1
Exhibit 1.1
3,850,000 Shares
Vestcom International, Inc.
Common Stock
UNDERWRITING AGREEMENT
________, 1997
Xxxxxxxxxxx & Co., Inc.
Prudential Securities Incorporated
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named in
Schedule I attached hereto.
Gentlemen:
Vestcom International, Inc., a New Jersey corporation (the
"Company"), proposes to sell to you and the other underwriters named in Schedule
I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 3,850,000 shares (the "Firm Shares") of the
Company's common stock, no par value (the "Common Stock"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 577,500 shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
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1. Sale and Purchase of the Shares. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at $____ per share (the "Initial Price"),
the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I to this Agreement.
(b) The Company grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by
the Representatives to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Underwriter
is purchasing of the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date (as defined below), and only once thereafter
within 30 days after the date of this Agreement, in each case upon
written or telegraphic notice, or verbal or telephonic notice confirmed
by written or telegraphic notice, by the Representatives to the Company
no later than 12:00 noon, New York City time, on the business day
before the Firm Shares Closing Date or at least two business days
before the Option Shares Closing Date (as defined below), as the case
may be, setting forth the number of Option Shares to be purchased and
the time and date (if other than the Firm Shares Closing Date) of such
purchase.
2. Delivery and Payment. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price by certified or official bank check or checks
payable in immediately available funds to the Company, shall take place at the
offices of Xxxxxxxxxxx & Co., Inc., at Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the
third business day following the date of this Agreement, provided, however, that
if the Shares sold hereunder are priced after 4:30 p.m., New York time, on any
business day, payment and delivery in respect of the Firm Shares shall take
place on the fourth business day following the date of this Agreement; if it is
determined that settlement within the foregoing time frame is not feasible, then
payment and delivery in respect of the Firm Shares shall occur at such time on
such other date, not later than 10 business days after the date of this
Agreement, as shall be agreed upon by the Company and the Representatives (such
time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by certified or official bank check or checks payable
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in immediately available funds to the Company shall take place at the offices of
Xxxxxxxxxxx & Co., Inc. specified above at the time and on the date (which may
be the same date as, but in no event shall be earlier than, the Firm Shares
Closing Date) specified in the notice referred to in Section 1(b) (such time and
date of delivery and payment are called the "Option Shares Closing Date"). The
Firm Shares Closing Date and the Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request at
least two full business days before the Firm Shares Closing Date or, in the case
of Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, at least one
full business day before the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
________), including a preliminary prospectus relating to the Shares, and has
filed with the Commission the registration statement and such amendments thereto
as may have been required to the date of this Agreement. Copies of such
registration statement (including all amendments thereto) and of the related
preliminary prospectus have heretofore been delivered by the Company to you. The
Company may also file a related registration statement with the Commission
pursuant to Rule 462(b) under the Securities Act for the purpose of registering
additional Shares, which registration shall be effective upon filing with the
Commission. The term "Registration Statement" means the Registration Statement
as amended at the time and on the date it becomes effective (the "Effective
Date"), including all exhibits and information, if any, deemed to be part of the
Registration Statement pursuant to Rule 424(a), Rule 430A and Rule 462(b) of the
Rules. The term "preliminary prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement. The term "Prospectus" means the prospectus in the form
first used to confirm sales of the Shares (whether such prospectus was included
in the Registration Statement at the time of effectiveness or was subsequently
filed with the Commission pursuant to Rule 424(b) of the Rules) or the
preliminary prospectus forming part of the Registration Statement at the time it
was declared effective together with the term sheet permitted under Rule 434(b)
and filed with the Commission pursuant to Rule 424(b), as applicable.
The Company understands that the Underwriters propose to make
a public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
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4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date the Registration Statement complied,
and on the date of the Prospectus, on the date any post-effective
amendment to the Registration Statement or any related registration
statement filed with the Commission pursuant to Rule 462(b) of the
Rules shall become effective, on the date any supplement or amendment
to the Prospectus is filed with the Commission and on each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply in all material respects
with the applicable provisions of the Securities Act and the Rules; the
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the other dates referred to
above neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. When any related preliminary prospectus was
first filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented (i) complied in all material
respects with the applicable provisions of the Securities Act and the
Rules, except for the financial statements of certain of the Founding
Companies (as hereinafter defined) which may have omitted certain
information as originally filed, but which financial statements
complied in all material respects with the applicable provisions of the
Securities Act and the Rules at the time that the Registration
Statement was declared effective and (ii) did not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The Company makes no representation or
warranty as to any information contained in or omitted from (x) the
paragraphs with respect to stabilization or affiliate transactions on
the inside front cover page of the Prospectus and (y) the statements
contained under the caption "Underwriting" in the Prospectus. The
Company acknowledges that such statements constitute the only
information furnished in writing by the Representatives on behalf of
the several Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus.
(b) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the
Commission as exhibits to the Registration Statement.
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(c) The financial statements of the Company and the Founding
Companies set forth on Schedule II hereto (each a "Founding Company"
and collectively, the "Founding Companies") (including all notes
thereto) included in the Registration Statement and Prospectus fairly
present the financial position, the results of operations,
stockholders' equity and cash flows and the other information purported
to be shown therein of the Company and the Founding Companies at the
respective dates and for the respective periods to which they apply;
and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of the results for such periods have been made. There
are no schedules required to be included in the Registration Statement
in order to present fairly in all material respects the information
required to be stated therein; and the historical financial information
and statistical data set forth in the Prospectus under the captions
"Summary Individual Founding Company Financial Data," "Capitalization,"
and "Selected Financial Data" are fairly stated in all material
respects in relation to the financial statements from which they have
been derived. The pro forma financial data included in the Registration
Statement and the Prospectus present fairly the information shown
therein, comply in all material respects with the requirements of the
Act and the Rules and Regulations with respect to pro forma financial
statements, have been properly compiled on the pro forma basis
described therein and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(d) Xxxxxx Xxxxxxxx LLP, whose reports are filed with the
Commission as a part of the Registration Statement, is and, during the
periods covered by their reports, was an independent public accountant
as required by the Securities Act and the Rules.
(e) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of New Jersey. Each of the Company's subsidiaries (the "Subsidiaries")
and each of the Founding Companies has been duly incorporated or formed
and is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation or organization. The Company has no
subsidiary or subsidiaries other than as set forth on Schedule III and
does not control, directly or indirectly, any other corporation,
partnership, joint venture, association or other business organization.
Each of the Company, the Subsidiaries and the Founding Companies is
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its business
makes such qualification necessary, except for such jurisdictions where
the failure to so qualify individually or in the aggregate would not
have a material adverse effect on the assets or properties, business,
results of operations or condition (financial or otherwise) of the
Company, the Subsidiaries and the Founding Companies, taken as a whole,
and neither the Company, the Subsidiaries nor any of the Founding
Companies has received any claim or notice from any official
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authority in any jurisdiction that it is required to be qualified or
licensed to do business in any such jurisdiction in which it is not so
qualified or licensed. Except as disclosed in the Registration
Statement and the Prospectus, neither the Company, the Subsidiaries nor
any of the Founding Companies owns, leases or licenses any asset or
property or conducts any business outside the United States of America.
Each of the Company, the Subsidiaries and the Founding Companies has
all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity, to own, lease and license its assets and properties
and conduct its businesses as now being conducted and as described in
the Registration Statement and the Prospectus, except for such
authorizations, approvals, consents, orders, licenses, certificates and
permits which, if not obtained, would not have a material adverse
effect on the assets or properties, business, results of operations or
condition (financial or otherwise) of the Company, the Subsidiaries and
the Founding Companies, taken as a whole; no such authorization,
approval, consent, order, license, certificate or permit contains a
materially burdensome restriction other than as disclosed in the
Registration Statement and the Prospectus; and the Company has all such
corporate power and authority, and such authorizations, approvals,
consents, orders, licenses, certificates and permits to enter into,
deliver and perform this Agreement and to issue and sell the Shares
(except as may be required under the Securities Act and state and
foreign Blue Sky laws).
(f) No patents, trademarks, service marks, copyrights,
licenses and other similar rights (collectively, the "Intangibles") are
material for the conduct of the business of the Company, the
Subsidiaries and the Founding Companies as now being conducted and as
described in the Registration Statement and the Prospectus. Neither the
Company, the Subsidiaries nor any of the Founding Companies has
infringed, is infringing or has received any notice of infringement of,
any Intangible of any other person and neither the Company, the
Subsidiaries nor any of the Founding Companies knows of any basis
therefor except for such infringements which individually or in the
aggregate would not have a material adverse effect on the assets or
properties, business, results of operations or financial condition of
the Company, the Subsidiaries or the Founding Companies, taken as a
whole.
(g) Each of the Company, the Subsidiaries and the Founding
Companies has good and marketable title in fee simple to each of the
items of personal property which are reflected in the financial
statements referred to in Section 4(c) or are referred to in the
Registration Statement and the Prospectus as being owned by it and
valid and enforceable leasehold interests in each of the items of real
and personal property which are referred to in the Registration
Statement and the Prospectus as being leased by it, in each case free
and clear of all liens, encumbrances, claims, security interests and
defects, other than those described in the Registration Statement and
the Prospectus and those liens which will be released upon the
repayment of debt within 120 days of the Firm Shares Closing Date.
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(h) Except as disclosed in the Registration Statement and the
Prospectus, there is no litigation or governmental or other proceeding
or investigation before any court or before or by any public body or
board pending or, to the Company's, the Subsidiaries' and the Founding
Companies' knowledge, threatened against, or involving the assets,
properties or businesses of, the Company, the Subsidiaries or the
Founding Companies, which, if determined adversely to the Company, any
of the Subsidiaries or any of the Founding Companies, would materially
adversely affect the value or the operation of the assets or properties
of the Company, the Subsidiaries and the Founding Companies, taken as a
whole, or the business, results of operations or financial condition of
the Company, the Subsidiaries and the Founding Companies, taken as a
whole, or would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement.
(i) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, there has not been any material adverse change or
any material adverse development or event involving a prospective
material change in the assets or properties, earnings, business affairs
or business prospects, results of operations or condition (financial or
otherwise) of the Company, the Subsidiaries and the Founding Companies,
taken as a whole, whether or not arising from transactions in the
ordinary course of business; neither the Company, the Subsidiaries nor
any of the Founding Companies has entered into any transaction, other
than in the ordinary course of business, that is material to the
Company, the Subsidiaries and the Founding Companies, taken as a whole,
neither the Company, the Subsidiaries nor any of the Founding Companies
has sustained any material loss or interference with its assets,
businesses or properties from fire, explosion, earthquake, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree. Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected in the
Registration Statement and the Prospectus, neither the Company, the
Subsidiaries nor any of the Founding Companies has undertaken any
liability or obligation, direct or contingent, except for liabilities
or obligations undertaken in the ordinary course of business.
(j) Each agreement listed in the Exhibits to the Registration
Statement is in full force and effect and is valid and enforceable by
the Company or one of the Subsidiaries in accordance with its terms,
assuming the due authorization, execution and delivery thereof by each
of the other parties thereto and except as the enforcement of such
agreement may be limited by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other similar laws
relating to or affecting creditors' rights generally and by general
principles of equity regardless of whether considered in a proceeding
in equity or at law. Neither the Company, the Subsidiaries nor any of
the Founding Companies, nor any other party is in default in the
observance or performance of any term or obligation to be performed by
it under any such agreement,
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and no event has occurred which with notice or lapse of time or both
would constitute such a default, which default or event would have a
material adverse effect on the assets or properties, business, results
of operations or condition (financial or otherwise) of the Company, the
Subsidiaries and the Founding Companies, taken as a whole. No default
exists under any of the agreements listed in the exhibits to the
Registration Statement, and no event has occurred which with notice or
lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the
Company or any of the Founding Companies of any of such agreements to
which the Company or any of the Founding Companies is a party or by
which any of them or their properties or businesses may be bound or
affected, which default or event would have a material adverse effect
on the assets or properties, business, results of operations or
condition (financial or otherwise) of the Company, the Subsidiaries and
the Founding Companies, taken as a whole.
(k) Neither the Company nor any of the Founding Companies is
in violation of any term or provision of its charter or by-laws or of
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation, where the consequences of such violation would have a
material adverse effect on the assets or properties, business, results
of operations or condition (financial or otherwise) of the Company, the
Subsidiaries and the Founding Companies, taken as a whole.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or provision of,
or constitute a default (or any event which with notice or lapse of
time or both would constitute a default) under, or require any consent
or waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company, the
Subsidiaries or any of the Founding Companies which would be material
to the Company, the Subsidiaries or any of the Founding Companies taken
as a whole, pursuant to the terms of, any indenture, mortgage, deed of
trust, note or other agreement or instrument to which the Company, the
Subsidiaries or any of the Founding Companies, is a party or by which
any of them or their properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or any of the Subsidiaries, or
violate any provision of the charter or by-laws of the Company, the
Subsidiaries or any of the Founding Companies, except for such consents
or waivers that have already been obtained and are in full force and
effect and liens and breaches that arise from change in control
provisions in documents evidencing obligations that are to be paid off
or satisfied within 120 days after the Firm Shares Closing Date.
(m) The Company has an authorized and outstanding pro forma
capitalization as set forth under the caption "Capitalization" in the
Prospectus as of the date specified
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therein. All of the outstanding shares of Common Stock and Preferred
Stock (as defined below) have been duly and validly authorized and have
been duly and validly issued and are fully paid and nonassessable and
none of them was issued in violation of any preemptive or other similar
statutory right. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and no
commitment, plan or agreement to issue, any share of stock of the
Company or any security convertible into, or exercisable or
exchangeable for, stock of the Company. The Common Stock, the
undesignated common stock and the preferred stock (the "Preferred
Stock"), and the Shares conform to all statements in relation thereto
contained in the Registration Statement and the Prospectus.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described or referred to therein, neither the Company nor any of the
Founding Companies has (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money,
except as described in Schedule ___ to the Reorganization Agreements
(as hereinafter defined) with respect to equipment financing, (ii)
entered into any transaction not in the ordinary course of business or
(iii) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its
stock.
(o) No holder of any security of the Company has any right to
have any security owned by such holder included in the Registration
Statement or to demand separate registration of any security owned by
such holder during the period ending 180 days from the date of this
Agreement. The Company has obtained from all officers and directors of
the Company and the stockholders of the Founding Companies named in
Schedule II hereto (the "Stockholders"), who together hold _________
shares of Common Stock, their enforceable written agreement that for a
period of at least 180 days from the date of this Agreement they will
not, without the prior written consent of Xxxxxxxxxxx & Co., Inc.,
offer to sell, distribute, pledge, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or encumber, or exercise
any registration rights with respect to, any shares of Common Stock or
any securities convertible into, exercisable for, or exchangeable for
any shares of Common Stock owned by them now or hereafter acquired
directly by such holder or with respect to which such holder has or
hereafter acquires the power of disposition, otherwise than (i) the
issuance of the Common Stock pursuant to the Registration Statement,
(ii) the issuance of shares of Common Stock pursuant to the exercise of
outstanding options under the Company's existing stock option plans,
(iii) the grant of options under the Company's existing stock option
plans, (iv) in connection with an acquisition by the Company of another
entity pursuant to which the Company sells or transfers any of its
shares of Common Stock to a third party as part or
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all of the purchase price of such entity; provided, however, that prior
to any sale or transfer, such third party shall have agreed in writing
with Xxxxxxxxxxx & Co., Inc. that it will not offer to sell,
distribute, pledge, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or encumber, or exercise any
registration rights with respect to, such shares of Common Stock (or
any securities convertible into, exercisable for or exchangeable for
such Common Stock) for the remainder of the 180 days after the date of
this Agreement, (v) the filing of a shelf registration statement by the
Company registering an additional 2,000,000 shares of Common Stock for
use by the Company as consideration in future acquisitions, (vi) the
sale or transfer by the Company of shares of Common Stock in connection
with the hiring of officers or directors not previously employed by the
Company; provided, however, that prior to any sale or transfer, such
officer or director shall have agreed in writing with Xxxxxxxxxxx &
Co., Inc. that he or she will not offer to sell, distribute, pledge,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, or encumber, or exercise any registration rights with
respect to, such shares of Common Stock (or any securities convertible
into, exercisable for or exchangeable for such Common Stock) for the
remainder of the 180 days after the date of this Agreement, (vii) the
filing by the Company of a registration statement on Form S-8
registering up to an additional 700,000 shares of Common Stock issuable
upon exercise of options granted under the Company's existing stock
option plans, or (viii) with the prior written consent of Xxxxxxxxxxx &
Co., Inc. The Company hereby agrees that it will not consent to the
sale, distribution, pledge, grant of any option for the sale of, or
other disposition or encumbrance of, or exercise of any registration
right with respect to, any shares of Common Stock subject to the
above-described lock-ups, without the prior written consent of
Xxxxxxxxxxx & Co., Inc. As of the date hereof, all other shares of
Common Stock which are outstanding or issuable upon the exercise of
stock options or warrants or the conversion of debt instruments
constitute "restricted securities" within the meaning of Rule 144 under
the Securities Act and the Rules.
(p) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly executed and delivered by the
Company and constitutes and will constitute the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except (A) as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether considered in proceedings in equity or at law) and
(B) to the extent that rights to indemnity or contribution under this
Agreement may be limited by federal, state or foreign securities laws
or the public policy underlying such laws.
(q) Each of the Company, the Subsidiaries and the Founding
Companies is conducting its business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all
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applicable local, state and federal environmental laws and regulations,
except where the failure to be so in compliance would not have a
material adverse effect on the assets or properties, business, results
of operations or financial condition of the Company, the Subsidiaries
and the Founding Companies, taken as a whole.
(r) No transaction has occurred between or among the Company
and any of its officers or directors or any affiliate or affiliates of
any such officer or director that is required to be described in and is
not described in the Registration Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of
any of the Shares.
(t) The Company and each of the Founding Companies has filed
all federal, state, local and foreign tax returns which are required to
be filed through the date hereof, or has received extensions thereof,
and has paid or accrued all taxes shown on such returns and all
assessments received by it.
(u) The Shares have been approved for quotation on the
National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market, subject to official notice of issuance.
(v) Effective as of the Closing, the Company, the Subsidiaries
and each of the Founding Companies will be insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company, the Subsidiaries nor any of the
Founding Companies has been refused any insurance coverage sought or
applied for; and neither the Company nor any of the Founding Companies
that had insurance prior to the Firm Shares Closing Date has any reason
to believe that it would 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.
(w) The Company, the Subsidiaries and each of the Founding
Companies will adopt a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's authorizations and are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles; (ii) access
to assets is permitted only in accordance with management's
authorization; and (iii) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
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(x) The Company has not distributed and, prior to the later of
(i) the Closing Date and (ii) the completion of the distribution of the
Shares, will not distribute any offering material in connection with
the offering and sale of the Shares other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or other materials,
if any, permitted by the Act.
The representations and warranties contained in this Section 4
regarding the Founding Companies apply to the Founding Companies as they
presently exist and as they will exist immediately following the closing of the
transactions described in those certain Agreements and Plans of Reorganization,
each dated as of ____________, 1997, by and among the Company and the Founding
Companies and certain other parties (collectively, the "Reorganization
Agreements").
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(A)(a).
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall be in effect, and no
order suspending the effectiveness of the Registration Statement shall
be in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives.
(c) The representations and warranties of the Company
(including those representations and warranties which relate to the
Subsidiaries and the Founding Companies) contained in this Agreement
and in the certificates delivered pursuant to Section 5(d) shall be
true and correct when made and on and as of each Closing Date as if
made on such date and the Company shall have performed all covenants
and agreements and satisfied all the conditions contained in this
Agreement required to be performed or satisfied by it at or before such
Closing Date.
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial officer or chief accounting officer of the Company
signing on the behalf of the Company, to the effect that the signers of
such certificate have carefully examined the Registration Statement,
the Prospectus and this Agreement and that the representations and
warranties of the Company in this Agreement are true and correct on and
as of such Closing Date with the same effect as if made on
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13
such Closing Date and the Company has performed all covenants and
agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by it at or prior to such Closing
Date.
(e) The Representatives shall have received at the time this
Agreement is executed and on each Closing Date a letter or letters
signed by Xxxxxx Xxxxxxxx LLP, addressed to the Representatives and
dated, respectively, the date of this Agreement and each such Closing
Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of
the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules, if any, and pro forma
financial statements included in the Registration Statement
and the Prospectus and reported on by them comply as to form
in all material respects with the applicable accounting
requirements of the Securities Act and the Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Summary Individual Founding Company
Financial Data" and "Selected Financial Data," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of
the meetings of the stockholders and directors of the Company
and the Subsidiaries, and inquiries of certain officials of
the Company and the Subsidiaries who have responsibility for
financial and accounting matters of the Company and the
Subsidiaries as to transactions and events subsequent to the
date of the latest audited financial statements, nothing came
to their attention which caused them to believe that:
(A) the amounts in "Summary Individual
Founding Company Financial Data" and "Selected
Financial Data" included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited [and unaudited]
financial statements from which such amounts were
derived; or
(B) the audited financial statements as of
and for the years ended [December 31, 1996 and
December 31, 1995] included in the Registration
Statement (i) do not comply in form in all material
respects with the applicable accounting requirements
of the Securities Act and the Rules and (ii) are not
in conformity with generally accepted accounting
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14
principles applied on a basis substantially
consistent with that of the audited financial
statements; or
(C) (i) with respect to the Company and the
Subsidiaries there were, at a specified date not more
than five business days prior to the date of the
letter, any increases in the short-term liabilities
and long-term liabilities of the Company or any of
the Subsidiaries or capital stock of the Company or
any of the Subsidiaries or decreases in working
capital (deficit) or total stockholders' equity
(deficit) of the Company or any of the Subsidiaries,
as compared with the amounts shown on the Company's
and each Subsidiary's audited December 31, 1996
balance sheet included in the Registration Statement
and the Prospectus, or (ii) for the period from
[December 31, 1996] to such specified date not more
than five business days prior to the date of the
letter, there were any increases in net losses except
for increases in net losses set forth in the
Registration Statement and the Prospectus, in which
case the Company shall deliver to the Representatives
a letter containing an explanation by the Company as
to the significance thereof unless said explanation
is not deemed necessary by the Representatives;
(iii) they have performed certain other procedures as
a result of which they determined that certain information of
an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company and
the Subsidiaries) set forth in the Registration Statement and
the Prospectus and specified by the Representatives agrees
with the accounting records of the Company and the
Subsidiaries; and
(iv) on the basis of a reading of the unaudited pro
forma financial statements included in the Registration
Statement and the Prospectus (the "pro forma financial
statements"); carrying out certain specified procedures;
inquiries of certain officials of the Company and the
Subsidiaries who have responsibility for financial and
accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro
forma financial statements do not comply in form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at the
date of the letter.
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15
(f) The Representatives shall have received on each Closing
Date from Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx, P.C., counsel for
the Company, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) The Company has been duly incorporated or
organized and is validly existing as a corporation in good
standing under the laws of the State of New Jersey. Each of
the Subsidiaries and the Founding Companies has been duly
incorporated or formed and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation or organization. The
Company, the Subsidiaries and each of the Founding Companies
is duly qualified as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the Company, the
Subsidiaries and the Founding Companies, taken as a whole.
(ii) Each of the Company, the Subsidiaries and the
Founding Companies has all requisite corporate power and
authority to own and lease its assets and properties and
conduct its business as now being conducted and as described
in the Registration Statement and the Prospectus; and the
Company has all requisite corporate power and authority and
all necessary governmental authorizations, approvals,
consents, orders, licenses, certificates and permits required
pursuant to federal law, the General Corporation Law of the
State of New Jersey, and all other necessary authorizations,
approvals, consents, orders, licenses, certificates and
permits either called for by any contracts or other documents
of which such counsel has knowledge or which are, to such
counsel's knowledge, otherwise required, to enter into,
deliver and perform this Agreement and to issue and sell the
Shares, other than those required under the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission
thereunder, and state and foreign Blue Sky laws.
(iii) The Company has authorized and issued of record
capital stock as set forth under the caption "Capitalization"
in the Prospectus as of the date specified therein; the
certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the
Company; all of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and have been
duly and validly issued and are fully paid and nonassessable
and none of them was issued in violation of any preemptive or
other similar statutory right. All of the issued and
outstanding shares of capital stock of, or other ownership
interests in each of the Subsidiaries have been duly and
validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company, free and clear
of any security interests, claims, liens, encumbrances or
adverse interests of any nature and, to such counsel's
knowledge, no options,
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16
warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any
obligations into any shares of capital stock of the
Subsidiaries are outstanding, except as described in or
contemplated by the Registration Statement, including the
exhibits thereto. The Shares, when issued and sold pursuant to
this Agreement, will be duly and validly issued, fully paid
and nonassessable and none of them will have been issued in
violation of any preemptive or other similar statutory right.
Except as disclosed in the Registration Statement and the
Prospectus, to such counsel's knowledge, there is no
outstanding option, warrant or other right calling for the
issuance of, and no commitment, plan or agreement to issue,
any share of stock of the Company or any security convertible
into, or exercisable or exchangeable for, stock of the
Company. The Common Stock, the Preferred Stock and the Shares
conform to all statements in relation thereto contained in the
Registration Statement and the Prospectus in all material
respects.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution,
delivery and performance of this Agreement. This Agreement has
been duly and validly executed and delivered by the Company
and constitutes and will constitute the legal, valid and
binding obligation of the Company enforceable against the
Company in accordance with its terms except (A) as such
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether
considered in proceedings in equity or at law) and (B) to the
extent that rights to indemnity or contribution under this
Agreement may be limited by federal, state or foreign
securities laws or the public policy underlying such laws.
(v) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any
of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) will (i) give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict
with or result in the breach of any term or provision of, or
constitute a default (or any event which with notice or lapse
of time, or both, would constitute a default) under, or
require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company, the Subsidiaries
or any of the Founding Companies pursuant to the terms of, any
agreement filed as an exhibit to the Registration Statement
and to which the Company, the Subsidiaries or any of the
Founding Companies is a party or by which any of them or their
properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation
of which such counsel has knowledge and applicable to the
Company or any of the Subsidiaries, except for such
terminations,
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17
accelerations, conflicts, breaches, defaults and events which
would not, individually or in the aggregate, result in a
material adverse effect on the assets or properties, business,
results of operations or financial condition of the Company,
the Subsidiaries and the Founding Companies, taken as a whole,
or (ii) violate any provision of the charter or by-laws of the
Company, the Subsidiaries or any of the Founding Companies.
(vi) Each of the Agreements and Plan of
Reorganization with respect to the Founding Companies (which
have been filed with the Commission as exhibits to the
Registration Statement) has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company; the Certificates or Articles of
Merger referred to in such Agreements and Plans of
Reorganization, assuming the due filing thereof with the
appropriate regulatory authorities, will cause the statutory
merger of each of the Founding Companies with the respective
Subsidiaries of the Company that are parties thereto.
(vii) To such counsel's knowledge, no default exists,
and no event has occurred which with notice or lapse of time
or both would constitute a default, in the due performance and
observance of any term, covenant or condition, of any
indenture, mortgage, deed of trust, note or any other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or their
assets or properties or businesses is bound or affected which
default would have a material adverse effect on the assets or
properties, business, results of operations or financial
condition of the Company and the Subsidiaries.
(viii) To such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in violation of any
term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation
would have a material adverse effect on the assets or
properties, businesses, results of operations or condition
(financial or otherwise) of the Company and the Subsidiaries,
taken as a whole.
(ix) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby, except
such as have been obtained under the Securities Act and such
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by
the several Underwriters and as such may be required under the
rules of the National Association of Securities Dealers, Inc.
with respect to the underwriting arrangements reflected in
this Agreement.
(x) Except as described in the Registration Statement
and the Prospectus, to such counsel's knowledge, there is no
litigation or governmental
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18
or other proceeding or investigation before any court or
before or by any public body or board pending or threatened
(and such counsel does not know of any basis therefor)
against, or involving the assets, properties or businesses of,
the Company or any of the Subsidiaries which, if determined
adversely to the Company or any of the Subsidiaries, would
materially adversely affect the value or the operation of any
such assets or properties or the business, results of
operations or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole.
(xi) The agreement of each of the Company and
officers and directors of the Company (a form of which Lock-Up
Agreement is attached hereto as Schedule IV) has been duly and
validly delivered by such persons and constitutes a legal,
valid and binding obligation of each such person enforceable
against each such person in accordance with its terms, except
as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent
conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles (whether considered in
proceedings in equity or at law). All shares of Common Stock
which are outstanding or issuable upon the exercise of stock
options or warrants or the conversion of debt instruments of
which such counsel has knowledge either (i) are subject to a
written agreement obtained by the Company pursuant to Section
4(o) of this Agreement or (ii) constitute "restricted
securities" within the meaning of Rule 144 under the
Securities Act and the Rules.
(xii) The statements in the Prospectus under the
captions "Risk Factors -- Potential Effects of Shares Eligible
for Future Sale on Price of Stock;" "--Effect of Certain
Charter Provisions;" "Certain Transactions;" "Description of
Capital Stock;" and "Shares Eligible for Future Sale" insofar
as such statements constitute a summary of documents referred
to therein or matters of law, are fair summaries of the
material provisions thereof and accurately present in all
material respects the information required by the Rules with
respect to such documents and matters. All contracts and other
documents required to be filed as exhibits to, or described
in, the Registration Statement of which such counsel has
knowledge have been so filed with the Commission or are fairly
described in the Registration Statement, as the case may be.
(xiii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or
supplement thereto (except for the financial statements and
notes and other financial and statistical data included
therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
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19
(xiv) The Registration Statement has become effective
under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are pending or, to the best of such counsel's knowledge, are
threatened or contemplated.
(xv) The Shares to be sold under this Agreement to
the Underwriters have been duly approved for listing on the
Nasdaq National Market.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of New Jersey, the General Corporation Law of New Jersey and the
federal laws of the United States; provided that such counsel shall state that
in their opinion that they have no basis to believe that it would be inadvisable
for them or the Underwriters to rely on such other opinions. In rendering the
opinion set forth in (i) above as to the qualification of the Company and each
of the Founding Companies as foreign corporations, the Company may rely upon
certificates of officers of the Company or the Founding Companies as to the
jurisdictions in which the Company or the Founding Companies own property or
conduct their respective businesses. In rendering the opinion set forth in (iii)
above concerning the due authorization, issuance and ownership of the issued and
outstanding shares of capital stock of the Subsidiaries, such counsel may rely
upon opinions of local counsel as to matters of law other than the laws of the
State of New Jersey except that such counsel may rely on the opinion of New
Jersey counsel to Direct Mail Services, Inc. In rendering the opinion set forth
in (iv) above concerning the validity, binding effect and enforceability of this
Agreement, which is governed by the laws of State of New York, such counsel may
assume that the relevant laws of the State of New York do not differ materially
from the corresponding laws of the State of New Jersey; provided, however, that
such counsel shall state that they have no knowledge of any difference between
the relevant laws of such states. Copies of such certificates and other opinions
shall be furnished to the Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with certain officers of, and with the accountants
and counsel for, the Company and the Subsidiaries and representatives of the
Representatives concerning the preparation of the Registration Statement, the
preliminary prospectus and the Prospectus and related matters, and although such
counsel has made certain inquiries and investigations in connection with the
preparation of the Registration Statement, such counsel did not independently
verify the accuracy or completeness of the statements made therein or in the
preliminary prospectus or in the Prospectus and the limitations inherent in the
role of outside counsel are such that such counsel cannot and does not assume
responsibility for or pass on the accuracy and completeness of such statements,
except insofar as such statements relate to such counsel. On the basis of the
foregoing, such counsel shall state that its work in connection with this matter
did not disclose any information that caused such counsel to believe that the
Registration Statement at the time it became effective (except with respect to
the financial statements and notes and schedules thereto and other financial and
statistical data,
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20
as to which such counsel need make no statement) 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, or that the
Prospectus as of its date and as of the date of such letter, contained or
contains an untrue statement of a material fact or omitted 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 (other than
financial statements and other information of a statistical, accounting, or
financial nature which are or should be contained therein, as to which such
counsel shall express no view).
(g) The Representatives shall receive on each Closing Date
from the counsel of each of the Stockholders, an opinion, addressed to
the Representatives and dated such Closing Date, and stating in effect
that the agreement of each of the Stockholders (a form of which Lock-Up
Agreement is attached hereto as Schedule IV) has been duly and validly
delivered by such persons and constitutes a legal, valid and binding
obligation of each such person enforceable against each such person in
accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether considered in proceedings in equity or at
law).
(h) All proceedings taken in connection with the sale of the
Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives
and their counsel and the Underwriters shall have received from Xxxxxx,
Xxxxx & Xxxxxxx LLP a favorable opinion, addressed to the
Representatives and dated such Closing Date, with respect to the
Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representatives may reasonably request, and the
Company shall have furnished to Xxxxxx, Xxxxx & Bockius LLP such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(i) The Representatives shall have received on each Closing
Date a certificate, including exhibits thereto, addressed to the
Representatives and dated such Closing Date, of the Secretary or an
Assistant Secretary of the Company, signed in such officer's capacity
as such officer, as to the (i) certificate of incorporation and bylaws
of the Company, (ii) resolutions authorizing the execution and delivery
of the Registration Statement, this Agreement and the performance of
the transactions contemplated by this Agreement, the Registration
Statement, the Prospectus and the offering of the Shares, (iii) form of
Common Stock certificate and the number of shares of Common Stock
outstanding and (iv) incumbency of the person or persons authorized to
execute and deliver the Registration Statement, this Agreement and any
other documents contemplated by the offering of the Shares.
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(j) The Representatives shall have received on each Closing
Date certificates of the Secretaries of State of each State where the
Company or any of the Subsidiaries is incorporated and doing business
as to the good standing of the Company or such Subsidiary, if
applicable, qualification of the Company or such Subsidiary to do
business as a foreign corporation, if applicable, and filing of annual
reports. In addition, the Representatives shall have received copies of
all charter documents of the Company and each of the Subsidiaries
certified by the Secretary of State of the state of such corporation's
incorporation.
6. Covenants of the Company.
(A) The Company covenants and agrees as follows:
(a) The Company shall prepare the Prospectus in a form
approved by the Representatives and file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement, or, if such second business day would
be more than fifteen business days after the Effective Date of the
Registration Statement or any post-effective amendment thereto, such
earlier date as would permit such Prospectus to be filed without filing
a post-effective amendment as set forth in Rule 430A(a)(3) under the
Securities Act, and shall promptly advise the Representatives (i) when
the Registration Statement shall have become effective, (ii) when any
amendment thereof or any related registration statement filed with the
Commission pursuant to Rule 462(b) of the Rules shall have become
effective, (iii) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (iv) of the prevention or suspension of the use of any
preliminary prospectus or the Prospectus or of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or amendment or
supplement to the Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not
file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall
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22
be necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare and
file with the Commission, subject to the second sentence of paragraph
(a) of this Section 6(A), an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect
such compliance.
(c) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at
the end of the fiscal quarter of the Company during which the Effective
Date occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earnings statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(d) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(e) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
under the laws of such jurisdictions as the Representatives may
designate and shall maintain such qualifications in effect so long as
required for the distribution of the Shares; provided, however, that
the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(f) For a period of five years after the date of this
Agreement, the Company shall supply to the Representatives, and to each
other Underwriter who may so request in writing, copies of such
financial statements and other periodic and special reports as the
Company may from time to time distribute generally to the holders of
any class of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to file with
the Commission.
(g) Without the prior written consent of Xxxxxxxxxxx & Co.,
Inc., for a period of 180 days after the date of this Agreement, the
Company shall not issue, offer to sell or register with the Commission,
distribute, pledge, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or encumber, or exercise any
registration rights with respect to, any shares of Common Stock or any
securities
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23
convertible into, exercisable for, or exchangeable for any shares of
Common Stock, otherwise than (i) the issuance of the Common Stock
pursuant to the Registration Statement, (ii) the issuance of shares of
Common Stock pursuant to the exercise of outstanding options under the
Company's existing stock option plans, (iii) the grant of options under
the Company's existing stock option plans, (iv) in connection with an
acquisition by the Company of another entity pursuant to which the
Company sells or transfers any of its shares of Common Stock to a third
party as part or all of the purchase price of such entity; provided,
however, that prior to any sale or transfer, such third party shall
have agreed in writing with Xxxxxxxxxxx & Co., Inc. that it will not
offer to sell, distribute, pledge, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or encumber, or exercise
any registration rights with respect to, such shares of Common Stock
(or any securities convertible into, exercisable for or exchangeable
for such Common Stock) for the remainder of the 180 days after the date
of this Agreement, (v) the filing of a shelf registration statement by
the Company registering an additional 2,000,000 shares of Common Stock
for use by the Company as consideration in future acquisitions, (vi)
the sale or transfer by the Company of shares of Common Stock in
connection with the hiring of officers or directors not previously
employed by the Company; provided, however, that prior to any sale or
transfer, such officer or director shall have agreed in writing with
Xxxxxxxxxxx & Co., Inc. that he or she will not offer to sell,
distribute, pledge, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or encumber, or exercise any
registration rights with respect to, such shares of Common Stock (or
any securities convertible into, exercisable for or exchangeable for
such Common Stock) for the remainder of the 180 days after the date of
this Agreement, (vii) the filing by the Company of a registration
statement on Form S-8 registering up to an additional 700,000 shares of
Common Stock issuable upon exercise of options granted under the
Company's existing stock option plans, or (viii) with the prior written
consent of Xxxxxxxxxxx & Co., Inc.
(h) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws and by
the Nasdaq National Market (including any required registration under
the Exchange Act). For a period of five years after the date of this
Agreement, the Company shall use its best efforts to maintain the
inclusion of the Common Stock in the Nasdaq National Market System (or
on a national securities exchange).
(i) The Company shall use its best efforts to do and perform
all things required or necessary to be done and performed under this
Agreement by the Company prior to the Firm Shares Closing Date or any
Option Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses of the
Company incident to the public offering of the Shares and
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24
the performance of the obligations of the Company under this Agreement including
those relating to (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the Registration
Statement and the Prospectus, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for the Shares to
the Underwriters; (iii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 6(A)(e), including the fees and
disbursements of counsel for the Underwriters in connection with such
registration and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv) the
furnishing (including costs of shipping and mailing) to the Representatives and
to the Underwriters of copies of each preliminary prospectus, the Prospectus and
all amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6(A)(f); and (vii) inclusion of the
Shares for quotation on the Nasdaq National Market.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or arise out
of or are based upon 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, or arise out of or are based upon
any misrepresentation or breach of any representation or warranty by
the Company contained in this Agreement; provided, however, that such
indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares to any
person by such Underwriter (i) if such untrue statement or omission or
alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives
on behalf of any Underwriter specifically for use therein or, (ii) as
to any
- 24 -
25
preliminary prospectus, with respect to any Underwriter, to the extent
that any such loss, claim, damage or liability of such Underwriter
results from an untrue statement of a material fact contained in, or
the omission of a material fact from, such preliminary prospectus,
which untrue statement or omission was corrected in the Prospectus, if
such Underwriter sold Shares to the person alleging such loss, claim,
damage or liability without sending or giving, at or prior to the
written confirmation of such sale, a copy of the Prospectus, unless
such failure resulted from the failure of the Company to deliver copies
of the Prospectus to such Underwriter on a timely basis to permit such
sending or giving. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, each director of the Company,
and each officer of the Company who signs the Registration Statement,
to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment thereof or supplement thereto, contained in the last
paragraph of the cover page, in the paragraph relating to stabilization
on the inside front cover page of the Prospectus and the statements
with respect to the public offering of the Shares under the caption
"Underwriting" in the Prospectus; provided, however, that the
obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to
the net proceeds received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served. No indemnification provided for in Section 7(a) or
7(b) shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the omission
so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to
any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after
- 25 -
26
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Sections 7(a) and 7(b) is due in accordance with its terms but for any reason is
held to be unavailable from the Company or the Underwriters, the Company and the
Underwriters shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting any contribution
received by the Company from persons other than the Underwriters, such as
persons who control the Company within the meaning of the Securities Act,
officers of the Company who signed the Registration Statement and directors of
the Company, who may also be liable for contribution) to which the Company and
one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Shares or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts but before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, bear to
(y) the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement or omission or
- 26 -
27
alleged omission of a material fact related to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter (except as may be provided
in the Master Agreement Among Underwriters) be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder; provided, however, that 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. For purposes of this Section 8,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
Section, notify such party or parties from whom contribution may be sought, but
the failure so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect
to the Shares to be purchased on a Closing Date by the Representatives by
notifying the Company at any time
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if there has been any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company, whether or not arising in
the ordinary course of business which, in the judgment of the
Representatives, materially impairs the investment quality of the
securities; (ii) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted the
securities markets; (iii) if there has occurred any new outbreak or
material escalation of major hostilities or other major national or
international calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of
the Representatives, inadvisable to proceed with the offering; (iv) if
there shall be such a material adverse change in general financial,
political or economic conditions or the effect of international
conditions on the financial markets in
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28
the United States is such as to make it, in the judgment of the
Representatives, inadvisable or impracticable to market the Shares; (v)
if trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock Exchange, Inc. or on the
American Stock Exchange, Inc. has been suspended or limited, or minimum
or maximum ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities have been required, by said
exchanges or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental or regulatory
authority; or (vi) if a banking moratorium has been declared by any
state or federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter, and
no Underwriter shall be under any liability to the Company, except that (y) if
this Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company
will, upon the request of the Representatives, reimburse the Underwriters for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) incurred by them in connection with the proposed purchase and sale of
the Shares or in contemplation of performing their obligations hereunder and (z)
no Underwriter who shall have failed or refused to purchase the Shares agreed to
be purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination of its obligations under this
Agreement, shall be relieved of liability to the Company or to the other
Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing
Date, then each of the nondefaulting Underwriters shall be obligated to
purchase such Shares on the terms herein set forth in proportion to
their respective obligations hereunder; provided, that in no event
shall the maximum number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be
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29
increased pursuant to this Section 10 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date,
then the Company shall be entitled to an additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase
such Shares upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company
shall have the right to postpone the applicable Closing Date for a period of not
more than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the
- 00 -
00
Xxxxxxxxxxxxxxx, x/x Xxxxxxxxxxx & Co., Inc., Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx X. Xxxxx, and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement.
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31
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
VESTCOM INTERNATIONAL, INC.
By
---------------------------
Name:
Title:
Confirmed:
XXXXXXXXXXX & CO., INC.
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By Xxxxxxxxxxx & Co., Inc.
By
---------------------------
Name:
Title: Managing Director
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32
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- --------------
Xxxxxxxxxxx & Co., Inc................................
Prudential Securities Incorporated....................
---------
TOTAL 3,850,000
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33
SCHEDULE II
Founding Companies State of Incorporation
------------------ ----------------------
Comvestrix Corp.
Direct Mail Services, Inc.
Computer Output Services, Inc.
Electronic Imaging Services, Inc.
COS Information, Inc.
Image Printing Systems
Mystic Graphic Systems, Inc.
- ii -
34
SCHEDULE III
Subsidiary State of Incorporation
---------- ----------------------
- iii -
35
SCHEDULE IV
Form of Lockup Agreement
- iv -
