Exhibit 1
5,900,000 Shares (1)
CONDOR TECHNOLOGY SOLUTIONS, INC.
Common Stock
UNDERWRITING AGREEMENT
December __, 1997
Xxxxx Xxxxx Xxxxxx & Company, LLC
Xxxxxx Xxxx LLC
As Representatives of the several Underwriters
c/x Xxxxx Xxxxx Xxxxxx & Company, LLC
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Gentlemen & Ladies:
Condor Technology Solutions, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 5,900,000 shares of its authorized but
unissued Common Stock, $.01 par value (the "Common Stock)(the "Firm Shares").
The Company proposes to grant to the Underwriters (as defined below) an
option to purchase up to 885,000 additional shares of Common Stock (the
"Optional Shares" and, with the Firm Shares, collectively, the "Shares").
The Common Stock is more fully described in the Registration Statement and
the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Shares by the several underwriters, for whom you are acting,
named in Schedule I hereto (collectively, the "Underwriters," which term
shall also include any underwriter purchasing Shares pursuant to Section 3(b)
hereof). You represent and warrant that you have been authorized by each of
the other Underwriters to enter into this Agreement on its behalf and to act
for it in the manner herein provided.
Section 1. Representations and Warranties of the Company. The
Company hereby represents and warrants to the several Underwriters as of the
date hereof and as of each Closing Date (as defined below) that:
(a) The Company and its subsidiaries set forth in the first column of
Schedule II hereto (the "Merger Subsidiaries") have entered into the
Agreements and Plans of Organization
-----------------------
(1) Plus an option to purchase up to 885,000 additional shares to cover
over-allotments.
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identified in the second column of Schedule II (the "Merger Agreements") with
each of the respective companies listed in the third column of Schedule II
(each a "Founding Company" and, together, the "Founding Companies") pursuant
to which each Merger Subsidiary will be merged with and into one or more
Founding Companies (each such transaction, a "Merger" and, collectively, the
"Mergers") simultaneously with the closing of the sale of the Shares. The
Founding Companies will be the surviving corporations following the Mergers,
and will by virtue of the Mergers become wholly owned subsidiaries of the
Company simultaneously with the closing of the sale of the Shares. For the
purposes of this Agreement, unless the context expressly otherwise requires,
references to "the Company and its subsidiaries, taken as a whole" shall be
deemed to include the Founding Companies as if the Mergers had already been
completed.
(b) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-37179),
including the related preliminary prospectus, for the registration under the
Securities Act of 1933, as amended (the "Securities Act") of the Shares.
Copies of such registration statement and of each amendment thereto, if any,
including the related preliminary prospectus (meeting the requirements of
Rule 430A of the rules and regulations of the Commission (the "Rules and
Regulations")) heretofore filed by the Company with the Commission have been
delivered to you.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement, including all exhibits and pro forma and
historical financial statements and all information omitted therefrom in
reliance upon Rule 430A and contained in the Prospectus referred to below, in
the form in which it became effective, and any registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations with respect to the
shares (a "Rule 462(b) registration statement"), and, in the event of any
amendment thereto after the effective date of such registration statement
(the "Effective Date"), shall also mean (from and after the effectiveness of
such amendment) such registration statement as so amended (including any Rule
462(b) registration statement). The term "Prospectus" as used in this
Agreement shall mean the prospectus relating to the Shares first filed with
the Commission pursuant to Rule 424(b) and Rule 430A (or if no such filing is
required, as included in the Registration Statement) and, in the event of any
supplement or amendment to such prospectus after the Effective Date, shall
also mean (from and after the filing with the Commission of such supplement
or the effectiveness of such amendment) such prospectus as so supplemented or
amended. The term "Preliminary Prospectus" as used in this Agreement shall
mean each preliminary prospectus included in such registration statement
prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, no stop order suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus is in effect and no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission. No post-effective amendment to the
Registration Statement has been filed as of the date of this Agreement. The
Company has caused to be delivered to you copies of each Preliminary
Prospectus and has consented to the use of such copies for the purposes
permitted by the Securities Act.
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(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of Delaware, has, and after
giving effect to the Mergers will have, the full corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus and as being
conducted, and is, and after giving effect to the Mergers will be, duly
qualified as a foreign corporation and in good standing in all jurisdictions
in which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, business prospects, properties, condition (financial or otherwise)
or results of operations of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect")).
(d) The Company does not own or control, directly or indirectly,
any corporation, association or other entity, other than the Merger
Subsidiaries. Each of the Merger Subsidiaries has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus. None of such Merger Subsidiaries qualifies as a "significant
subsidiary" within the meaning of Rule 1-02 of S-X promulgated by the
Commission; all of the issued shares of capital stock of each Merger
Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims. Pursuant to the Merger
Agreements, each of the Merger Subsidiaries will merge with and into a
respective Founding Company and, upon consummation of the Mergers, each of
the Merger Subsidiaries will cease to exist as a separate entity and the
Founding Companies will be the only subsidiaries of the Company.
(e) Each of the Founding Companies has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has, and after giving effect to the
Mergers will have, the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is, and after
giving effect to the Mergers will be, duly qualified to transact business and
in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would
not have a Material Adverse Effect; all of the issued shares of capital stock
of each Founding Company prior to its Merger have been duly and validly
authorized and issued, are fully paid and non-assessable, and upon
consummation of the Mergers, all of the shares of capital stock of each
Founding Company will be duly and validly authorized and issued, fully paid
and nonassessable and owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(f) The shares of capital stock of the Company to be issued
pursuant to the Mergers have been duly authorized and, when issued pursuant
to the terms of the Merger Agreements, will be validly issued, fully paid and
non-assessable and will not be subject to any preemptive or similar rights.
The shares of Common Stock to be issued pursuant to the Merger
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Agreements, when so issued, will have been issued in compliance with the
Securities Act, in transactions which will be exempt from the registration
requirements of Section 5 of the Securities Act.
(g) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company, the Merger
Subsidiaries and the Founding Companies have not suffered a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of business,
neither the Company, the Merger Subsidiaries nor the Founding Companies has
entered into any material transaction not referred to in the Registration
Statement and the Prospectus.
(h) The Registration Statement and the Prospectus comply, and on
the Closing Date (as hereinafter defined) and any later date on which
Optional Shares are to be purchased, the Prospectus will comply, in all
material respects, with the provisions of the Securities Act and the Rules
and Regulations thereunder; on the Effective Date, the Registration Statement
did not contain any untrue statement of a material fact as to the Company or
any of the Founding Companies and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
with regard to each such company therein not misleading; and, on the
Effective Date the Prospectus did not and, on the Closing Date and any later
date on which Optional Shares are to be purchased, will not contain any
untrue statement of a material fact regarding the Company or any Founding
Company or omit to state any material fact necessary in order to make the
statements therein regarding any such company, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties in this subparagraph (h)
shall apply to statements in, or omissions from, the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
herein or otherwise furnished in writing to the Company by or on behalf of
the Underwriters for use in the Registration Statement or the Prospectus.
(i) The Company has authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus. The issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities. Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company and of the Founding Companies and the
related notes thereto included in the Prospectus, neither the Company, any
Merger Subsidiary nor any Founding Company has any outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of
the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required by the Securities Act and the Rules and Regulations to
be shown with respect to such plans, arrangements, options and rights.
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(j) Prior to the Closing Date, the Shares to be issued and sold by
the Company will be authorized for listing on the Nasdaq National Market upon
official notice of issuance without any waivers of listing requirements.
(k) The Shares will be, when issued and sold to the Underwriters as
provided herein, validly issued, fully paid and nonassessable and conform to
the description thereof in the Prospectus. No further approval or authority
of the stockholders or the Board of Directors of the Company will be required
for the issuance and sale of the Shares to be sold by the Company as
contemplated herein. The Shares will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest, and will
conform to the description thereof contained in the Prospectus. No preemptive
right, co-sale right, registration right, right of first refusal or other
similar right to subscribe for or purchase securities of the Company exists
with respect to the issuance and sale of the Shares by the Company pursuant
to the Merger Agreements or this Agreement. No stockholder of the Company or
of any Founding Company has any right which has not been waived to require
the Company to register the sale of any shares owned by such stockholder
under the Securities Act in the public offering contemplated by this
Agreement.
(l) The Company has full corporate power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to those
provisions relating to indemnity or contribution for liabilities arising
under federal and state securities laws. The making and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby (i) will not violate any provisions of the respective
charter, bylaws or other organizational documents of the Company, the Merger
Subsidiaries or the Founding Companies; and (ii) will not conflict with,
result in a material breach or violation of, or constitute, either by itself
or upon notice or the passage of time or both, a material default under (A)
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company, the Merger Subsidiaries or
any of the Founding Companies is a party or by which the Company, the Merger
Subsidiaries or any of the Founding Companies or any of their respective
properties may be bound or affected, or (B) any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory
body, administrative agency or other governmental body applicable to the
Company, any Merger Subsidiary, any Founding Company or any of their
respective properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body
that has not already been obtained is required for the execution and delivery
of this Agreement or the consummation of the transactions contemplated by
this Agreement, except for compliance with the Securities Act, the Blue Sky
laws applicable to the public offering of the Common Shares by the several
Underwriters and the clearance of such offering with the National Association
of Securities Dealers, Inc. ("NASD").
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(m) The making and performance by the Company, the Merger
Subsidiaries and the Founding Companies of the Merger Agreements and the
consummation of the transactions contemplated thereby (i) will not violate
any provisions of the respective charter, bylaws or other organizational
documents of the Company, the Merger Subsidiaries or the Founding Companies
and (ii) will not conflict with, result in a material breach or violation of,
or constitute, either by itself or upon notice or the passage of time or
both, a material default under (A) any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which the
Company, the Merger Subsidiaries or the Founding Companies is a party or by
which the Company, the Merger Subsidiaries or the Founding Companies or any
of their respective properties may be bound or affected, or (B) any statute
or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental
body applicable to the Company, the Merger Subsidiaries or any of their
respective properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body
that has not already been obtained is required for the execution and delivery
of the Merger Agreements or the consummation of the transactions contemplated
thereby, other than the filing with applicable state authorities of
certificates of merger or similar documents required under relevant state
laws to effect the consummation of the Mergers.
(n) The pro forma combined financial statements of the Company and
the historical financial statements of each of the Company and of the
Founding Companies and the related notes thereto included in the Registration
Statement and the Prospectus present fairly in all material respects the pro
forma combined or historical financial position of the Company and each of
the Founding Companies, as the case may be, as of the respective dates of
such financial statements and schedules, and the results of their operations
and their cash flows for the respective periods covered thereby. Such
statements, schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods specified, as certified by the respective independent
accountants whose reports are included in the Prospectus. The pro forma
combined financial information , and the related notes thereto included in
the Registration Statement and the Prospectus has been prepared in accordance
with the applicable requirements of the Securities Act and are based upon
good faith estimates and assumptions believed by the Company. No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the
Prospectus under the captions "Capitalization" and "Selected Consolidated
Financial Information" fairly present the information set forth therein on
the basis stated in the Registration Statement.
(o) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets
is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The representations and warranties given by
the Company and its officers to its
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independent public accountants for the purpose of supporting the letters
referred to in Section 9(f) hereof are true and correct.
(p) Price Waterhouse LLP which has certified certain financial
statements of the Company and certain Founding Companies, Deloitte & Touche
LLP which has certified the financial statements of Management Support
Technology Corporation and Coopers & Xxxxxxx L.L.P., which has certified the
financial statements of Federal Computer Corporation, are and, during the
periods covered by their reports were, independent public accountants as
required by the Securities Act.
(q) Neither the Company, any Merger Subsidiary nor any Founding
Company is (i) in violation or default of any provision of its respective
charter, bylaws or other organizational documents; or (ii) in a material
breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it
or any of its properties are bound; and there does not exist any state of
facts which, with notice or lapse of time or both would constitute such a
breach or default on the part of the Company, the Merger Companies or the
Founding Companies, taken as a whole.
(r) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described or filed as required. The contracts so
described in the Prospectus are in full force and effect on the date hereof.
(s) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or threatened to which the
Company, the Merger Subsidiaries or any Founding Company is or is threatened
to be made a party or of which property owned or leased by any of such
companies is or is threatened to be made the subject, which actions, suits or
proceedings could, individually or in the aggregate, prevent or adversely
affect the transactions contemplated by this Agreement or result in a
Material Adverse Effect; and no labor disturbance by the employees of the
Company or any of the Founding Companies exists or is imminent which could
result in a Material Adverse Effect. Neither the Company nor any of the
Founding Companies is a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body. Except as disclosed in the
Prospectus, there are no material legal or governmental actions, suits or
proceedings pending or, to the Company's knowledge, threatened against any
executive officers or directors of the Company.
(t) The Company or the applicable Founding Company has good and
marketable title to all the properties and assets reflected as owned in the
financial statements hereinabove described (or elsewhere in the Prospectus),
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such financial statements (or
elsewhere in the Prospectus); or (ii) those which are not material in amount
to the Company or the applicable Founding Company, and do not adversely
affect the use made and proposed to be made of such property by the Company
or the Founding Companies. The Company or the applicable
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Founding Company holds its leased properties under valid and binding leases.
Except as disclosed in the Prospectus, the Company and the Founding Companies
collectively own or lease all such properties as are necessary to their
operations as now conducted or as proposed to be conducted.
(u) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) neither the Company, the
Merger Subsidiaries nor any Founding Company has (A) incurred any liabilities
or obligations, indirect, direct or contingent, or (B) entered into any oral
or written agreement or other transaction, which in the case of (A) or (B) is
not in the ordinary course of business; (ii) neither the Company, the Merger
Subsidiaries nor any Founding Company has sustained any material loss or
interference with their respective businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) neither the Company, the Merger Subsidiaries nor any Founding Company
has paid or declared any dividends or other distributions with respect to
their respective capital stock and the Company, the Merger Subsidiaries and
the Founding Companies are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any
change in the capital stock of the Company, any Merge Subsidiary or any
Founding Company (other than upon the sale of the Shares hereunder or upon
the exercise of any options or warrants disclosed in the Prospectus); (v)
there has not been any material increase in the short- or long-term debt of
the Company, the Merger Subsidiaries and the Founding Companies; and (vi)
there has not been any material adverse change or any development involving
or which may reasonably be expected to involve a prospective material adverse
change, in the business, business prospects, condition (financial or
otherwise), properties, or results of operations of the Company or the
Founding Companies.
(v) The Company is and the Founding Companies are conducting
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which they are conducting business, except where the failure
to be so in compliance would not have a Material Adverse Effect.
(w) The Company, the Merger Subsidiaries and the Founding Companies
have filed all necessary federal, state and foreign income and franchise tax
returns, and all such tax returns are complete and correct in all material
respects, and the Company and the Founding Companies have not failed to pay
any taxes which were payable pursuant to said returns or any assessments with
respect thereto. The Company has no knowledge of any tax deficiency which has
been or is likely to be threatened or asserted against the Company, the
Merger Subsidiaries or any Founding Company.
(x) The Company has not distributed, and will not distribute prior
to the later to occur of (i) completion of the distribution of the Shares, or
(ii) the expiration of any time period within which a dealer is required
under the Securities Act to deliver a prospectus relating to the Shares, any
offering material in connection with the offering and sale of the Shares
other than the Prospectus, the Registration Statement and any other materials
permitted by the Securities Act and consented to by the Underwriters.
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(y) Each of the Company and the Founding Companies maintains
insurance of the types and in the amounts generally deemed adequate for their
business, including, but not limited to, directors' and officers' insurance,
insurance covering real and personal property owned or leased by the Company
and the Founding Companies against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. The Company has not been refused any
insurance coverage sought or applied for, and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not constitute a Material Adverse Effect.
(z) Neither the Company nor any Founding Company nor, to the best
of the Company's knowledge, any of their respective employees or agents has
at any time during the last five years (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any foreign,
federal or state governmental officer or official or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(aa) The Company has not, and to the Company's knowledge, none of the
Founding Companies have, taken nor will take, directly or indirectly, any
action designed to or that might be reasonably expected to, cause or result
in stabilization or manipulation of the price of the Common Stock in
contravention of the provisions of the Commission's Regulation M.
(bb) The Company has caused (i) each of its executive officers and
directors as set forth in the Prospectus; (ii) each holder of the outstanding
Common Stock (including shares issuable upon the exercise or conversion of
any option, warrant or other security); and (iii) each person expected to
become a director or executive officer of the Company, to furnish to the
Underwriters an agreement in form and substance satisfactory to Xxxxx Xxxxx
Xxxxxx & Company, LLC ("VBW") pursuant to which each such party has agreed
that during the period of one year after the date the Registration Statement
becomes effective (the "Lock-Up Period"), without the prior written consent
of VBW, such party will not (A) offer, sell, contract to sell, make any short
sale (including, without limitation, short sales against the box), pledge or
otherwise dispose of, directly or indirectly, any shares of Common Stock,
options to acquire Common Stock or securities convertible into or
exchangeable or exercisable for, or any other rights to purchase or acquire,
Common Stock (including, without limitation, Common Stock that may be deemed
to be beneficially owned in accordance with the Rules and Regulations) other
than the exercise or conversion of options, warrants or convertible
securities outstanding and held by such person prior to the date hereof; or
(B) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences or ownership of Common Stock, whether
any such transaction described in (A) or (B) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise
provided, however, that bona fide gift transactions and transfers which will
not result in any change in beneficial ownership may be permitted if the
transferee enters into a lock-up agreement in substantially the same form
covering the remainder of the Lock-Up Period.
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(cc) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba.
(dd) Except as specifically disclosed in the Prospectus, the Company and
the Founding Companies have sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals and governmental authorizations to
conduct their respective businesses as now conducted; the expiration of any
trademarks, trade names, patent rights, copyrights, licenses, approvals or
governmental authorizations would not have a Material Adverse Effect; the
Company has no knowledge of any infringement by the Company or any Founding
Company of trademarks, trade name rights, patent rights, copyrights,
licenses, trade secret or other similar rights of others; and no claims have
been made or are threatened against the Company or any Founding Company
regarding trademark, trade name, patent, copyright, license, trade secret or
other infringement which could have a Material Adverse Effect.
(ee) The Company is not, and after giving effect to the Mergers and the
offering and sale of the Shares and the application of the proceeds thereof
as described in the Prospectus, will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
Section 2. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and
sell 5,900,000 of the Firm Shares to the several Underwriters and each of the
Underwriters agrees to purchase from the Company the respective aggregate
number of Firm Shares set forth opposite its name in Schedule I. The price at
which such Firm Shares shall be sold by the Company and purchased by the
several Underwriters shall be $___ per share. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 2, the agreement of each Underwriter
is to purchase only the respective number of shares of the Firm Shares
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 9 or 10 hereof) to purchase
and pay for the number of Shares agreed to be purchased by such Underwriter
or Underwriters, the Company shall immediately give notice thereof to you,
and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, all or any part of Shares which such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such
shares and portion, the number of Shares which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares
and portion which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not
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be obligated to purchase the portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such Shares
exceeds 10% of the total number of Shares which all Underwriters agreed to
purchase hereunder. If the total number of Shares which the defaulting
Underwriter or Underwriters agreed to purchase shall not be purchased or
absorbed in accordance with the two preceding sentences, the Company shall
have the right, within 24 hours next succeeding the 24-hour period above
referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such Shares and portion on the terms
herein set forth. In any such case, either you or the Company shall have the
right to postpone the Closing Date determined as provided in Section 4 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to Section 4 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company
shall make arrangements within the 24-hour periods stated above for the
purchase of all of the Shares which the defaulting Underwriter or
Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the
Company to any non-defaulting Underwriter and without any liability on the
part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter
under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to 885,000 Optional Shares from the Company at
the same price per share as the Underwriters shall pay for the Firm Shares.
Said option may be exercised only to cover over-allotments in the sale of the
Firm Shares by the Underwriters and may be exercised in whole or in part at
any time or before the 30th day after the date of this Agreement upon written
or telegraphic notice by you to the Company setting forth the aggregate
number of Optional Shares as to which the several Underwriters are exercising
the option. Delivery of certificates for the Optional Shares, and payment
therefor, shall be made as provided in Section 4 hereof. The number of
Optional Shares to be purchased by each Underwriter shall be the same
percentage of the total number of Optional Shares to be purchased by the
several Underwriters as such Underwriter is purchasing of the Firm Shares, as
adjusted by you in such manner as you deem advisable to avoid fractional
shares.
Section 3. Offering by Underwriters.
(a) The terms of the initial public offering by the Underwriters of the
Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the
concessions and discounts to dealers as they may determine.
(b) The information (insofar as such information relates to the
Underwriters) set forth in the last paragraph on the front cover page and
under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Shares constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration
11
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf
of the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
Section 4. Delivery of and Payment for the Shares.
(a) Delivery of certificates for the Firm Shares and the Optional Shares
(if the option granted by Section 2(c) hereof shall have been exercised not
later than 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date), and payment therefor, shall be made at the
office of Xxxxxx, Xxxxx & Xxxxxxx LLP at 7:00 a.m., San Francisco time, on
the fourth business day after the date of this Agreement, or at such time on
such other day not later than seven full business days after such fourth
business day, as shall be agreed upon in writing by the Company and you. The
date and hour of such delivery and payment (which may be postponed as
provided in Section 2(b) hereof) is herein called the "Closing Date."
(b) If the option granted by Section 2(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding
the Closing Date, delivery of certificates for the shares of Optional Shares,
and payment therefor, shall be made at the office of Xxxxxx, Xxxxx & Bockius
at 7:00 a.m., San Francisco time, on the third business day after the
exercise of such option.
(c) Payment for the Shares shall be made to the Company or its order by
(i) one or more certified or official bank check or checks in next-day funds
(and the Company agrees not to deposit any such check in the bank on which
drawn until the day following the date of its delivery to the Company or the
Custodian, as the case may be) or (ii) federal funds wire transfer. Such
payment shall be made upon delivery of certificates for the shares to you for
the respective accounts of the several Underwriters (including without
limitation by "full-fast" electronic transfer by Depository Trust Company)
against receipt therefor signed by you. Certificates for the Shares to be
delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Firm Shares, and at least one business day prior
to the purchase thereof, in the case of the Optional Shares. Such
certificates will be made available to the Underwriters for inspection,
checking and packaging at the offices of agent of VBW's clearing agent, Bear
Xxxxxxx Securities Corp., on the business day prior to the Closing Date or, in
the case of the Optional Shares, by 3:00 p.m., New York time, on the business
day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later date on which Optional
Shares are purchased for the account of such Underwriter. Any such payment by
you shall not relieve such Underwriter from any of its obligations hereunder.
Section 5. Covenants of the Company. The Company covenants and agrees
as follows:
12
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on Rule
430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Securities Act or
the Rules and Regulations.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, (ii)
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement, (iii) the institution or notice of intended
institution of any action or proceeding for that purpose, (iv) the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction, or (v) the receipt
by it of notice of the initiation or threatening of any proceeding for such
purpose. The Company will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be
issued, to obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together
with, in each case, all exhibits thereto unless previously furnished to you)
and will also deliver to you, for distribution to the Underwriters, a
sufficient number of additional conformed copies of each of the foregoing
(but without exhibits) so that one copy of each may be distributed to each
Underwriter; (ii) as promptly as possible deliver to you and send to the
several Underwriters, at such office or offices as you may designate, as many
copies of the Prospectus as you may reasonably request; and (iii) thereafter
from time to time during the period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, likewise send to the
Underwriters as many additional copies of the Prospectus and as many copies
of any supplement to the Prospectus and of any amended prospectus, filed by
the Company with the Commission, as you may reasonably request for the
purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser of the Shares, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended prospectus so that
the Prospectus as so supplemented or amended will not contain 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
existing at the time such Prospectus is delivered to such purchaser, not
misleading. If, after the initial public offering of the Shares by the
Underwriters and during such
13
period, the Underwriters shall propose to vary the terms of offering thereof
by reason of changes in general market conditions or otherwise, you will
advise the Company in writing of the proposed variation, and, if in the
opinion either of counsel for the Company or of counsel for the Underwriters
such proposed variation requires that the Prospectus be supplemented or
amended, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus setting forth such
variation. The Company authorizes the Underwriters and all dealers to whom
any of the Shares may be sold by the several Underwriters to use the
Prospectus, as from time to time amended or supplemented, in connection with
the sale of the Shares in accordance with the applicable provisions of the
Securities Act and the applicable Rules and Regulations thereunder for such
period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Shares for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, in keeping such qualifications in good standing under said securities
or blue sky laws; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications in effect
for so long a period as you may reasonably request for distribution of the
Shares.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders
of the Company and of all information, documents and reports filed with the
Commission.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its security holders an earnings
statement in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.
(i) For a period of one year commencing with the date hereof, the
Company agrees, at the Company's expense, to cause the Company's regularly
engaged independent certified public accountants to review (but not audit)
the Company's financial statements in accordance with the procedures
specified by the American Institute of Certified Public Accountants for a
review of interim financial information as described in Statement on Auditing
Standards No. 71 "Interim Financial Information" for each of the three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's Quarterly Report on Form 10-Q with the Commission and
the mailing of quarterly financial information to stockholders of the Company.
14
(j) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus; (ii) the furnishing to the Underwriters and
the persons designated by them of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this Section 5 to be so
furnished; (iii) the printing of this Agreement and related documents
delivered to the Underwriters; (iv) the preparation, printing and filing of
all supplements and amendments to the Prospectus referred to in paragraph (d)
of this Section 5, (v) the furnishing to you and the Underwriters of the
reports and information referred to in paragraph (g) of this Section 5; and
(vi) the printing and issuance of stock certificates, including the transfer
agent's fees.
(k) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including counsel
fees and disbursements and cost of printing memoranda for the Underwriters)
paid by or for the account of the Underwriters or their counsel in qualifying
the Shares under state securities or blue sky laws and in the review of the
offering by the NASD.
(l) The provisions of paragraphs (j) and (k) of this Section are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Company hereby agrees to pay and shall not affect any
agreement which the Company may make, or may have made, with any other party
for the sharing of any such expenses and costs.
(m) The Company hereby agrees that, without the prior written consent of
VBW, the Company will not, for a period of one year following the date the
Registration Statement becomes effective, (i) offer, sell, contract to sell,
make any short sale (including, without limitation, short sales against the
box), pledge or otherwise dispose of, directly or indirectly, any shares of
Common Stock or any options to acquire shares of Common Stock, options to
acquire Common Stock or securities convertible into or exchangeable or
exercisable for or any other rights to purchase or acquire Common Stock
(including, without limitation, Common Stock that may be deemed to be
beneficially owned in accordance with the Rules and Regulations) other than
the exercise or conversion of options, warrants or convertible securities
outstanding and held by such person prior to the date hereof; or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of
the economic consequences or ownership of Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise;
provided, however, that bona fide gift transactions and transfers which will
not result in any change in beneficial ownership may be permitted if the
transferee enters into a lock-up agreement in substantially the same form
covering the remainder of the Lock-Up Period. The foregoing sentence shall
not apply to (A) the Shares to be sold to the Underwriters pursuant to this
Agreement; (B) shares of Common Stock issued by the Company upon the exercise
of options granted prior to the date hereof under the option plans of the
Company (the "Option Plans", all as described in footnote (__) to the table
under the caption "Capitalization" in the Preliminary Prospectus; and (C)
options to purchase Common Stock granted after the date
15
hereof under the Option Plans, provided that such options by their terms are
not exercisable until after the Lock-Up Period.
(n) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the shares has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication
or event.
Section 6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages or liabilities, joint or several,
to which such indemnified parties or any of them may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the common law or otherwise, and the agrees to reimburse
each such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties,
in each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus
or the Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that (1) the
indemnity agreements of the Company contained in this paragraph (a) shall not
apply to any such losses, claims, damages, liabilities or expenses if such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to
the Company by or on behalf of any Underwriter for use in any Preliminary
Prospectus or the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto, and (2) the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages, liabilities or expenses purchased
the Shares which are the subject thereof (or to the benefit of any person
controlling such Underwriter) if at or prior to the written confirmation of
the sale of such Shares a
16
copy of the Prospectus (or the Prospectus as amended or supplemented) was not
sent or delivered to such person and the untrue statement or omission of a
material fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented) unless the failure
is the result of noncompliance by the Company with paragraph (c) of Section 5
hereof. The indemnity agreements of the Company contained in this paragraph
(a) and the representations and warranties of the Company contained in
Section 2 hereof shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of
Section 15 of the Securities Act, from and against any and all losses,
claims, damages or liabilities, joint or several, to which such indemnified
parties or any of them may become subject under the Securities Act, the
Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as
part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement) or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished
in writing to the Company by or on behalf of such indemnifying Underwriter
for use in the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto. The indemnity agreement of each Underwriter
contained in this paragraph (b) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the
shares.
(c) Each party indemnified under the provision of paragraphs (a) and (b)
of this Section 6 agrees that, upon the service of a summons or other initial
legal process upon it in any action or suit instituted against it or upon its
receipt of written notification of the commencement of any investigation or
inquiry of, or proceeding against, it in respect of which indemnity may be
sought on account of any indemnity agreement contained in such paragraphs, it
will promptly give written notice (the "Notice") of such service or
notification to the party or parties from whom
17
indemnification may be sought hereunder. No indemnification provided for in
such paragraphs shall be available to any party who shall fail so to give the
Notice if the party to whom such Notice was not given was unaware of the
action, suit, investigation, inquiry or proceeding to which the Notice would
have related and was prejudiced by the failure to give the Notice, but the
omission so to notify such indemnifying party or parties of any such service
or notification shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution
or otherwise than on account of such indemnity agreement. Any indemnifying
party shall be entitled at its own expense to participate in the defense of
any action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense
of such action, suit, investigation, inquiry or proceeding, in which event
such defense shall be conducted, at the expense of the indemnifying party or
parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided,
however, that (i) if the indemnified party or parties reasonably determine
that there may be a conflict between the positions of the indemnifying party
or parties and of the indemnified party or parties in conducting the defense
of such action, suit, investigation, inquiry or proceeding or that there may
be legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then counsel for the indemnified party or parties shall be entitled to
conduct the defense to the extent reasonably determined by such counsel to be
necessary to protect the interests of the indemnified party or parties and
(ii) in any event, the indemnified party or parties shall be entitled to have
counsel chosen by such indemnified party or parties participate in, but not
conduct, the defense. If, within a reasonable time after receipt of the
Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 6 for any legal or
other expenses subsequently incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation, inquiry or
proceeding, except that (A) the indemnifying party or parties shall bear the
legal and other expenses incurred in connection with the conduct of the
defense as referred to in clause (i) of the proviso to the preceding sentence
and (B) the indemnifying party or parties shall bear such other expenses as
it or they have authorized to be incurred by the indemnified party or
parties. If, within a reasonable time after receipt of the Notice, no Notice
of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party
or parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 6 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or
(b) of this Section 6, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6 (i) in such
proportion as is appropriate to reflect the relative benefits received by
each indemnifying party from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such
18
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each
indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares
received by the Company and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Shares. Relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (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 in the first sentence of
this paragraph (d). The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities, or actions in respect thereof,
referred to in the first sentence of this paragraph (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigation, preparing to defend or defending
against any action or claim which is the subject of this paragraph (d).
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this paragraph (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it will promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in paragraph (c) of this Section
6).
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act is a party
to such claim, action, suit or proceeding) unless such settlement, compromise
or consent includes an unconditional release of such Underwriter and each
such controlling person from all liability arising out of such claim, action,
suit or proceeding.
19
Section 7. Reimbursement of Certain Expenses. In addition to their
other obligations under Section 6 of this Agreement, the Company hereby
agrees to reimburse on a monthly basis the Underwriters for all reasonable
legal and other expenses incurred in connection with investigating or
defending any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in paragraph (a) of Section 6 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 7 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the persons receiving such payments shall promptly refund them; and
(ii) such persons shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
Section 8. Termination. This Agreement may be terminated by you at
any time prior to the Closing Date by giving written notice to the Company in
accordance with Section 9, or if after the date of this Agreement trading in
the Common Stock shall have been suspended, or if there shall have occurred
(i) the engagement in hostilities or an escalation of major hostilities by
the United States or the declaration of war or a national emergency by the
United States on or after the date hereof; (ii) any outbreak of hostilities
or other national or international calamity or crisis or change in economic
or political conditions if the effect of such outbreak, calamity, crisis or
change in economic or political conditions in the financial markets of the
United States or the Company's industry sector would, in the Underwriters'
reasonable judgment, make the offering or delivery of the Shares
impracticable; (iii) suspension of trading in securities generally or a
material adverse decline in value of securities generally on the New York
Stock Exchange, the American Stock Exchange, or The Nasdaq Stock Market, or
limitations on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system; (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of, or commencement of any proceeding or
investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable opinion materially and
adversely affects or will materially or adversely affect the business or
operations of the Company; (v) declaration of a banking moratorium by either
federal or New York State authorities; or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in the Underwriters' reasonable opinion has a
material adverse effect on the securities markets in the United States. If
this Agreement shall be terminated pursuant to this Section 9, there shall be
no liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (j) and (k) of Section 5 hereof.
Section 9. Conditions of Underwriters' Obligations. The obligations
of the several Underwriters to purchase and pay for the Shares shall be
subject to the performance by the Company of all of its obligations to be
performed hereunder at or prior to the Closing Date or any later date on
which Optional Shares are to be purchased, as the case may be, and to the
following further conditions:
20
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Shares hereunder and
the validity and form of the certificates representing the Shares, all
corporate proceedings and other legal matters incident to the foregoing, and
the form of the Registration Statement and of the Prospectus (except as to
the financial statements contained therein), shall have been approved at or
prior to the Closing Date by Xxxxxxxx & Xxxxxx, Ltd., counsel for the
Underwriters.
(c) You shall have received from Xxxxxx, Xxxxx & Bockius LLP, counsel
for the Company, an opinion, addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex A, and if Optional
Shares are purchased at any date after the Closing Date, additional opinions
from each such counsel, addressed to the Underwriters and dated such later
date, confirming that the statements expressed as of the Closing Date in such
opinions remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true
and correct, and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, respectively, not misleading; (ii)
since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment; (iii) since the respective dates as
of which information is given in the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein,
there has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, and, since such dates, except in the
ordinary course of business, neither the Company nor any of the Founding
Companies has entered into any material transaction not referred to in the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein; (iv) the Commission has not issued any
order preventing or suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the Registration
Statement has been issued; and to the best knowledge of the respective
signers, no proceedings for that purpose have been instituted or are pending
or contemplated under the Securities Act; (v) neither the Company nor any of
the Merger Subsidiaries or the Founding Companies has any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus; (vi) there are not any pending or known threatened legal
proceedings to which the Company, any Merger Subsidiary or any Founding
Company is a party or of which property of the Company or any Founding
Company is the subject which are material and which are not disclosed in the
Registration Statement and the Prospectus; (vii) there are not any
franchises, contracts, leases or other documents which are required to be
filed as exhibits to the
21
Registration Statement which have not been filed as required; and (vii) the
representations and warranties of the Company herein are true and correct in
all material respects as of the Closing Date or any later date on which
Optional Shares are to be purchased, as the case may be.
(e) You shall have received on the Closing Date and on any later date on
which Optional Shares are purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein and any supplements or amendments thereto, and that the statements
included in clauses (i) through (viii) of paragraph (d) of this Section 9 are
true and correct.
(f) You shall have received from Price Waterhouse LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Optional Shares are purchased, confirming that they are
independent public accountants with respect to the Company within the meaning
of the Securities Act and the applicable published rules and regulations
thereunder and based upon the procedures described in their letter delivered
to you concurrently with the execution of this Agreement (the "Original
Letter"), but carried out to a date not more than three business days prior
to the Closing Date or such later date on which Optional Shares are purchased
(i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such
later date, as the case may be, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the
Company, the Merger Subsidiaries or any of the Founding Companies which, in
your sole judgment, makes it impractical or inadvisable to proceed with the
public offering of the shares or the purchase of the Optional Shares as
contemplated by the Prospectus.
(g) You shall have received from Price Waterhouse LLP a letter stating
that their review of the Company's system of internal accounting controls, to
the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as at September 30, 1997,
did not disclose any weakness in internal controls that they considered to be
material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 5 hereof.
(i) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the Nasdaq National Market upon official notice of
issuance.
22
(j) On or prior to the Closing Date, you shall have received from all
directors, officers, and beneficial holders of outstanding Common Stock,
other than holders holding less than 1% of the Company's Common Stock as of
immediately prior to the closing hereunder who became such only by virtue of
the Merger Agreements, in form reasonably satisfactory to VBW, stating that
without the prior written consent of VBW, such person or entity will not,
during the Lock-Up Period (i) offer, sell, contract to sell, make any short
sale (including, without limitation, short sales against the box), pledge, or
otherwise dispose of, directly or indirectly, any shares of Common Stock,
options to acquire Common Stock or securities convertible into or
exchangeable or exercisable for, or any other rights to purchase or acquire,
Common Stock (including, without limitation, Common Stock that may be deemed
to be beneficially owned in accordance with the Rules and Regulations) other
than the exercise or conversion of options, warrants or convertible
securities outstanding and held by such person prior to the date hereof or
(ii) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences or ownership of Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise;
provided, however, that bona fide gift transactions and transfers which will
not result in any change in beneficial ownership may be permitted if the
transferee enters into a lock-up agreement in substantially the same form
covering the remainder of the Lock-Up Period.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxxxx & Xxxxxx, Ltd., counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to
the Underwriters and without liability of the Underwriters to the Company;
provided, however, that (i) in the event of such termination, the Company
agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 5 hereof; and (ii) if this Agreement is terminated by
you because of any refusal, inability or failure on the part of the Company
to perform any agreement herein, to fulfill any of the conditions herein, or
to comply with any provision hereof other than by reason of a default by any
of the Underwriters, the Company will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the transactions contemplated hereby.
Section 10. Conditions of the Obligation of the Company . The
obligation of the Company to deliver the Shares shall be subject to the
conditions that (a) the Registration Statement shall have become effective
and (b) no stop order suspending the effectiveness thereof shall be in effect
and no proceedings therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall
23
be without liability of the Company to the Underwriters and without liability
of the Underwriters to the Company; provided, however, that in the event of
any such termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 5 hereof.
Section 11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of the Company and the several Underwriters and,
with respect to the provisions of Section 6 hereof, the several parties (in
addition to the Company and the several Underwriters) indemnified under the
provisions of said Section 6, and their respective personal representatives,
successors and assigns. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Shares from
any of the several Underwriters.
Section 13. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Xxxxx Xxxxx Xxxxxx
& Company, LLC, Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxx X. Xxxxx; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, 0000 Xxxxxx Xxxxxxxxx, Xxxxx
000, XxXxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxx. All notices given
by telegraph shall be promptly confirmed by letter.
Section 14. Miscellaneous. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or their respective directors or
officers, and (c) delivery and payment for the Shares under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraphs (m) and (n) of Section 5 hereof shall be
of no further force or effect.
Section 15. Partial Unenforceability. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 16. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining
to conflicts of laws) of the State of California.
24
Section 17. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in
several counterparts, each one of which shall be an original, and all of
which shall constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This
25
Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company and you.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof,
whereupon, when confirmed and accepted by the Underwriters as evidenced by
the signature of Xxxxx Xxxxx Xxxxxx & Company, LLC below, it will become a
binding agreement between the Company and the several Underwriters, including
you, all in accordance with its terms.
Very truly yours,
Condor Technology Solutions, Inc.
By:
----------------------------
Title:
-------------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted by us
in San Francisco, California as of the
date first above written.
Xxxxx Xxxxx Xxxxxx & Company, LLC
Xxxxxx Xxxx LLC
Acting for ourselves and as Representatives
of the several Underwriters named in the
attached Schedule I
By:
----------------------------
Principal
26
Schedule I
UNDERWRITERS
Number of
Shares
to be
Underwriters Purchased
------------ ---------
Xxxxx Xxxxx Xxxxxx & Company, LLC .............
Xxxxxx Xxxx LLC................................
Total ..................................... 5,900,000
-----------
-----------
27
