligence of such Underwriter.
11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section . If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Stock to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Representatives
do not elect to purchase the shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Stock) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company or Deluxe, except that the Company and Deluxe will continue to be liable
for the payment of expenses to the extent set forth in Sections and 13. As used
in this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 11, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and Deluxe for damages caused by its
default. If other underwriters are obligated or agree to purchase the Stock of a
defaulting or withdrawing Underwriter, either the Representatives or the Company
may postpone the First Delivery Date for up to seven full business days in order
to effect any changes that in the opinion of counsel for the Company or counsel
for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
and Deluxe
27
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 8(i) or 8(j) shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
13. Reimbursement of Underwriters' Expenses. If the Company shall fail
to tender the Stock for delivery to the Underwriters for any reason permitted
under this Agreement, or (b) the Underwriters shall decline to purchase the
Stock for any reason permitted under this Agreement (including the termination
of this Agreement pursuant to Section 12), the Company and Deluxe shall
reimburse the Underwriters for the fees and expenses of their counsel and for
such other out-of-pocket expenses as shall have been incurred by them in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company and Deluxe shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 11 by
reason of the default of one or more Underwriters, neither the Company nor
Deluxe shall be obligated to reimburse any defaulting Underwriter on account of
those expenses.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Xxxxxx Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 000-000-0000);
(b) if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth
in the Primary Registration Statement, Attention: General Counsel (Fax:
000-000-0000);
(c) if to Deluxe, shall be delivered or sent by mail, telex or
facsimile transmission to General Counsel (Fax: 000-000-0000);
provided, however, that any notice to an Underwriter pursuant to Section 9(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
Deluxe shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by Xxxxxx Brothers Inc. on
behalf of the Representatives.
15. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company,
Deluxe and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
and Deluxe contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of each Underwriter and the person or
persons, if any, who control each Underwriter within the meaning of Section 15
of the Securities Act and (B) the indemnity agreement of the Underwriters
contained in Section 9(b) of this Agreement shall be deemed to be
28
for the benefit of directors, officers and employees of the Company and Deluxe
and any person controlling the Company and Deluxe within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations, warranties
and agreements of the Company, Deluxe and the Underwriters contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
17. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, "business day" means any day on which the New York
Stock Exchange, Inc. is open for trading and "subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
20. 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.
29
If the foregoing correctly sets forth the agreement among the Company,
Deluxe and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
eFUNDS CORPORATION
By
-------------------------------------
[Insert title of person executing
agreement]
DELUXE CORPORATION
By
-------------------------------------
[Insert title of person executing
agreement]
Accepted:
XXXXXX BROTHERS INC.
BEAR, XXXXXXX & CO. INC.
FIRST ALBANY CORPORATION
XXXX X. XXXXXXX & COMPANY, INCORPORATED
FIDELITY CAPITAL MARKETS, A DIVISION OF
NATIONAL FINANCIAL SERVICES CORPORATION
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By XXXXXX BROTHERS INC.
By
------------------------------
Authorized Representative
SCHEDULE 1
Number of
Underwriters Shares
------------ ---------
Xxxxxx Brothers Inc. .......................................
Bear, Xxxxxxx & Co. Inc. ...................................
First Albany Corporation ...................................
Xxxx X. Xxxxxxx & Company, Incorporated ....................
Fidelity Capital Markets, a division of
National Financial Services Corporation ..................
---------
Total .......................................................
=========
SCHEDULE 2
Name of Officers and Directors
------------------------------
Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxx
Xx. Xxxxxx Xxxxx
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxx III
Xxxx Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxx X. XxXxxxx
Xxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
ANNEX A
June __, 2000
Xxxxxx Brothers Inc.
Bear, Xxxxxxx & Co. Inc.
First Albany Corporation
Xxxx X. Xxxxxxx & Company, Incorporated
Fidelity Capital Markets, a division of
National Financial Services Corporation
c/x Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned have been informed that eFunds Corporation (the
"Company") proposes to issue 6,250,000 shares of its common stock (the
"Shares"). The undersigned have been informed that the Company has prepared a
preliminary prospectus regarding the shares and will enter into an underwriting
agreement with respect to the Shares (the "Underwriting Agreement") with Xxxxxx
Brothers Inc., Bear, Xxxxxxx & Co. Inc., First Albany Corporation, Xxxx X.
Xxxxxxx & Company, Incorporated and Fidelity Capital Markets, a division of
National Financial Services Corporation, as representatives on behalf of the
underwriters named in such Underwriting Agreement (the "Underwriters").
To facilitate the sale of the Shares to be purchased thereunder and in
consideration of the Underwriters entering into the Underwriting Agreement, the
undersigned hereby irrevocable confirms, covenants and agrees for the benefit of
the Company and the Underwriters and for a period of 180 days from the date
hereof, that the undersigned will not, directly or indirectly (whether any
transaction is to be settled by delivery of the Company's common stock or other
securities, in cash or otherwise) offer for sale, sell or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition or purchase by any person at any time in
the future of) any shares of the Company's common stock or securities
convertible into or exchangeable for the Company's common stock or substantially
similar securities or sell or grant options, rights or warrants with respect to
any shares of the Company's common stock or securities convertible into or
exchangeable for the Company's common stock or substantially similar securities,
without the prior written consent of Xxxxxx Brothers Inc.
Notwithstanding the immediately preceding paragraph, this agreement
shall not prohibit (a) a bona fide gift or gifts, provided that the undersigned
provides written notice of such gift or gifts to Xxxxxx Brothers Inc. and the
donee or donees thereof agree in writing to be bound by the restrictions set
forth herein; (b) transfers upon the death of the undersigned to his or her
executors, administrators, testamentary trustees, legatees or beneficiaries,
provided that, in each case, any such transferee shall be bound by the
provisions of this agreement and (c) transfers made by the undersigned to a
trust or custodianship the beneficiaries of which include the undersigned, his
or her
