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EXHIBIT 1.1
2,218,000 SHARES
AMBASSADORS INTERNATIONAL, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXX & COMPANY INCORPORATED
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
X. X. XXXXXXXX & CO.
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. Introductory. Ambassadors International, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell 2,000,000 shares of its
authorized but unissued Common Stock, par value $0.01 per share (the "Common
Stock"), and certain stockholders of the Company named in Schedule B annexed
hereto (the "Selling Stockholders") propose to sell an aggregate of 218,000
shares of the Company's issued and outstanding Common Stock to you (sometimes
called herein the "Underwriters"). Said aggregate of 2,218,000 shares are herein
called the "Firm Common Shares." In addition, the Company proposes to grant to
the Underwriters an option to purchase up to 332,700 additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 5 hereof. The Firm
Common Shares and, to the extent such option is exercised, the Optional Common
Shares are hereinafter collectively referred to as the "Common Shares."
You have advised the Company and the Selling Stockholders that you propose
to make a public offering of your respective portions of the Common Shares on
the effective date of the registration statement hereinafter referred to, or as
soon thereafter as in your judgment is advisable.
The Company and each of the Selling Stockholders hereby confirm(s) their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that as of the date hereof:
(a) A registration statement on Form S-3 (File No. 333- ) with
respect to the Common Shares has been prepared by the Company in conformity
in all material respects with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission. The Company has
prepared and has filed or proposes to file prior to the effective date of
such registration statement an amendment or amendments to such registration
statement, which amendment or amendments have been or will be similarly
prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each
exhibit filed therewith. Conformed copies of such registration statement
and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to you in such reasonable quantities as you
have requested. The Company will next file with the Commission one of the
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following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus, (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations, or (iii) a term sheet (the "Term Sheet") as described in and
in accordance with Rules 434 and 424(b) of the Rules and Regulations. As
filed, the final prospectus, if one is used, or the Term Sheet and
Preliminary Prospectus (as hereinafter defined), if a final prospectus is
not used, shall include all Rule 430A Information (as hereinafter defined)
and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to
you prior to the date and time that this Agreement was executed and
delivered by the parties hereto, or, to the extent not completed at such
date and time, shall contain only such specific additional information and
other changes (beyond that contained in the latest Preliminary Prospectus
as hereinafter defined) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended; provided, however,
that such term shall also include (i) all Rule 430A Information deemed to
be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations, and (ii) a registration statement, if any, filed pursuant to
Rule 462(b) of the Rules and Regulations relating to the Common Shares. The
term "Preliminary Prospectus" shall mean any preliminary prospectus
referred to in the preceding paragraph and any preliminary prospectus
included in the Registration Statement at the time it becomes effective
that omits Rule 430A Information. The term "Prospectus" as used in this
Agreement shall mean either (i) the prospectus relating to the Common
Shares in the form in which it is first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations, or (ii) if a Term Sheet is not
used and no filing pursuant to Rule 424(b) of the Rules and Regulations is
required, the form of final prospectus included in the Registration
Statement at the time such registration statement becomes effective, or
(iii) if a Term Sheet is used, the Term Sheet in the form in which it is
first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, together with the Preliminary Prospectus included in the
Registration Statement at the time it becomes effective. The term "Rule
430A Information" means information with respect to the Common Shares and
the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A of the Rules and
Regulations. Any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated or deemed to be incorporated by reference therein pursuant to
Form S-3 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; all references herein to financial
statements and schedules and other information which is "contained,"
"included" or "stated" in the Registration Statement or the Prospectus (and
all other references of like import) shall be deemed to mean and include
all such financial statements and schedules and other information which is
or is deemed to be incorporated by reference in the Registration Statement
or the Prospectus, as the case may be; and all references in this Agreement
to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document
under the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act") which is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of
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the Act and the Rules and Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, did
or will include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, no representation or
warranty contained in this subsection 2(b) shall be applicable to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company by or on behalf of you, specifically for use in the preparation
thereof. Each Preliminary Prospectus and the Prospectus was, when and if
filed by electronic transmission pursuant to the Commission's Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX") (except as may be
permitted by Regulation S-T under the Act), identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale
of the Common Shares. The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act, and the rules
and regulations of the Commission thereunder, and none of such documents
contained an 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.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed
in Exhibit 21.1 to the Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1997 (the "Company Form 00-X"), Xxxxxxxxxx
Specialty Group, Inc. a Delaware corporation (such entities being referred
to herein as the "subsidiaries" of the Company). The Company and each of
its subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, with full power and authority (corporate
and other) to own and lease their properties and conduct their respective
businesses as described in the Prospectus; the Company, or one of its
wholly owned subsidiaries, owns all of the outstanding capital stock of its
subsidiaries free and clear of all claims, liens, charges and encumbrances;
the Company and each of its subsidiaries are in possession of and operating
in compliance with all authorizations, licenses, permits, consents,
certificates and orders material to the conduct of their respective
businesses, all of which are valid and in full force and effect; the
Company and each of its subsidiaries are duly qualified to do business and
in good standing as foreign corporations in each jurisdiction in which the
ownership or leasing of properties or the conduct of their respective
businesses requires such qualification, except for jurisdictions in which
the failure to so qualify would not have a material adverse effect upon the
Company or its subsidiaries, taken as a whole; and no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or
qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of
or subject to any preemptive rights or other rights to subscribe for or
purchase securities, and conform to the description thereof contained in
the Prospectus. All issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. Except as disclosed in or contemplated by
the Prospectus and the financial statements of the Company, and the related
notes thereto, included in the Prospectus, neither the Company nor any
subsidiary has outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted and exercised thereunder, set forth in or incorporated by
reference in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
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(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Common Shares
by the Company pursuant to this Agreement. No stockholder of the Company
has any right which has not been waived to require the Company to register
the sale of any shares owned by such stockholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the stockholders or the Board of Directors of the Company will
be required for the transfer and sale of the Common Shares to be sold by
the Selling Stockholders or the issuance and sale of the Common Shares to
be sold by the Company as contemplated herein.
(f) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company in accordance
with its terms. The making and performance of this Agreement by the Company
and the consummation of the transactions herein contemplated will not
violate any provisions of the certificate of incorporation or bylaws, or
other organizational documents, of the Company or any of its subsidiaries,
and will not conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice or the passage of time or both,
a default under any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of its respective properties may be bound or affected,
any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company or any of its
subsidiaries or any of their respective properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and
delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Act, the
Blue Sky laws applicable to the public offering of the Common Shares by the
several Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(g) Coopers & Xxxxxxx L.L.P., who have expressed their opinion with
respect to the financial statements and schedules included in or
incorporated by reference in the Prospectus and in the Registration
Statement, are independent accountants as required by the Act and the Rules
and Regulations and by the Exchange Act.
(h) The financial statements and schedules of the Company, and the
related notes thereto, included in or incorporated by reference in the
Registration Statement and the Prospectus present fairly the financial
position of the Company as of the respective dates of such financial
statements and schedules, and the results of operations and changes in
financial position of the Company for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent accountants named in
subsection 2(g). No other financial statements or schedules are required to
be included in the Registration Statement. The selected financial and
statistical data set forth in the Prospectus under the captions "Prospectus
Summary -- Summary Selected Financial Data," "Capitalization" and "Selected
Financial Data" fairly present the information set forth therein on the
basis stated in the Registration Statement.
(i) The pro forma consolidated condensed financial statements of the
Company and its subsidiaries and the related notes thereto included under
the captions "Prospectus Summary -- Summary Pro Forma Selected Financial
Data" and "Pro Forma Selected Financial Data" and elsewhere in the
Prospectus and the Registration Statement (including the pro forma summary
information included in the documents incorporated or deemed incorporated
by reference therein), present fairly the information contained therein,
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly
presented on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
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appropriate to give effect to the transactions and circumstances referred
to therein. The financial statements of Xxxxx America, Co. included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the consolidated financial position of such entities as of
and at the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved as certified
by the independent accountants named therein (each of which are independent
accountants as required by the Act and the Rules and Regulations and by the
Exchange Act), except as may be expressly stated in the related notes
thereto.
(j) Except as disclosed in the Prospectus, and except as to defaults
which individually or in the aggregate would not be material to the
Company, neither the Company nor any of its subsidiaries is in violation or
default of any provision of its certificate of incorporation or bylaws, or
other organizational documents, or is in breach of or default with respect
to any provision of any agreement, judgment, decree, order, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its properties are bound;
and there does not exist any state of facts which constitutes an event of
default on the part of the Company or any such subsidiary as defined in
such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
(k) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The contracts so described in
the Prospectus are in full force and effect on the date hereof; and neither
the Company nor any of its subsidiaries, nor to the best of the Company's
knowledge, any other party is in breach of or default under any of such
contracts.
(l) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or may be a party or of which property owned or leased by
the Company or any of its subsidiaries is or may be the subject, or related
to environmental or discrimination matters, which actions, suits or
proceedings might, individually or in the aggregate, prevent or adversely
affect the transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company and
its subsidiaries, taken as a whole; and no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent
which might be expected to affect adversely such condition, properties,
business, results of operations or prospects. Neither the Company nor any
of its subsidiaries is a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
(m) The Company or the applicable subsidiary has good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property by
the Company and its subsidiaries. The Company or the applicable subsidiary
holds its leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of
the Company and its subsidiaries, taken as a whole. Except as disclosed in
the Prospectus, the Company and its subsidiaries own or lease all such
properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(n) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or
written agreement or other transaction which is not in the ordinary course
of business or which is reasonably likely to have a material adverse effect
on the condition (financial or otherwise), business, results of operations
or prospects of the Company and its subsidiaries,
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taken as a whole; (ii) the Company and its subsidiaries have not sustained
any loss or interference with their respective businesses or properties
material to the Company and its subsidiaries, taken as a whole, from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock and the Company and
its subsidiaries are not in default in the payment of principal or interest
on any outstanding debt obligations; (iv) there has not been any change in
the capital stock (other than upon the sale of the Common Shares hereunder
and upon the exercise of options and warrants described in the Registration
Statement) or indebtedness material to the Company and its subsidiaries,
taken as a whole (other than in the ordinary course of business); and (v)
there has not been any material adverse change in the condition (financial
or otherwise), business, properties, results of operations or prospects of
the Company and its subsidiaries.
(o) Except as disclosed in or specifically contemplated by the
Prospectus, (i) the Company and its subsidiaries own or have the legal
right to use all trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals and governmental authorizations to conduct
their respective businesses as now conducted; (ii) the expiration of any
trademarks, trade names, patent rights, mask works, copyrights, licenses,
approvals or governmental authorizations would not have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company or its subsidiaries, taken as a
whole; and (iii) the Company has no knowledge of any material infringement
by it or its subsidiaries of trademark, trade name rights, patent rights,
mask works, copyrights, licenses, trade secret or other similar rights of
others, and there is no claim being made against the Company or its
subsidiaries regarding trademark, trade name, patent, mask work, copyright,
license, trade secret or other infringement which is reasonably likely to
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(p) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations; except where failure to be so in compliance would not
materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(q) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes
shown as due thereon; and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the
Company or its subsidiaries which could materially and adversely affect the
business, operations or properties of the Company and its subsidiaries,
taken as a whole.
(r) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(s) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Prospectus, the
Registration Statement and the other materials permitted by the Act.
(t) Each of the Company and its subsidiaries maintains insurance of
the types and in the amounts generally deemed adequate for its business,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
(u) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any foreign, federal or
state governmental
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officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws
of the United States or any jurisdiction thereof.
(v) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Common Shares.
(w) The Common Stock (including the Common Shares) is registered
pursuant to Section 12(g) of the Exchange Act and is duly listed on the
Nasdaq National Market, and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act or delisting the Common Stock from the Nasdaq
National Market, nor has the Company received any notification that the
Commission or the NASD is contemplating terminating such registration or
listing.
SECTION 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Each of the Selling Stockholders severally represents and warrants to,
and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing Date
hereinafter mentioned will have, good and valid title to the Common Shares
proposed to be sold by such Selling Stockholder hereunder on such Closing
Date and full right, power and authority to enter into this Agreement and
to sell, assign, transfer and deliver such Common Shares hereunder, free
and clear of all voting trust arrangements, liens, encumbrances, equities,
security interests, restrictions and claims whatsoever other than pursuant
to the Stockholders Agreement (as defined in paragraph (ii) below); and
upon delivery of and payment for such Common Shares hereunder in accordance
with the terms and conditions of this Agreement, the Underwriters will
acquire good and valid title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting
trusts or other defects of title whatsoever, other than any of the
foregoing created by or through the Underwriters.
(ii) Such Selling Stockholder has executed and delivered a Power of
Attorney and caused to be executed and delivered on his or her behalf a
Custody Agreement (hereinafter collectively referred to as the
"Stockholders Agreement"), and in connection therewith such Selling
Stockholder has deposited in custody, under the Stockholders Agreement,
with the agent named therein (the "Agent") as custodian, certificates in
negotiable form for the Common Shares to be sold hereunder by such Selling
Stockholder, for the purpose of delivery pursuant to this Agreement. Such
Selling Stockholder agrees that the Common Shares to be sold by such
Selling Stockholder on deposit with the Agent are subject to the interests
of the Company and the Underwriters under this Agreement, that the
arrangements made for such custody are to that extent irrevocable, and that
the obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Stockholders
Agreement, by any act of such Selling Stockholder, by operation of law, by
the death or incapacity of such Selling Stockholder or by the occurrence of
any other event. If the Selling Stockholder should die or become
incapacitated, or if any other event should occur, before the delivery of
the Common Shares hereunder, the documents evidencing Common Shares then on
deposit with the Agent shall be delivered by the Agent in accordance with
the terms and conditions of this Agreement as if such death, incapacity or
other event had not occurred, regardless of whether or not the Agent shall
have received notice thereof. This Agreement and the Stockholders Agreement
have been duly executed and delivered by or on behalf of such Selling
Stockholder and the form of such Stockholders Agreement has been delivered
to you.
(iii) The performance of this Agreement and the Stockholders Agreement
and the consummation of the transactions contemplated hereby and by the
Stockholders Agreement will not result in a breach or violation by such
Selling Stockholder of any of the terms or provisions of, or constitute a
default by such Selling Stockholder under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which such Selling Stockholder
is a party or by which such Selling Stockholder or any of its properties is
bound, any statute, or any judgment, decree, order, rule or regulation of
any court or governmental agency or body applicable to
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such Selling Stockholder or any of its properties, except in each case for
any violation, breach or default which would not have a material adverse
effect on the ability of such Selling Stockholder to perform its
obligations under this Agreement.
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Common Shares.
(v) Such Selling Stockholder has read each Preliminary Prospectus and
the Prospectus, and to the best knowledge of such Selling Stockholder each
Preliminary Prospectus, at its date of issue, and the Prospectus, from its
date of issue through each Closing Date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein not misleading in light of the circumstances
under which they were made; and to the best knowledge of such Selling
Stockholder neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(b) Each of the Selling Stockholders agrees that, for a period commencing
on the date hereof and continuing through the close of trading on the date 90
days after the date of the Prospectus, such Selling Stockholder will not,
without the prior written consent of NationsBanc Xxxxxxxxxx Securities LLC
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose
of any shares of the Company's Common Stock or other equity securities, options
or warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under
the Exchange Act) by such Selling Stockholder, or publicly announce his
intention to do any of the foregoing.
SECTION 4. Representations and Warranties of the Underwriters. You
represent and warrant to the Company and to the Selling Stockholders that the
information set forth (i) on the cover page of the Prospectus with respect to
price, underwriting discounts and commissions and terms of offering and (ii)
under the caption "Underwriting" in the Prospectus was furnished to the Company
by and on behalf of the Underwriters for use in connection with the preparation
of the Registration Statement and the Prospectus and is correct in all material
respects. NationsBanc Xxxxxxxxxx Securities LLC represents and warrants that it
has been authorized by each of the Underwriters to enter into this Agreement on
their behalf and to act for them in the manner herein provided.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, (i) the Company agrees to issue and
sell to the Underwriters 2,000,000 of the Firm Common Shares, and (ii) the
Selling Stockholders agree, severally and not jointly, to sell to the
Underwriters in the respective amounts set forth in Schedule B hereto, an
aggregate of 218,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
stockholders, respectively, the number of Firm Common Shares described below.
The purchase price per share to be paid by the several Underwriters to the
Company and to the Selling stockholders, respectively, shall be $ per
share.
The obligation of each Underwriter to the Company shall be to purchase from
the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 2,000,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholders shall be to purchase from the Selling
Stockholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 218,000 the same proportion as the number of shares
set forth opposite the name of such Underwriter in Schedule A hereto bears to
the total number of Firm Common Shares.
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Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of NationsBanc
Xxxxxxxxxx Securities LLC, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or
such other place as may be agreed upon by the Company and you) at 6:00 a.m., San
Francisco time, on the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) of the Exchange Act, after 4:30 p.m. Washington,
D.C. Time, the fourth) full business day following the first date that any of
the Common Shares are released by you for sale to the public, or at such other
time and date not later than 10:30 a.m., San Francisco time, on ,
1998 [insert date 10 business days following the originally contemplated First
Closing Date] as you shall designate by notice to the Company (the time and date
of such closing are referred to herein as the "First Closing Date"); provided,
however, that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by you for sale to the public
(as set forth above) or the date that is 48 hours after the date that the
Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Stockholders to you with respect to the
Firm Common Shares to be sold by the Company and by the Selling Stockholders
against the irrevocable release of a wire transfer of immediately available
funds in the amount of the purchase price therefor to the order of the Company
and of the Agent in proportion to the number of Firm Common Shares to be sold by
the Company and the Selling Stockholders, respectively. The certificates for the
Firm Common Shares shall be registered in such names and denominations as you
shall have requested at least two full business days prior to the First Closing
Date, and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 332,700 Optional Common Shares
at the purchase price per share to be paid for the Firm Common Shares, for use
solely in covering any over-allotments made by you for the account of the
Underwriters in the sale and distribution of the Firm Common Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Common Shares are released by you
for sale to the public, upon notice by you to the Company setting forth the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. The number of Optional Common
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Optional Common Shares to be sold by the Company pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Common Shares to be purchased by such Underwriter as set forth opposite its name
in Schedule A and the denominator of which is 2,218,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New York, New York, as may be designated by you.
The manner of payment for and delivery of the Optional Common Shares shall be
the same as for the Firm Common Shares purchased from the Company as specified
in the two preceding paragraphs. At any time before lapse of the option, you may
cancel such option by giving written notice of such cancellation to the Company.
Notwithstanding the foregoing, in the event that the Registration Statement is
amended or the Prospectus is supplemented between the date hereof and any
Closing Date, the Underwriters shall have the right to delay the Closing Date to
a date which will allow the Underwriters the time necessary to distribute the
Prospectus as amended or supplemented.
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Not later than 12:00 p.m. on the second business day following the date the
Common Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as you shall request.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in your judgment is
advisable and at the public offering price set forth on the cover page of and on
the terms set forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly advise
you in writing (i) of the receipt of any comments of the Commission, (ii)
of any request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information,
(iii) when the Registration Statement shall have become effective and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose. If the Commission shall enter any such stop
order at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. The Company will not
file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus (including any amendment or supplement through incorporation by
reference of any report filed under the Exchange Act) of which you have not
been furnished with a copy a reasonable time prior to such filing or to
which you reasonably object or which is not in compliance with the Act and
the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable the several Underwriters to continue the distribution
of the Common Shares and will use its best efforts to cause the same to
become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and
Regulations with respect to information omitted from the Registration
Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred to in Section
10(a)(3) of the Act during which a prospectus relating to the Common Shares
is required to be delivered under the Act any event occurs, as a result of
which the Prospectus, including any amendments or supplements, would
include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or if it is necessary at any time to
amend the Prospectus, including any amendments or supplements, to comply
with the Act or the Rules and Regulations, the Company will promptly advise
you thereof and will promptly prepare and file with the Commission, at its
own expense, an amendment or supplement which will correct such statement
or omission or an amendment or supplement which will effect such compliance
and will use its best efforts to cause the same to become effective as soon
as possible; and, in case any Underwriter is required to deliver a
prospectus after such nine-month period, the Company upon request, but at
the expense of such Underwriter, will promptly prepare such amendment or
amendments to the Registration Statement and such Prospectus or
Prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the
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Rules and Regulations), the Company will make generally available to its
security holders an earnings statement (which need not be audited) which
will satisfy the provisions of the last paragraph of Section 11(a) of the
Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, (i) the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you and the Selling
Stockholders or mail to your order copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and
supplements (including any documents incorporated or deemed incorporated by
reference therein) to any such documents in each case as soon as available
and in such quantities as you and the Selling Stockholders may request, for
the purposes contemplated by the Act and (ii) the Company will file with
the Commission and The Nasdaq Stock Market on a timely basis all documents
required to be filed with the Commission pursuant to the Exchange Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the Blue Sky laws of such jurisdictions as you
designate, will comply with such laws and will continue such
qualifications, registrations and exemptions in effect so long as
reasonably required for the distribution of the Common Shares. The Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise you promptly of the suspension
of the qualification or registration of (or any such exemption relating to)
the Common Shares for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification,
registration or exemption, the Company, with your cooperation, will use its
best efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to you: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (ii) as
soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 90 days following the date of the Prospectus,
the Company will not, without the prior written consent of NationsBanc
Xxxxxxxxxx Securities LLC (which consent may be withheld at the sole
discretion of NationsBanc Xxxxxxxxxx Securities LLC), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the meaning
of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or
transfer, or announce the offering of, or file any registration statement
under the Act in respect of, any shares of the Company's Common Stock or
other equity securities, options or warrants to acquire shares of the
Company's Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Common Shares, other than the granting of
stock options pursuant to the Company's 1995 Equity Participation Plan and
the exercise of stock options disclosed in the Prospectus, and other than
restricted shares of Common Stock issued as consideration for any
acquisition of a business).
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's
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Common Stock in California), will comply with such Blue Sky laws and will
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(k) The Company will use its best efforts to maintain the Common Stock
for quotation as a national market system security on The Nasdaq Stock
Market (or for quotation on The New York Stock Exchange).
You may, in your sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of the obligations of the Company and, except as
provided below, the Selling Stockholders, hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel (including fees and expenses relating to the
representation of the Selling Stockholders by the Company's counsel) and the
Company's independent accountants, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the Blue Sky laws, (vii) the filing fee of the National
Association of Securities Dealers, Inc., and (viii) all other fees, costs and
expenses referred to in Item 13 of the Registration Statement. Except as
provided in this Section 7, Section 9 and Section 11 hereof, the Underwriters
shall pay all of their own expenses, including the fees and disbursements of
their counsel (excluding those relating to qualification, registration or
exemption under the Blue Sky laws and the Blue Sky memorandum referred to
above). This Section 7 shall not affect any agreements relating to the payment
of expenses between the Company and the Selling Stockholders.
The Selling Stockholders will pay (directly or by reimbursement) all fees
and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to (i) any fees and expenses of counsel for such Selling
Stockholders, (ii) any fees and expenses of the Agent, and (iii) all expenses
and taxes incident to the sale and delivery of the Common Shares to be sold by
such Selling Stockholders to the Underwriters hereunder.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m. (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares,
not later than 10:00 p.m.), Washington, D.C. Time, on the date of this
Agreement, or at such later time as shall have been consented to by you; if
the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and
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Regulations; and prior to such Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending
or, to the knowledge of the Company, the Selling Stockholders or you, shall
be contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i)
there shall not have been any change in the capital stock of the Company or
its direct or indirect subsidiaries other than pursuant to the exercise of
outstanding options and warrants disclosed in the Prospectus of the Company
or any of its subsidiaries or any material change in the indebtedness
(other than in the ordinary course of business) of the Company or any of
its subsidiaries, taken as a whole, (ii) except as set forth or
contemplated by the Registration Statement or the Prospectus, no material
verbal or written agreement or other transaction shall have been entered
into by the Company or any of its subsidiaries, which is not in the
ordinary course of business or which is reasonably likely to have a
material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries, taken as a whole, (iii) no loss or damage (whether or not
insured) to the property of the Company or any of its subsidiaries shall
have been sustained which materially and adversely affects the condition
(financial or otherwise), business, results of operations or prospects of
the Company and its subsidiaries, taken as a whole, (iv) no legal or
governmental action, suit or proceeding affecting the Company or any of its
subsidiaries which is material to the Company or any of its subsidiaries,
taken as a whole, or which affects or may affect the transactions
contemplated by this Agreement shall have been instituted or threatened and
(v) there shall not have been any material change in the condition
(financial or otherwise), business, management, results of operations or
prospects of the Company or any of its subsidiaries, taken as a whole,
which makes it impractical or inadvisable in your judgment to proceed with
the public offering or purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you, on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly
provided below:
(i) An opinion of Xxxxxxx, Xxxxxxxx, Xxxx, Xxxxxxxx & Xxxxxxxx,
counsel for the Company, addressed to you and dated the First Closing
Date, or the Second Closing Date, as the case may be, to the effect
that:
(1) Each of the Company and its Material Subsidiaries (as
defined below) has been duly incorporated and is validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus, and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(As used herein, "Material Subsidiary" means (a) each of Ambassador
Education Group, Inc., a Delaware corporation ("AEG"), Ambassador
Performance Group, Inc., a Delaware corporation, The Helin
Organization, a California corporation (all of the foregoing being
wholly owned subsidiaries of the Company), Ambassador Programs, Inc.,
a Delaware corporation, and Ambassador Specialty Group, Inc., a
Delaware corporation (the latter two corporations being wholly owned
subsidiaries of AEG), (b) any subsidiary of the Company deemed to be
such by the Company and you and (c) any corporation (i) of which more
than 50% of the voting stock is owned or controlled by the Company or
by one or more of its subsidiaries and (ii) to such counsel's
knowledge either (x) the total assets of which represent 5% or more
of the total assets of the Company on a consolidated basis as of
March 31, 1998 or (y) the net sales of which represent 5% or more of
the net sales of the Company on a consolidated basis for the year
ended December 31, 1997 or
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for the quarter ended March 31, 1998 or (z) the Company's and its
other subsidiaries' equity in the income from continuing operations
before income taxes, extraordinary items and cumulative effect of
changes in accounting principles of such corporation exceeds 5% of
such income of the Company on a consolidated basis for the year ended
December 31, 1997 or for the quarter ended March 31, 1998.)
(2) All shares of capital stock of the Company issued by the
Company subsequent to August 9, 1995 have been duly authorized and
validly issued, are fully paid and non-assessable, have been issued
in compliance with federal and state securities laws and, to the best
of such counsel's knowledge, are free of preemptive or similar
rights; without limiting the foregoing, to such counsel's knowledge
there are no preemptive or other rights to subscribe for or purchase
any of the Common Shares to be sold by the Company hereunder;
(3) All of the issued and outstanding shares of capital stock of
each of the Material Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable, and are owned of
record by the Company (and to such counsel's knowledge, beneficially
by the Company free and clear of all liens, encumbrances, equities,
claims, security interests, voting trusts or other title defects);
and the authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus and conforms to the descriptions thereof set forth or
incorporated by reference in the Prospectus;
(4) The Common Shares to be issued and sold by the Company
pursuant to this Agreement have been duly authorized, and when issued
to you and paid for by the Underwriters in accordance with the terms
of this Agreement, will be validly issued, fully paid and
nonassessable, and, to the best knowledge of such counsel, will not
have been issued in violation of or subject to any preemptive rights
or other rights to subscribe for or purchase securities, and the
certificates evidencing the Common Shares to be delivered hereunder
are in due and proper form under Delaware law and under the Company's
Certificate of Incorporation and Bylaws;
(5) The Company has the requisite corporate power and authority
to enter into this Agreement and to sell and deliver the Common
Shares to be sold by it to the several Underwriters; this Agreement
has been duly and validly authorized by all necessary corporate
action by the Company, has been duly and validly executed and
delivered by and on behalf of the Company, and is a valid and binding
agreement of the Company enforceable in accordance with its terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for
liabilities arising under the Act as to which no opinion need be
expressed; the issuance and sale of the Common Shares by the Company
pursuant to this Agreement will not result in the violation by the
Company of its Certificate of Incorporation or Bylaws or the Delaware
General Corporation Law or any federal or California statute, rule or
regulation known to such counsel to be applicable to the Company
(other than federal or state securities laws, which are specifically
addressed elsewhere in the opinion) or, to such counsel's knowledge,
any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any of its property or
any of its subsidiaries or any of their property, or in a material
breach of or constitute, either by itself or upon notice or the
passage of time or both, a material default under any agreement which
has been filed as an exhibit to the Registration Statement or the
Company 10-K pursuant to Item 601(b)(10) of Regulation S-K, and no
consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the consummation
of the sale of the Common Shares pursuant to this Agreement, except
such as have been obtained and are in full force and effect under the
Act and such as may be required under the Exchange Act or state
securities laws in connection with the purchase and distribution of
such Common Shares by the Underwriters;
(6) The Common Shares have been approved for listing on the
Nasdaq National Market;
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(7) The Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued under the Act
and no proceedings therefor have been initiated or threatened by the
Commission; and any required filing of the Prospectus pursuant to
Rule 424(b) under the Act has been made in accordance with Rule
424(b) and 430A under the Act;
(8) The Registration Statement and the Prospectus (including
each amendment or supplement thereto) comply as to form in all
material respects with the requirements for registration statements
on Form S-3 under the Act and the rules and regulations of the
Commission thereunder; it being understood, however, that such
counsel need not express an opinion with respect to the financial
statements, schedules and other financial data included in the
Registration Statement or the Prospectus;
(9) To the best of such counsel's knowledge, there are no
leases, contracts, agreements or documents of a character required to
be disclosed in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement which are not
disclosed or filed, as required;
(10) To the best of such counsel's knowledge, there are no legal
or governmental actions, suits or proceedings pending or threatened
against the Company which are required to be described in the
Prospectus which are not described as required;
(11) The documents incorporated by reference in the Prospectus
(except for any financial statements and schedules included in such
documents as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
(12) The statements set forth in the Prospectus under the
headings "Risk Factors -- Shares Eligible for Future Sale,"
"Business -- Legal Proceedings" and "Certain Transactions" and the
description of the Company's capital stock included or incorporated
by reference in the Prospectus, insofar as such statements constitute
a summary of legal matters, legal proceedings, contracts or the
Company's charter or by-law provisions, are accurate in all material
respects;
(13) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options or warrants issued by the Company to purchase
capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company; and
(14) To the best of such counsel's knowledge, no holders of
securities of the Company have rights which have not been waived to
the registration of shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company or
the offering contemplated hereby.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of the Underwriters, at which the contents of the
Registration Statement and the Prospectuses and related matters were
discussed and, although such counsel is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectuses
and has not made any independent check or verification thereof, during the
course of such participation, no facts came to their attention that caused
such counsel to believe that the Registration Statement, at the time it
became effective, contained an 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 or as of the Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact
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necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; it being understood that such
counsel need not express a belief with respect to the financial statements,
schedules and other financial data included in the Registration Statement
or the Prospectus.
In rendering such opinions, such counsel may rely as to matters of
fact, on certificates of officers of the Company and of governmental
officials, in which case their opinion is to state that they are so doing
and the Underwriters are justified in relying on such certificates, and
copies of said certificates are to be delivered to counsel for the
Underwriters.
(ii) An opinion of Xxxxxxx, Xxxxxxxx, Xxxx, Xxxxxxxx & Xxxxxxxx,
counsel for the Selling Stockholders, addressed to the Underwriters and
dated the First Closing Date, or the Second Closing Date, as the case
may be, to the effect that:
(1) This Agreement and the Stockholders Agreement have been duly
authorized, executed and delivered by or on behalf of each of the
Selling Stockholders; the Agent has been duly and validly authorized
to act as the custodian of the Common Shares to be sold by each such
Selling Stockholder; and the performance of this Agreement and the
Stockholders Agreement and the consummation of the transactions
herein contemplated by the Selling Stockholders will not result in a
breach of, or constitute a default under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which any of
the Selling Stockholders is a party or by which any of the Selling
Stockholders or any of their properties may be bound, or violate any
statute, judgment, decree, order, rule or regulation known to such
counsel of any court or governmental body having jurisdiction over
any of the Selling Stockholders or any of their properties; and to
the best of such counsel's knowledge, no approval, authorization,
order or consent of any court, regulatory body, administrative agency
or other governmental body is required for the execution and delivery
of this Agreement or the Stockholders Agreement or the consummation
by the Selling Stockholders of the transactions contemplated by this
Agreement, except such as have been obtained and are in full force
and effect under the Exchange Act, the Act and such as may be
required under the rules of the NASD and applicable Blue Sky laws;
(2) To the best of such counsel's knowledge, the Selling
Stockholders have full right, power and authority to enter into this
Agreement and the Stockholders Agreement and to sell, transfer and
deliver the Common Shares to be sold on such Closing Date by such
Selling Stockholders hereunder and good and marketable title to such
Common Shares so sold, free and clear of all liens, encumbrances,
equities, claims, restrictions, security interests, voting trusts, or
other defects of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona fide purchasers) who
have purchased such Common Shares hereunder; and
(3) To the best of such counsel's knowledge, this Agreement and
the Stockholders Agreement are valid and binding agreements of each
of the Selling Stockholders in accordance with their terms except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except with respect to
those provisions relating to indemnities or contributions for
liabilities under the Act, as to which no opinion need be expressed.
In rendering such opinions, such counsel may rely as to matters of
fact, on certificates of the Selling Stockholders and of officers of the
Company and of governmental officials, in which case their opinion is to
state that they are so doing and that they believe that the Underwriters
are justified in relying on such certificates and copies of said
certificates are to be delivered to counsel for the Underwriters.
(iii) Such opinion or opinions of Pillsbury Madison & Sutro LLP,
counsel for the Underwriters dated the First Closing Date or the Second
Closing Date, as the case may be, with respect to the incorporation of
the Company, the sufficiency of all corporate proceedings and other
legal matters relating to this Agreement, the validity of the Common
Shares, the Registration Statement and the
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Prospectus and other related matters as you may reasonably require, and
the Company and the Selling Stockholders shall have furnished to such
counsel such documents and shall have exhibited to them such papers and
records as they may reasonably request for the purpose of enabling them
to pass upon such matters. In connection with such opinions, such
counsel may rely on representations or certificates of officers of the
Company and governmental officials.
(iv) A certificate of the Company executed by the Chairman of the
Board or President and the chief financial or accounting officer of the
Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company set forth
in Section 2 of this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or the Second Closing
Date, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus; in
his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein
regarding the Company and its subsidiaries; and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(4) Since the initial date on which the Registration Statement
was filed, no agreement, written or oral, transaction or event has
occurred which should have been set forth in an amendment to the
Registration Statement or in a supplement to or amendment of any
prospectus which has not been disclosed in such a supplement or
amendment;
(5) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as
disclosed in or contemplated by the Prospectus, there has not been
any material adverse change or a development involving a material
adverse change in the condition (financial or otherwise), business,
properties, results of operations, management or prospects of the
Company and its subsidiaries; and no legal or governmental action,
suit or proceeding is pending or, to such person's knowledge,
threatened against the Company or any of its subsidiaries which is
material to the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, or which may adversely affect the transactions contemplated
by this Agreement; since such dates and except as so disclosed,
neither the Company nor any of its subsidiaries has entered into any
verbal or written agreement or other transaction which is not in the
ordinary course of business or which could result in a material
adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company and its
subsidiaries, taken as a whole, or incurred any material liability or
obligation, direct, contingent or indirect, made any change in its
capital stock, made any material change in its short-term debt or
funded debt or repurchased or otherwise acquired any of the Company's
capital stock; and the Company has not declared or paid any dividend,
or made any other distribution, upon its outstanding capital stock
payable to stockholders of record on a date prior to the First
Closing Date or Second Closing Date; and
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(6) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus and except as
disclosed in or contemplated by the Prospectus, the Company and its
subsidiaries have not sustained a material loss or damage by strike,
fire, flood, windstorm, accident or other calamity (whether or not
insured).
(v) On the First Closing Date, a certificate, dated such Closing
Date and addressed to you, signed by or on behalf of each of the Selling
Stockholders to the effect that the representations and warranties of
such Selling Stockholder in this Agreement are true and correct, as if
made at and as of the First Closing Date, and such Selling Stockholder
has complied with all the agreements and satisfied all the conditions on
his part to be performed or satisfied prior to the First Closing Date.
(vi) On the date before this Agreement is executed and also on the
First Closing Date and the Second Closing Date a letter addressed to you
from Coopers & Xxxxxxx L.L.P., independent accountants, the first one to
be dated the day before the date of this Agreement, the second one to be
dated the First Closing Date and the third one (in the event of a Second
Closing) to be dated the Second Closing Date, in form and substance
satisfactory to you.
(vii) On or before the First Closing Date, letters from each of the
Selling Stockholders and each director and officer of the Company, in
form and substance satisfactory to you, confirming that for a period of
90 days after the date of the Prospectus, such person will not, without
the prior written consent of NationsBanc Xxxxxxxxxx Securities LLC
(which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell (including
without limitation any short sale), pledge, transfer, establish an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of any shares of the Company's Common
Stock or other equity securities, options or warrants to acquire shares
of Common Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock currently or hereafter owned
either of record or beneficially (as defined in Rule 13d-3 under the
Exchange Act) by such person, or publicly announce his intention to do
any of the foregoing.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Pillsbury Madison & Sutro LLP, counsel for the Underwriters. The Company
shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to you or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you to the Company and the
Selling Stockholders without liability on the part of any Underwriter, the
Company or the Selling Stockholders except for the expenses to be paid or
reimbursed by the Company and by the Selling Stockholders pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding any
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 8, or if the sale to the Underwriters of the Common Shares at the
First Closing is not consummated because of any refusal, inability or failure on
the part of the Company or the Selling Stockholders to perform any agreement
herein or to comply with any provision hereof, the Company agrees to reimburse
you and the other Underwriters upon demand for all out-of-pocket expenses that
shall have been reasonably incurred by you and them in connection with the
proposed purchase and the sale of the Common Shares, including but not limited
to fees and disbursements of counsel, printing expenses, travel expenses,
postage, telegraph charges and telephone charges relating directly to the
offering contemplated by the Prospectus. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section, Section 7 and Section 11 shall at all times be effective and shall
apply.
SECTION 10. Effectiveness of Registration Statement. You, the Company and
the Selling Stockholders will use your, its and their best efforts to cause the
Registration Statement to become effective, to prevent the
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issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 11. 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 the Act
against any losses, claims, damages, liabilities or expenses, joint or several,
to which such Underwriter or such controlling person may become subject, under
the Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) (i) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of them
not misleading (in the case of a Preliminary Prospectus or the Prospectus, in
light of the circumstances in which they are made), or (ii) arise out of or are
based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained herein or any failure of the Company to
perform its obligations hereunder or under law; and will reimburse each
Underwriter and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof. The Company and the Selling Stockholders may agree, as among themselves
and without limiting the rights of the Underwriters under this Agreement, as to
their respective amounts of such liability for which they each shall be
responsible. In addition to its other obligations under this Section 11(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, or any
inaccuracy in the representations and warranties of the Company herein or
failure to perform its obligations hereunder, all as described in this Section
11(a), it will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse each Underwriter for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by Bank of America NT&SA, San Francisco, California (the "Prime Rate"). Any such
interim reimbursement payments which are not made to an Underwriter within 30
days of a request for reimbursement, shall bear interest at the Prime Rate from
the date of such request. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each of the Selling Stockholders, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) (i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based
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upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of them
not misleading (in the case of a Preliminary Prospectus or the Prospectus, in
light of the circumstances in which they are made), or (ii) arise out of or are
based in whole or in part on any inaccuracy in the representations and
warranties of the Selling Stockholders contained herein or any failure of the
Selling Stockholders to perform their respective obligations hereunder or under
law; and will reimburse each Underwriter and each such controlling person for
any legal and other expenses as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Selling Stockholders
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof; provided
further, that each Selling Stockholder shall only be liable under this paragraph
for an amount equal to the aggregate initial public offering price of the Common
Shares sold by such Selling Stockholder to the Underwriters minus the
underwriting discounts paid thereon to the Underwriters; provided further that
no Selling Stockholder shall be required to provide indemnification hereunder
until the Underwriter or controlling person seeking indemnification shall have
first made a demand for payment on the Company with respect to any such loss,
claim, damage, liability or expense and the Company shall have either rejected
such demand or failed to make such requested payment within 180 days after
receipt thereof. The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for which they each
shall be responsible. In addition to their other obligations under this Section
11(b), the Selling Stockholders agree that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, or any inaccuracy in the representations and warranties of the
Selling Stockholders herein or failure to perform its obligations hereunder, all
as described in this Section 11(b), it will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Selling
Stockholders' obligation to reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Underwriter shall
promptly return it to the Selling Stockholders together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to an Underwriter within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the date
of such request. This indemnity agreement will be in addition to any liability
which the Selling Stockholders may otherwise have.
(c) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, the Selling Stockholders and each person, if any, who controls the
Company or any Selling Stockholder within the meaning of the Act, against any
losses, claims, damages, liabilities or expenses to which the Company, or any
such director, officer, Selling Stockholder or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; and will
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reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In addition
to its other obligations under this Section 11(c), each Underwriter severally
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 11(c) which relates to information furnished to the Company pursuant to
Section 4 hereof, it will reimburse the Company (and, to the extent applicable,
each officer, director, controlling person or Selling Stockholder) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling Stockholder)
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, the Company
(and, to the extent applicable, each officer, director, controlling person or
Selling Stockholder) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Company within 30 days
of a request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by you in the case of paragraphs (a) and (b),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(e) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b),
(c) or (d) in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is
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appropriate to reflect the relative benefits received by the Company, the
Selling Stockholders and the Underwriters from the offering of the Common Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Selling Stockholders and the Underwriters in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits received by the Company, the Selling Stockholders and the
Underwriters shall be deemed to be in the same proportion, in the case of the
Company and the Selling Stockholders as the total price paid to the Company and
to the Selling Stockholders, respectively, for the Common Shares sold by them to
the Underwriters (net of underwriting commissions but before deducting
expenses), and in the case of the Underwriters as the underwriting commissions
received by them bears to the total of such amounts paid to the Company and to
the Selling Stockholders and received by the Underwriters as underwriting
commissions. The relative fault of the Company, the Selling Stockholders and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact or the inaccurate or the alleged
inaccurate representation and/or warranty relates to information supplied by the
Company, the Selling Stockholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subparagraph (d) of
this Section 11, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (d) of this Section 11 with respect to
notice of commencement of any action shall apply if a claim for contribution is
to be made under this subparagraph (e); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
given under subparagraph (d) for purposes of indemnification. The Company, the
Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined solely 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 in this subparagraph (e).
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint.
(f) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a), 11(b) and 11(c)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
interim reimbursement provisions contained in Sections 11(a), 11(b) and 11(c)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 11(a), 11(b) and 11(c) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for all
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Underwriters of all such shares in accordance
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with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs is more than the above percentage and arrangements
satisfactory to you and the Company for the purchase of such Common Shares by
other persons are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Company or the Selling Stockholders except for the expenses to be paid by
the Company and the Selling Stockholders pursuant to Section 7 hereof and except
to the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 p.m., California Time, on the first full business
day following the effectiveness of the Registration statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 p.m., California Time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling Stockholders
to any Underwriter (except for the expenses to be paid or reimbursed by the
Company and the Selling Stockholders pursuant to Sections 7 and 9 hereof
and except to the extent provided in Section 11 hereof) or of any
Underwriter to the Company or the Selling Stockholders (except to the
extent provided in Section 11 hereof)
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak or
escalation of major hostilities or other national or international calamity
or any substantial change in political, financial or economic conditions
shall have occurred or shall have accelerated or escalated to
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such an extent, as, in your judgment, to affect adversely the marketability
of the Common Shares, (iii) if any adverse event shall have occurred or
shall exist which makes untrue or incorrect in any material respect any
statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements
or information contained therein not misleading in any material respect, or
(iv) if there shall be any action, suit or proceeding pending or
threatened, or there shall have been any development or prospective
development involving particularly the business or properties or securities
of the Company or any of its subsidiaries or the transactions contemplated
by this Agreement, which, in your reasonable judgment, may materially and
adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any
termination pursuant to this subsection (b) shall be without liability on
the part of any Underwriter to the Company or the Selling Stockholders or
on the part of the Company or the Selling Stockholders to any Underwriter
(except for expenses to be paid or reimbursed by the Company and the
Selling Stockholders pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof).
SECTION 15. Failure of the Selling Stockholders to Sell and Deliver. If one
or more of the Selling Stockholders shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by such Selling
Stockholders at the First Closing Date under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the Selling Stockholders, either (i) terminate this Agreement without any
liability on the part of any Underwriter or, except as provided in Sections 7, 9
and 11 hereof, the Company or the Selling Stockholders, or (ii) purchase the
shares which the Company and other Selling Stockholders have agreed to sell and
deliver in accordance with the terms hereof. In the event of a failure by one or
more of the Selling Stockholders to sell and deliver as referred to in this
Section, either you or the Company shall have the right to postpone the Closing
Date for a period not exceeding seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected.
SECTION 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in writing and,
if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx Xxxxxx, Esq., with a copy to Pillsbury Madison & Sutro LLP, 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxx,
Esq.; if sent to the Company shall be mailed, delivered or telegraphed and
confirmed to the Company at Xxxxxx X. Xxxxxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxxxx
00000 with a copy to Xxxxxxx, Xxxxxxxx, Xxxx, Xxxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx; and
if sent to the Selling Stockholders shall be mailed, delivered or telegraphed
and confirmed to the Selling Stockholders at Xxxxxx X. Xxxxxxxxxx Xxxxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000 with a copy to Xxxxxxx, Xxxxxxxx, Xxxx, Xxxxxxxx &
Xxxxxxxx, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx. The Company, the Selling Stockholders or you may change the
address for receipt of communications hereunder by giving notice to the others.
SECTION 18. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 12 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 11, and in each case their respective
successors, personal representatives and assigns, and no other person will have
any right or obligation hereunder. No such assignment shall relieve any party of
its obligations hereunder. The term "successors" shall not include any purchaser
of the Common Shares as such from any of the Underwriters merely by reason of
such purchase.
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SECTION 19. Representation of Underwriters. Except as otherwise expressly
provided herein, any action under or in respect of this Agreement taken by you
jointly or by NationsBanc Xxxxxxxxxx Securities LLC will be binding upon all the
Underwriters.
SECTION 20. Partial Unenforceability. The invalidity or unenforceability of
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
SECTION 21. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 22. General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Stockholders represents by so doing that he has been duly appointed
as Attorney-in-fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Stockholders.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
AMBASSADORS INTERNATIONAL, INC.
By
-----------------------------------
Xxxx X. Xxxxxxxxx
President
SELLING STOCKHOLDERS
By
-----------------------------------
Xxxx X. Xxxxxxxxx
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as
of the date first above written.
NATIONSBANC XXXXXXXXXX
SECURITIES LLC
XXXXX & COMPANY INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
X. X. XXXXXXXX & CO.
By NATIONSBANC XXXXXXXXXX
SECURITIES LLC
By:
--------------------------------
Managing Director
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SCHEDULE A
NUMBER OF FIRM
COMMON SHARES
NAME OF UNDERWRITER TO BE PURCHASED
------------------- ---------------
NationsBanc Xxxxxxxxxx Securities LLC.......................
Xxxxx & Company Incorporated................................
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation.........
X. X. Xxxxxxxx & Co. .......................................
---------
Total............................................. 2,218,000
=========
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SCHEDULE B
NUMBER OF FIRM
COMMON SHARES TO
BE SOLD BY SELLING
NAME OF SELLING STOCKHOLDER STOCKHOLDERS
--------------------------- ------------------
Xxxx X. Xxxxxxxxx........................................... 200,000
Xxxxx America, Co. ......................................... 18,000
-------
Total............................................. 218,000
=======
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