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EXHIBIT 1.1
Draft of 7/16/97
6,000,000 Shares
CORESTAFF, INC.
Common Stock
(par value $.01 per share)
UNDERWRITING AGREEMENT
__________, 1997
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_____________, 1997
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Alex. Xxxxx & Sons
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxxxxx Securities
The Xxxxxxxx-Xxxxxxxx Company, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
Certain shareholders of the Company (the "SELLING
SHAREHOLDERS") of CORESTAFF, Inc., a Delaware corporation (the "COMPANY"),
named in Schedule III hereto severally propose to sell to the several
Underwriters named in Schedule I and II hereto (the "UNDERWRITERS"), an
aggregate of 6,000,000 shares of the Common Stock, par value $.01 per share, of
the Company (the "FIRM SHARES"), each Selling Shareholder selling the amount
set forth opposite such Selling Shareholder's name in Schedule III hereto.
It is understood that, subject to the conditions hereinafter
stated, 5,000,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the
several U.S. Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS")
in connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 1,000,000 Firm Shares (the "INTERNATIONAL SHARES") will be
sold to the several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons
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other than United States and Canadian Persons. Xxxxxx Xxxxxxx & Co.
Incorporated and Xxxxxxx, Sachs & Co., Alex. Xxxxx & Sons, Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation, Xxxxxxxxxx Securities and The
Xxxxxxxx-Xxxxxxxx Company, Inc. shall act as representatives (the "U.S.
REPRESENTATIVES") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co.
International Limited and Xxxxxxx Sachs International shall act as
representatives (the "INTERNATIONAL REPRESENTATIVES") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the Underwriters.
The additional Selling Stockholder specified in Schedule III
hereto also proposes to issue and sell to the several U.S. Underwriters not
more than an additional 900,000 shares of its Common Stock, par value $.01 per
share, (the "ADDITIONAL SHARES") if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of common stock granted to the
U.S. Underwriters in Section 2 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "SHARES." The shares of
Common Stock, par value $.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON STOCK."
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement relating to the Shares.
The registration statement contains two prospectuses to be used in connection
with the offering and sale of the Shares: the U.S. prospectus, to be used in
connection with the offering and sale of Shares in the United States and Canada
to United States and Canadian Persons, and the international prospectus, to be
used in connection with the offering and sale of Shares outside the United
States and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "Registration Statement"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "PROSPECTUS" (including,
in the case of all references to the Registration Statement or the Prospectus,
documents incorporated therein by reference). The terms "supplement" and
"amendment" or "amend" as used in this Agreement with respect to the
Registration Statement or Prospectus shall include all documents subsequently
filed by the Company with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), that are deemed to be
incorporated by reference in the Prospectus. If the Company has filed an
abbreviated registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Securities Act (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Registration Statement.
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1. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus
complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (ii) the Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iv) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this paragraph 1(b) do
not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is 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 on the Company and its subsidiaries,
taken as a whole.
(d) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is 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 on the Company and its subsidiaries, taken as
a whole; all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and (except for directors' qualifying
shares and except as set forth in the
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Prospectus) are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed
and delivered by the Company.
(f) The authorized capital stock of the Company conforms
as to legal matters to the description thereof contained in the
Prospectus.
(g) The Shares of Common Stock have been duly authorized and
are validly issued, fully paid and non-assessable, and the issuance of
such Shares did not violate any preemptive or similar rights.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the Certificate
of Incorporation or By-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(i) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(j) There are no legal or governmental proceedings pending
or, to the Company's knowledge after due inquiry, threatened to which
the Company or any of its subsidiaries is a party or to which any of
the properties of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required.
(k) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities
Act and the applicable rules and regulations of the Commission
thereunder.
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(l) The Company is not and, after giving effect to 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" as such term is defined in the Investment Company Act of
1940, as amended.
(m) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(n) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(o) 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 or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement, except for rights
under such contracts or agreements that have been waived by all
persons holding such rights.
(p) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
(q) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound.
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(r) The statements set forth in the Prospectus under the
caption "Description of Capital Stock," insofar as they purport to
constitute a summary of the terms of the Shares, are accurate,
complete and fair.
(s) Ernst & Young LLP who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder.
(t) The Company owns or possesses adequate licenses or other
rights to use all trademarks, service marks, trade names, copyrights,
and know-how necessary to conduct the business now or proposed to be
conducted by the Company as described in the Prospectus, and, except
as disclosed in the Prospectus, the Company has not received any
notice of infringement of or conflict with (and knows of no such
infringement of or conflict with) asserted rights of others with
respect to trademarks, service marks, trade names, copyrights, or
know-how which, individually or in the aggregate, is reasonably likely
to result in any material adverse effect upon the financial position,
stockholders' equity or results of operations of the Company; and,
except as disclosed in the Prospectus and to the knowledge of the
Company, the Company does not, in the conduct of its business as now
or proposed to be conducted as described in the Prospectus, infringe
or conflict with any right of any third party, known to the Company,
where such infringement or conflict is reasonably likely to result in
any material adverse effect upon the financial position, stockholders'
equity or results of operations of the Company.
(u) The Company has obtained any permits, consents and
authorizations required to be obtained by it under laws or regulations
relating to its business, including, without limitation, laws or
regulations relating to the operation and sales of franchises
(collectively, "LAWS"), and any such permits, consents and
authorizations remain in full force and effect, except as to any of
the foregoing the absence of which (individually or in the aggregate)
will not have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company; and the
Company is in compliance with the Laws in all material respects, and
there is no pending or, to the Company's knowledge, threatened, action
or proceeding against the Company for violation of any Law, other than
any such actions or proceedings which, individually or in the
aggregate, if adversely determined, is not reasonably likely to have a
material adverse effect on the financial position, stockholders'
equity or results of operations of the Company.
(v) The Company (i) has timely and properly prepared and
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 has furnished all information returns it is required
to furnish pursuant to the Internal Revenue Code of 1986, as amended,
(ii) the charges, accruals and reserves on the consolidated books of
the Company in respect of any income, franchise or corporation tax
liability for any years not fully determined are reasonable and have
been recorded on a basis in conformance with generally accepted
accounting principles, and (iii)
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does not have any tax deficiency or claims outstanding, assessed or to
its knowledge, proposed against it which is reasonably likely to
result in any material adverse effect upon the financial position,
stockholders' equity or results of operations of the Company.
(w) The Company maintains insurance of the types and in the
amounts which the Company reasonably believes are adequate for its
business and consistent with insurance coverage maintained by similar
companies in similar businesses, including but not limited to,
workers' compensation insurance, insurance covering real and personal
property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. Each of the Selling Shareholders represents and warrants to and
agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed
and delivered by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder
of, and the performance by such Selling Shareholder of its obligations
under, this Agreement, the Custody Agreement signed by such Selling
Shareholder and the Company, as Custodian, relating to the deposit of
the Shares to be sold by such Selling Shareholder (the "CUSTODY
AGREEMENT") and the Power of Attorney appointing certain individuals
as such Selling Shareholder's attorneys-in-fact to the extent set
forth therein, relating to the transactions contemplated hereby and by
the Registration Statement (the "POWER OF ATTORNEY") will not
contravene any provision of applicable law, or the certificate of
incorporation or by-laws of such Selling Shareholder (if such Selling
Shareholder is a corporation), or any agreement or other instrument
binding upon such Selling Shareholder or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over
such Selling Shareholder, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Shareholder, except such as may be required
by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
(c) Such Selling Shareholder has, and on the Closing Date
will have, valid title to the Shares to be sold by such Selling
Shareholder and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement, the Custody
Agreement and the Power of Attorney and to sell, transfer and deliver
the Shares to be sold by such Selling Shareholder.
(d) The Shares to be sold by such Selling Shareholder
pursuant to this Agreement have been duly authorized and are validly
issued, fully paid and non-assessable.
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(e) The Custody Agreement and the Power of Attorney have been
duly authorized, executed and delivered by such Selling Shareholder
and are valid and binding agreements of such Selling Shareholder.
(f) Delivery of the Shares to be sold by such Selling
Shareholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances assuming the Underwriters purchase such shares
without notice of any adverse claim, as defined in the Uniform
Commercial Code as adopted in the State of New York (the "UCC") and
are otherwise bona fide purchasers for the purposes of the UCC and
that such Underwriters' rights are not limited by subsection (4) of
Section 8-302 of the UCC.
(g) To the extent, but only to the extent, that any
statements or omissions made in the Registration Statement, the
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder
expressly for use therein or filed by the Selling Shareholder pursuant
to the Exchange Act, (i) the Registration Statement, when it became
effective, did not contain and, as supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and
(iii) the Prospectus does not contain and, as amended or supplemented,
if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph 2(g) do not apply to statements or omissions
in the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(h) Certificates in negotiable form representing all of the
Shares to be sold by such Selling Shareholder hereunder have been
placed in custody under a Custody Agreement, in the form heretofore
furnished to you (the "CUSTODY AGREEMENT"), duly executed and
delivered by such Selling Shareholder to the Company, as custodian
(the "CUSTODIAN"), and such Selling Shareholder has duly executed and
delivered a Power of Attorney, in the form heretofore furnished to you
(the "POWER OF ATTORNEY"), appointing Xxxxxxx X. Xxxxxx and Xxxxx X.
Xxxxxxx, and each of them, as such Selling Shareholder's
attorneys-in-fact (the "ATTORNEYS-IN-FACT") with authority to execute
and deliver this Agreement on behalf of such Selling Shareholder, to
determine the purchase price to be paid by the Underwriters to the
Selling Shareholders as provided in Section 3 hereof, to authorize the
delivery of the Shares to be sold by such Selling Shareholder
hereunder and certain other matters provided therein; and
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(i) The Shares represented by the certificates held in
custody for such Selling Shareholder under the Custody Agreement are
subject to the interests of the Underwriters hereunder; the
arrangements made by such Selling Shareholder for such custody, and
the appointment by such Selling Shareholder of the Attorneys-in-Fact
by the Power of Attorney, are to that extent irrevocable; the
obligations of the Selling Shareholders hereunder shall not be
terminated by operation of law, whether by the death or incapacity of
any individual Selling Shareholder or, in the case of an estate or
trust, by the death or incapacity of any executor or trustee or the
termination of such estate or trust, or in the case of a partnership
or corporation, by the dissolution of such partnership or corporation,
or by the occurrence of any other event; if any individual Selling
Shareholder or any such executor or trustee should die or become
incapacitated, or if any such estate or trust should be terminated, or
if any such partnership or corporation should be dissolved, or if any
other such event should occur, before the delivery of such Shares
hereunder certificates representing the Shares shall be delivered by
or on behalf of such Selling Shareholder in accordance with the terms
and conditions of this Agreement and of the Custody Agreement; and
actions taken by the Attorneys-in-Fact pursuant to the Power of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or
not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution or
other event.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, such Selling
Shareholder agrees to deliver to you prior to or at the First Time of Delivery
(as hereinafter defined) a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement specified
by Treasury Department regulations in lieu thereof).
3. AGREEMENTS TO SELL AND PURCHASE. Each Selling Stockholder,
severally and not jointly, hereby agrees to sell to the several Underwriters,
and each Underwriter, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from such Selling Stockholder at U.S.
$______ a share (the "PURCHASE PRICE") the number of Firm Shares (subject to
such adjustments to eliminate fractional shares as you may determine) that
bears the same proportion to the number of Firm Shares to be sold by such
Selling Stockholder as the number of Firm Shares set forth in Schedule II
hereto opposite the name of such Underwriters bears to the total number of Firm
Shares.
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, Xxxxxxx X. Xxxxxx,
a Selling Stockholder, agrees to sell to the U.S. Underwriters the Additional
Shares, and the U.S. Underwriters shall have a one-time right to purchase,
severally and not jointly, up to 900,000 Additional Shares at the Purchase
Price. If the U.S. Representatives, on behalf of the U.S. Underwriters, elect
to exercise such option, the U.S. Representatives shall so notify the Company
in writing not later than 30 days after the date of this Agreement, which
notice shall specify the number of Additional Shares to be purchased by the
U.S.
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Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each U.S.
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares
as the U.S. Representatives may determine) that bears the same proportion to
the total number of Additional Shares to be purchased as the number of U.S.
Firm Shares set forth in Schedule I hereto opposite the name of such U.S.
Underwriter bears to the total number of U.S. Firm Shares.
The Company and each Selling Shareholder hereby agrees that,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on
behalf of the Underwriters, it will not, during the period ending 90 days after
the date of the Prospectus, (i) offer, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, loan or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the 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. The foregoing sentence shall not apply to, with respect to the
Company: (A) the Shares to be sold hereunder; (B) the issuance by the Company
of shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing; or (C) any shares of Common Stock
issued as payment of any part of the purchase price for acquisitions of
businesses by the Company. In addition, each Selling Shareholders, agree that,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf
of the Underwriters, it will not, during the period ending 90 days after the
date of the Prospectus, make any demand for, or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
4. TERMS OF PUBLIC OFFERING. The Selling Shareholders are
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this Agreement have become effective as in your judgment is advisable. The
Selling Shareholders are further advised by you that the Shares are to be
offered to the public initially at $____________ a share (the "PUBLIC OFFERING
PRICE") and to certain dealers selected by you at a price that represents a
concession not in excess of $______ a share under the Public Offering Price,
and that any Underwriter may allow, and such dealers may reallow, a concession,
not in excess of $____ a share, to any Underwriter or to certain other dealers.
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5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be
sold by each Selling Shareholder shall be made to such Selling Shareholder in
Federal or other funds immediately available in New York City against delivery
of such Firm Shares for the respective accounts of the several Underwriters at
10:00 A.M., New York City time, on ____________, 1997, or at such other time on
the same or such other date, not later than _________, 1997, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to Xxxxxxx X.
Xxxxxx in Federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 A.M., New York City time, on the date specified in the
notice described in Section 3 or at such other time on the same or on such
other date, in any event not later than _______, 1997, as shall be designated
in writing by the U.S. Representatives. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall
be in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes
payable in connection with the transfer of the Shares to the Underwriters duly
paid, against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Selling Stockholders to sell the Shares to the Underwriters
and the several obligations of the Underwriters to purchase and pay for the
Shares on the Closing Date are subject to the condition that the Registration
Statement shall have become effective not later than 5:00 P.M. (New York City
time) on the date hereof.
The several obligations of the Underwriters are subject to
the following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization,"as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
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(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date
a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in clause (a)(i) above
and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate
may rely upon the best of his or her knowledge as to proceedings
threatened.
(c) The Underwriters shall have received on the Closing Date
an opinion of Xxxxxx & Xxxxxx, L.L.P., outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
State of Delaware, has the corporate power and authority to
own its property and to conduct its business as described in
the Prospectus and is duly qualified to transact business and
is 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 on the Company and its
subsidiaries, taken as a whole;
(ii) each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is
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 on the Company and its subsidiaries,
taken as a whole;
(iii) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
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(iv) the outstanding shares of Common Stock as of
the date and as set forth under the caption "Capitalization"
in the Prospectus have been duly authorized and are validly
issued, fully paid and non-assessable;
(v) all of the issued shares of capital stock of
each subsidiary of the Company 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;
(vi) the Shares have been duly authorized and are
validly issued, fully paid and non-assessable, and the
issuance of such Shares did not violate any preemptive or
similar rights at the time of their issuance;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and, assuming the due
authorization, execution and delivery of the Power of
Attorney and Custody Agreement by each of the Selling
Shareholders, the Selling Shareholders;
(viii) the execution and delivery by the Company of,
and the performance by the Company of its obligations under,
this Agreement will not contravene any provision of
applicable law or the certificate of incorporation or by-laws
of the Company or, to the best of such counsel's knowledge,
any agreement or other instrument binding upon the Company or
any of its subsidiaries that is material to the Company and
its subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance
by the Company of its obligations under this Agreement,
except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and
sale of the Shares by the U.S.
Underwriters;
(ix) the statements (A) in the Prospectus under the
captions "Description of Capital Stock" and, with respect to
the summary of this Agreement and Exhibit A hereto,
"Underwriters" and (B) in the Registration Statement in Item
15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called
for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to
therein;
(x) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its
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subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(xi) the Company is not and, after giving effect to
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" as such term is defined in the
Investment Company Act of 1940, as amended;
(xii) except as described in the Prospectus or as
have been waived at the Closing Date, there are no persons
with registration or similar rights to have any securities of
the Company registered pursuant to the Registration Statement
or otherwise registered by the Company under the Securities
Act or the Exchange Act pursuant to any agreement or
instrument known to us after due inquiry to which the Company
is a party; and
(xiii) such counsel (A) is of the opinion that each
document, if any, filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus (except for
financial statements and schedules as to which such counsel
need not express any opinion) complied when so filed as to
form in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder, (B) is of
the opinion that the Registration Statement and Prospectus
(except for financial statements and schedules and other
financial and statistical data included therein as to which
such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the
applicable rules and regulations of the Commission
thereunder, (C) has no reason to believe that (except for
financial statements and schedules and other financial and
statistical data as to which such counsel need not express
any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement
became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading and (D) has no reason to believe that (except
for financial statements and schedules and other financial
and statistical data as to which such counsel need not
express any belief) the Prospectus contains any untrue
statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made,
not misleading.
(d) The Underwriters shall have received on the Closing Date
an opinion of each of (A) Xxxxxxxx & Xxxxx, (B) Xxxxxxx Xxxxxxxxx
Xxxxxxx & Xxxxxxx, L.L.P., and (C) Xxxxxx & Xxxxxx, L.L.P., counsel
for (A) Golder, Thoma, Xxxxxxx Fund III Limited
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Partnership, (B) First Union Corporation and (C) Xxxxxxx X. Xxxxxx,
respectively, dated the Closing Date, to the effect that:
(i) such Selling Shareholder, if a corporation, has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of
its incorporation, or such Selling Shareholder, if a
partnership has been duly formed and is validly existing as a
partnership in good standing under the laws of the state of
its formation;
(ii) this Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling
Shareholder;
(iii) the execution and delivery of each Selling
Shareholder of, and the performance by such Selling
Shareholder of its obligations under, this Agreement and the
Custody Agreement and Powers of Attorney of such Selling
Shareholder will not contravene any provision of applicable
law, or the certificate of incorporation or by-laws of such
Selling Shareholder (if such Selling Shareholder is a
corporation), or, to the best of such counsel's knowledge,
any agreement or other instrument binding upon such Selling
Shareholder or, to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Shareholder
(excluding breaches, violations and defaults that,
individually or in the aggregate, will not materially
adversely affect such Selling Shareholder's ability to
perform its obligations under this Agreement);
(iv) no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of
its obligations under this Agreement or the Custody Agreement
or Power of Attorney of such Selling Shareholder, except such
as may be required by the securities or Blue Sky laws of the
various states in connection with offer and sale of the
Shares;
(v) such Selling Shareholder has valid title to the
Shares to be sold by such Selling Shareholder and the legal
right and power, and all authorization and approval required
by law, to enter into this Agreement and the Custody
Agreement and Power of Attorney of such Selling Shareholder
and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder;
(vi) the Custody Agreement and the Power of Attorney
of such Selling Shareholder have been duly authorized,
executed and delivered by such Selling Shareholder and are
valid and binding agreements of such Selling Shareholder;
(vii) immediately prior to the consummation of the
transactions contemplated by this Agreement, such Selling
Shareholder was the sole record owner
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of the Shares to be sold by such Selling Shareholder under
this Agreement; upon delivery of the Shares to be sold by the
Selling Shareholders under this Agreement and payment of the
purchase price therefor as contemplated by this Agreement,
assuming the Underwriters have purchased the Shares for value
in good faith and without notice of any adverse claim or
actual knowledge of a restriction on transfer, (1) the
Underwriters will have acquired all rights of such Selling
Shareholder in such Shares free of any adverse claim, any
lien in favor of the Company and any restrictions on transfer
imposed by the Company, and (2) the owner of such Shares, if
other than such Selling Shareholder, is precluded from
asserting against the Underwriters the ineffectiveness of any
unauthorized endorsement or instruction; and
(e) The Underwriters shall have received on the Closing Date
an opinion of Xxxxxxx & Xxxxx L.L.P., counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in Sections
5(c)(vi), 5(c)(vii), 5(c)(ix) (but without limitation to
"Underwriters") and 5(c)(xiii)(B)-(D) above.
With respect to subparagraph (xiii) of paragraph (c) above,
Xxxxxx & Xxxxxx, L.L.P. and Xxxxxxx & Xxxxx L.L.P., may state that
their opinion and belief are based upon their participation and
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified.
The opinions of Xxxxxx & Xxxxxx, L.L.P. on behalf of the
Company, and Xxxxxxxx & Xxxxx, Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx,
L.L.P. and Xxxxxx & Xxxxxx, L.L.P. on behalf of the Selling
Shareholder described in paragraphs (c) and (d) above, shall be
rendered to the Underwriters at the request of the Company or one or
more of the Selling Shareholders, as the case may be, and shall so
state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory
to the Underwriters, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in, or incorporated by reference into, the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
(g) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and certain shareholders, officers
and directors of the Company (other than the Selling Shareholders)
relating to sales and certain other dispositions of shares of Common
Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
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(h) The Shares to be sold at such Time of Delivery shall have
been duly approved, subject to notice of issuance, for quotation on
the Nasdaq National Market.
(i) The several obligations of the U.S. Underwriters to
purchase Additional Shares hereunder are subject to the delivery to
the U.S. Representatives on the Option Closing Date of such documents
as they may reasonably request with respect to the good standing of
the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional
Shares.
7. COVENANTS OF THE COMPANY. In further consideration
of the agreements of the Underwriters herein contained, the Company covenants
with each Underwriter as follows:
(a) To furnish to you, without charge, 13 signed copies of
the Registration Statement (including exhibits thereto and any
documents incorporated therein by reference) and for delivery to each
other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto but including documents incorporated therein
by reference) and to furnish to you in New York City, without charge,
prior to 10:00 A.M. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated therein by reference and any supplements and
amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to
a purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the
Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
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(d) To endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement
covering the twelve-month period ending September 30, 1998 that
satisfies the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
8. EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, (a) the Company
agrees to pay or cause to be paid all expenses incident to the performance of
the Selling Shareholders and its obligations under this Agreement, including:
(i) the fees, disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or Legal Investment memorandum in connection with the offer and sale
of the Shares under state securities laws and all expenses in connection with
the qualification of the Shares for offer and sale under state securities laws
as provided in Section 7(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of the
offering of the Shares by the National Association of Securities Dealers, Inc.,
(v) all costs and expenses incident to listing the Shares on the Nasdaq
National Market, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, and (viii) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not
otherwise made in this Section; and (b) each Selling Shareholder agrees to pay
or cause to be paid all costs and expenses incident to the performance of such
Selling Shareholder's obligations hereunder which are not otherwise
specifically provided for in this Section, including (i) any fees and expenses
of counsel for such Selling Shareholder, (ii) such Selling Shareholder's pro
rata share of the fees and expenses of the Attorneys-in-Fact and the Custodian,
if any, and (iii) all expenses and taxes incident to the sale and delivery of
the Shares to be sold by such Selling Shareholder to the Underwriters
hereunder. It is understood, however, that the Company shall bear, and the
Selling Shareholders shall not be required to pay or to reimburse the Company
for, the cost of any other matters not directly relating to the sale and
purchase of the Shares pursuant to this Agreement, that except as provided in
this Section, Section 9 entitled "Indemnity and Contribution", and the last
paragraph of Section 11 below, the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock transfer
taxes payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
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The provisions of this Section shall not supersede or
otherwise affect any agreement that the Comany and the Selling Stockholders may
otherwise have for the allocation of such expenses among themselves.
9. INDEMNITY AND CONTRIBUTION. (a) The Company and Xxxxxxx X.
Xxxxxx, an officer of the Company who is a Selling Shareholder, (the "INSIDE
SELLER") agree, jointly and severally, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), 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, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein. Notwithstanding the
foregoing, in no event shall any Inside Seller be required to pay an amount in
indemnification under this Section 9(a) in excess of the total price at which
Shares sold by such Inside Seller were offered to the public.
(b) The Selling Shareholders other than the Insider Seller
(the "OTHER SELLERS"), agree to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), 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, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Other Seller expressly for use
therein, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter any in writing by
such Underwriter through you expressly for use therein; provided, however, that
each Other Seller shall not be liable to any Underwriter under the indemnity
agreement in this subsection (b) with respect to any Preliminary Prospectus to
the extent that any such loss, claim, damage or liability to any Underwriter
results from the fact that such
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Underwriter sold Shares to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus or of the Prospectus as then amended or
supplemented in any case where such delivery is required by the Securities Act
if the Company has previously furnished copies thereof in sufficient quantity
to such Underwriter and the loss, claim, damage or liability of such
Underwriter results from an untrue statement or omission of a material fact
contained in the Preliminary Prospectus which was identified in writing at such
time to such Underwriter and corrected in the Prospectus or in the Prospectus
as then amended or supplemented. Notwithstanding the foregoing, in no event
shall any Other Seller be required to pay an amount in indemnification under
this Section 9(b) or contribution under Section 9(e) hereof in excess of the
net amount received by such Other Seller from the sale of the Shares pursuant
to the Prospectus.
(c) Each Selling Shareholder agrees, severally and not
jointly, to indemnify and hold less the Company, its directors, its officers
who sign the Registration Statement and each son, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), 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, but only with reference to information relating to such
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(d) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Shareholders, the
directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Shareholder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), 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, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
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(e) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a), (b), (c) or (d) of this
Section 9, such person (the "INDEMNIFIED PARTY") shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Section and (iii) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Selling Shareholders and all persons, if any, who control any Selling
Shareholder within the meaning of either such Section, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholders and such control persons of any Selling Shareholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Shareholders under the Powers of Attorney.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnity the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and
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indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
(f) To the extent the indemnification provided for in
paragraph (a), (b), (c) or (d) of this Section 9 is unavailable to an
indemnified party or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company or the Selling
Shareholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Selling Stockholder and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of Company or
the Selling Shareholders on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, the
Selling Shareholders or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective number
of Shares they have purchased hereunder, and not joint.
(g) The Company, the Selling Shareholders and the
Underwriters agree that it would not be just or equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (e) of this Section 9. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, 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, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages that such Underwriter has otherwise been required to pay by reason
of such untrue
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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 remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
(h) The indemnity and contribution provisions contained in
this Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholders contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of
this Agreement, (ii) any investigation made by or on behalf of any Underwriter
or any person controlling any Underwriter, any Selling Shareholder or any
person controlling any Selling Shareholder, or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Shares.
10. TERMINATION. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange or the Nasdaq National Market, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York or Texas shall have been declared by
either Federal or New York or Texas State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities involving the United States
or any change in financial markets or any calamity or crisis that, in your
judgment, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event, singly or together with
any other such event, makes it, in your judgment, impracticable or inadvisable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This
Agreement shall become effective upon the execution and delivery hereof by the
parties hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of the Shares to be purchased on such date,
the other Underwriters shall be obligated severally in the proportions that the
number of Firm Shares set forth opposite their respective names in Schedule I
or Schedule II bears to the aggregate number of Firm Shares set forth opposite
the names of all such non-defaulting Underwriters, or in such other proportions
as you may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 11 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to
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purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Firm Shares to be purchased, and arrangements satisfactory to you and the
Company for the purchase of such Firm Shares are not made within 36 hours after
such default, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two
or more counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
14. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.
15. TIME OF THE ESSENCE. Time shall be of the essence of
this Agreement. As used herein, the term "business day" shall mean any day when
the Commission's office in Washington, D.C. is open for business.
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Very truly yours,
CORESTAFF, INC.
By
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
THE SELLING SHAREHOLDERS
NAMED ON SCHEDULE III HERETO
By
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-in-Fact
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX, SACHS & CO.
ALEX. XXXXX & SONS
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
XXXXXXXXXX SECURITIES
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I hereto.
By Xxxxxx Xxxxxxx & Co. Incorporated
By
--------------------------
Name:
Title:
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XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX SACHS INTERNATIONAL
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By Xxxxxx Xxxxxxx & Co. International Limited
By
--------------------------
Name:
Title:
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Schedule I
U.S. Underwriters
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Alex. Xxxxx & Sons
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxxxxx Securities
The Xxxxxxxx-Xxxxxxxx Company, Inc.
---------
Total U.S. Firm Shares............................ 5,000,000
=========
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Schedule II
International Underwriters
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx, Sachs International
Alex. Xxxxx & Sons
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxxxxx Securities
The Xxxxxxxx-Xxxxxxxx Company, Inc.
---------
Total International Firm Shares.................. 1,000,000
=========
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Schedule III
Selling Shareholders
Number of Number of
Firm Shares Additional Shares
Selling Shareholder To Be Sold To Be Sold
------------------- ---------- -----------------
Xxxxxx, Xxxxx & Xxxxxxx Fund III Limited Partnership 5,500,000 0
First Union Corporation 500,000 0
Xxxxxxx X. Xxxxxx 0 900,000
--------- ---------
Total Selling Shareholder Shares..................... 6,000,000 9,000,000
========= =========
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Exhibit A
FORM OF LOCK-UP LETTER
____________, 1997
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Alex. Xxxxx & Sons
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxxxxx Securities
The Xxxxxxxx-Xxxxxxxx Company, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co.
Incorporated ("Xxxxxx Xxxxxxx") and Xxxxxx Xxxxxxx & Co. International Limited
("MSIL") propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with CORESTAFF, Inc., a Delaware corporation (the "Company")
providing for the public offering (the "Public Offering") by the several
Underwriters, including Xxxxxx Xxxxxxx and MSIL (the "Underwriters") of
6,000,000 shares (the "Shares") of the Common Stock, par value $.01 per share,
of the Company (the "Common Stock").
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To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 45 days after the date of the final
prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, loan
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, or (2) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement. In addition,
the undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx
on behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 45 days after the date of the Prospectus, make any demand
for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock.
Whether or not the Public Offering actually occurs depends on
a number of factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject
to negotiation between the Company and the Underwriters.
Very truly yours,
-------------------------------------
(Name)
-------------------------------------
(Address)
31
