EXHIBIT 1.1
ALLSTAR SYSTEMS, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
---------------
UNDERWRITING AGREEMENT
------------
_______________, 1996
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.,
Sutro & Co. Incorporated
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.
Cityplace
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
Allstar Systems, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
1,500,000 shares and, at the election of the Underwriters, up to 305,250
additional shares of Common Stock, par value $.01 per share ("Stock") of the
Company, and the stockholder of the Company named in Schedule II hereto (the
"Selling Stockholder") proposes, subject to the terms and conditions stated
herein, to sell to the Underwriters an aggregate of 535,000 shares of Stock. The
aggregate of 2,035,000 shares to be sold by the Company and the Selling
Stockholder is herein called the "Firm Shares" and the aggregate of 305,250
additional shares to be sold by the Company is herein called the "Optional
Shares." The Firm Shares and the Optional Shares which the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement in respect of the Firm Shares and
Optional Shares has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; no other document with respect to such registration statement has
heretofore been filed with the Commission; and no stop order suspending
the effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), being hereinafter called
a "Preliminary Prospectus"; the various parts of such registration
statement, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A or Rule 434 under the Act to be
part of the registration statement at the time it was declared
effective, each as amended at the time such part of the registration
statement became effective, being hereinafter called the "Registration
Statement"; and such final prospectus, in the form first filed pursuant
to Rule 424(b) under the Act, being hereinafter called the
"Prospectus");
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission or the Blue Sky or
securities authority of any jurisdiction, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an 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, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by (A) an Underwriter
through you expressly for use therein or (B) a Selling Stockholder
expressly for use in the preparation of the information required to be
presented therein pursuant to Item 7 of Form S-1;
(iii) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an 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, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by (A) an Underwriter through you
expressly for use therein or (B) a Selling Stockholder for use in the
preparation of the information to be presented therein pursuant to Item
7 of Form S-1;
(iv) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, that has had a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect") and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus
and except as set forth or contemplated in the Prospectus, there has not
been any change in the capital stock, short-term debt or long-term debt
of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective Material Adverse
Effect;
2
(v) The Company and its subsidiaries have good and marketable
title in fee simple or, in jurisdictions outside of the United States,
the substantive equivalent thereto, to all material real property and
good and marketable title to all material personal property owned by
them, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and
its subsidiaries; and any material real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries;
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so qualified
in any such jurisdiction; and each subsidiary of the Company has been
duly incorporated and is validly existing as a corporation and is in
good standing under the laws of its jurisdiction of incorporation;
(vii) This Agreement and the transactions contemplated herein
have been duly and validly authorized by the Company and this Agreement
has been duly and validly executed and delivered by the Company.
(viii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description thereof contained in
the Prospectus in all material respects; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, and are fully paid and non-assessable and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances or
claims;
(ix) All offers and sales of (A) the Common Stock by the Company
(other than the Shares); and (B) the Common Stock of Allstar Systems,
Inc., a Texas corporation and the Company's predecessor, were at all
relevant times exempt from the registration requirements of the Act and
were the subject of an available exemption from the registration
requirements of applicable state securities or Blue Sky laws.
(x) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and nonassessable and
will conform to the description of the Stock contained in the Prospectus
in all material respects;
(xi) The issue and sale of the Firm Shares and the Optional
Shares by the Company and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any
3
indenture, mortgage, deed of trust, loan agreement, sale/leaseback
agreement or other agreement or instrument (collectively, the "Specified
Documents") to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject except where such conflict, breach or violation would not
have a Material Adverse Effect, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or the
Bylaws of the Company or any statute or any order, rule or regulation of
any court or government agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties except
where such violation would not have a Material Adverse Effect; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required for
the issue and sale of the Shares or the consummation by the Company of
the transactions contemplated by this Agreement, except the registration
under the Act of the Shares, such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters and such consents,
approvals, authorizations, registrations or qualifications the absence
of which would not have a Material Adverse Effect;
(xii) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect; and, to
the best of the Company's knowledge, no such proceedings are threatened
by governmental authorities or by others;
(xiii) Deloitte & Touche LLP, who have certified financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(xiv) The historical financial statements, including the notes
thereto, and schedules included in the Registration Statement and the
Prospectus present fairly, on the basis stated therein, the financial
position of the Company as of the dates of such financial statements and
the results of such operations for the periods specified. Such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, except as otherwise
disclosed in the Registration Statement; the schedules included in the
Registration Statement present fairly the information required to be
stated therein; and the other historical financial data of the Company
and its subsidiaries included in the Registration Statement and the
Prospectus are materially accurate and prepared on a basis consistent
with such financial statements and schedules and the books and records
of the Company;
(xv) The Company has no subsidiaries other than Stratasoft, Inc.;
(xvi) The Company and its subsidiaries own, or possess adequate
rights to use, all the patents, trademarks, service marks, trade names
and copyrights ("Intellectual Property") necessary for the conduct of
its business as currently conducted by it. To the best knowledge of the
Company, none of the activities engaged in by the Company infringes or
conflicts with Intellectual Property rights of others;
4
(xvii) Except as set forth in the Prospectus, no person has any
right to require the Company to register any securities under the Act;
(xviii) The Company has not taken, directly or indirectly, any
action designed to cause or result in, or which constitutes or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate
the sale or resale of the Shares;
(xvix) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as
an "investment company" under the Investment Company Act of 1940;
(xx) There are no Specified Documents of a character required to
be described or referred to in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement by the Act or
by the Regulations that have not been described or referred to therein
or filed as required;
(xxi) The Company and each of its subsidiaries maintain a system
of internal accounting controls that, taken as a whole, are sufficient
to provide reasonable assurance that: (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; and
(xxii) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida), relating to
doing business with the Government of Cuba or any person or affiliate
located in Cuba.
(b) The Selling Stockholder represents and warrants to, and agrees with,
each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement, the Power of Attorney (the "Power of Attorney") and the
Custody Agreement (the "Custody Agreement") hereinafter referred to, and
for the sale and delivery of the Shares to be sold by such Selling
Stockholder hereunder, have been obtained; and such Selling Stockholder
has full right, power and authority to enter into this Agreement, the
Power of Attorney and the Custody Agreement and to sell, assign,
transfer and deliver the Shares to be sold by such Selling Stockholder
hereunder;
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney and
the Custody Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any statute, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the property or assets
5
of such Selling Stockholder is subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of such Selling Stockholder if such Selling Stockholder is a
corporation, or the Articles of Partnership of such Selling Stockholder
if such Selling Stockholder is a partnership, or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Selling Stockholder or the property of
such Selling Stockholder;
(iii) Such Selling Stockholder has good and valid title to the
Shares to be sold at the First Time of Delivery (as defined in Section 4
hereof) by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances, equities and claims, and immediately prior to the
First Time of Delivery such Selling Stockholder will have good and valid
title to the Shares to be sold at such Time of Delivery by such Selling
Stockholder hereunder, free and clear of all liens, encumbrances,
equities or claims; and, upon delivery of such Shares and payment
therefor pursuant hereto, good and valid title to such Shares, free and
clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters;
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares; and
(v) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated, each of the Selling
Stockholder agrees to deliver to you prior to or at the First Time of Delivery
(as hereinafter defined) a properly completed and executed United States
Treasury Department Form W-9 (or Form W-8 if applicable, or other applicable
form or statement specified by Treasury Department regulations in lieu thereof).
The Selling Stockholder represents and warrants that certificates in
negotiable form representing all of the Shares to be sold by such Selling
Stockholder hereunder have been placed in custody under a Custody Agreement, in
the form heretofore furnished to you, duly executed and delivered by such
Selling Stockholder to the persons indicated on Schedule II hereto, and each of
them, as custodians (the "Custodians"), and that such Selling Stockholder has
duly executed and delivered a Power of Attorney, in the form heretofore
furnished to you, appointing the persons indicated in Schedule II hereto, and
each of them, as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Stockholder, to determine the purchase price to be paid
by the Underwriters to the Selling Stockholder as provided in Section 2 hereof,
to authorize the
6
delivery of the Shares to be sold by such Selling Stockholder hereunder and
otherwise to act on behalf of such Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
The Selling Stockholder specifically agrees that the Shares represented
by the certificates held in custody for such Selling Stockholder under the
Custody Agreement are subject to the interests of the Underwriters hereunder and
that the arrangements made by such Selling Stockholder for such custody, and the
appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of
Attorney, are to that extent irrevocable. The Selling Stockholder specifically
agrees that the obligations of the Selling Stockholder hereunder shall not be
terminated by operation of law, whether by the death or incapacity of any
individual Selling Stockholder or, in the case of an estate or trust, by the
death or incapacity of any executor or trustee or the termination of such estate
or trust, or in the case of a partnership or corporation, by the dissolution of
such partnership or corporation, or by the occurrence of any other event. If any
individual Selling Stockholder or any such executor or trustee should die or
become incapacitated, or if any such estate or trust should be terminated, or if
any such partnership or corporation should be dissolved, or if any other such
event should occur, before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of the Selling
Stockholder in accordance with the terms and conditions of this Agreement and of
the Custody Agreement, and actions taken by the Attorneys-in Fact pursuant to
the Powers of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless of whether
or not the Custodians, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution or other
event.
2. Subject to the terms and conditions herein set forth, (a) the Company
and the Selling Stockholder agree, severally and not jointly, to sell to each of
the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholder, at a purchase
price per share of $[_____], the number of Firm Shares (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholder as
set forth opposite their respective names in Schedule II hereto by a fraction,
the numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
I hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all the Underwriters from the Company and the Selling
Stockholder hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (a) of this Section
2, that portion of the number of Optional Shares as to which such election shall
have been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of the Optional Shares which all of the Underwriters are entitled to
purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 305,250 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 45 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional
7
Shares to be purchased and the date on which such Optional Shares are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. Certificates in definitive form for the Shares to be purchased by
each Underwriter hereunder, and in such denominations and registered in such
names as ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc. may request upon at least 48 hours' prior
notice to the Company and the Selling Stockholder, shall be delivered by or on
behalf of the Company and the Selling Stockholder to you for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer to the Company and the Selling
Stockholder, as their interests may appear in same day funds, or by payment in
such other manner as shall be agreed to in writing by the Company and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Refsnes, Inc., all at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.,
Cityplace, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or
at such other place as shall be agreed upon by you and the Company. The time and
date of such delivery and payment shall be, with respect to the Firm Shares,
9:00 a.m., Dallas time, on , 1996, or at such other time and date as you and the
Company and the Selling Stockholder may agree upon in writing, and, with respect
to the Optional Shares, 9:00 a.m., Dallas time, on the date specified by you in
the written notice given by you of the Underwriters' election to purchase such
Optional Shares, or at such other time and date as you and the Company may agree
upon in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the "Second
Time of Delivery," and each such time and date for delivery is herein called a
"Time of Delivery."
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) or Rule 434 under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when the
Registration Statement, or any amendment thereto, has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish you with copies thereof; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
8
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if the delivery
of a prospectus is required at any time prior to the expiration of nine months
after the time of the issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Shares at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as you
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than 18 months after the effective date
of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
thereunder (including at the option of the Company Rule 158);
(e) (i) During the period beginning from the date hereof and continuing
to and including the date 180 days after the effective date of the Prospectus,
not to, directly or indirectly, offer, sell, contract to sell, grant any option
to sell or otherwise dispose of Stock, or other securities which are
substantially similar to the Stock, or securities which are convertible into or
exercisable or exchangeable for or any rights to purchase or acquire Stock or
other securities which are substantially similar to the Stock, without your
prior written consent (other than the sale of the Shares pursuant to this
Agreement or the grant of options or of restricted stock awards pursuant to
stock option or restricted stock plans existing on the date of this Agreement,
provided such options are not exercisable within the 180 day period); and (ii)
that it will use its reasonable efforts to cause each person who has entered
into a Lock-up Agreement to comply therewith, will not grant any waivers or
consents to non-compliance therewith and will otherwise enforce its rights under
each such agreement, in each case unless and to the extent that it shall have
obtained your prior written consent;
(f) To furnish to its stockholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements
of income, stockholders' equity and cash flow of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;
9
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) To use its best efforts to have the Shares accepted for quotation on
the Nasdaq National Market;
(i) The Company will apply the net proceeds from the sale of the Shares
in the manner described in "Use of Proceeds" in the Prospectus; and
(j) The Company will file with the Commission such reports on Form SR as
may be required pursuant to Rule 463 of the Regulations.
6. The Company and the Selling Stockholder covenant and agree with one
another and with the several Underwriters that, except as provided below, the
Company will pay or cause to be paid all costs and expenses incident to the
performance of the Company's and the Selling Stockholder's obligations hereunder
including: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum and
any other documents in connection with the offering, purchase, sale and delivery
of the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) the filing fees and the fees and expenses of the
Underwriters incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Shares;
(v) the cost of preparing stock certificates; (vi) the cost and charges of any
transfer agent or registrar; (vii) the Selling Stockholder's pro rata share of
the fees and expenses of the Attorneys-in-Fact and the Custodians; and (viii)
all registration expenses and stock transfer taxes incident to the sale and
delivery of the Shares to be sold by the Selling Stockholder to the Underwriters
hereunder; PROVIDED, HOWEVER, that, notwithstanding the foregoing, (A) all
underwriters' discounts and commissions in respect of the sale of the Shares by
the Selling Stockholder shall be paid by the Selling Stockholder, (B) your
$150,000 non-accountable expense allowance for due diligence shall be paid by
the Company and the Selling Stockholder in proportion to the number of Shares
sold by each in the public offering and (C) all fees and expenses of counsel to
the Selling Stockholder shall be paid by the Selling Stockholder. In connection
with Clause (viii) of the preceding sentence, the Company agrees to reimburse
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc. for associated carrying costs if such tax payment
is not rebated on the day of payment and for any portion of such tax payment not
rebated. It is understood, however, that the Company shall bear, and the Selling
Stockholder shall not be required to pay or reimburse the Company for, the cost
of any other matters not directly relating to the sale and purchase of the
Shares pursuant to this Agreement and that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, stock
10
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholder herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Stockholder shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
no stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Gardere & ▇▇▇▇▇, L.L.P., counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery, with
respect to the incorporation of the Company, this Agreement, the validity of the
Shares being delivered at such Time of Delivery, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery,
but with respect to such Shares to be issued and delivered by the
Company, when issued and delivered by the Company pursuant to this
Agreement against payment therefor) have been duly and validly
authorized and issued and are fully paid and non-assessable; and the
Shares conform to the description of the Stock contained in the
Prospectus in all material respects;
(iii) The form of certificates for the Shares complies in all
material respects with the requirements of the General Corporation Law
of the State of Delaware and the Company's Bylaws.
(iv) The Company is duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, except where
such failure would not have a Material Adverse Effect (such counsel
being entitled to rely in respect
11
of the opinion in this clause upon certificates of Secretaries of State
or other appropriate public officials and in respect of matters of fact
upon certificates of officers of the Company);
(v) Each subsidiary of the Company listed on Exhibit A has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; and all of
the issued shares of capital stock of each such subsidiary have been
duly and validly authorized and issued, are fully paid and
non-assessable, and to best of such counsel's knowledge such shares
(except for directors' qualifying shares and except as otherwise set
forth in the Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances or claims (such
counsel being entitled to rely in respect of the opinion in this clause
upon certificates of Secretaries of State or other appropriate public
officials and in respect of matters of fact upon certificates of
officers of the Company or its subsidiaries);
(vi) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its subsidiaries
is the subject which, if determined adversely to the Company or any of
its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened by governmental authorities or others;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company;
(viii) The execution and delivery of this Agreement and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated herein will not
(A) conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any Specified Document
known to such counsel (based solely on their review of the documents on
a list of all Specified Documents of the Company as certified by the
Chief Executive Officer and the Chief Financial Officer of the Company
and such other Specified Documents, if any, known to members of such
counsel devoting substantive attention to matters as to which such
counsel has been retained by the Company) which conflict, breach or
default would have a Material Adverse Effect, (B) result in any
violation of the provisions of the Certificate of Incorporation or
Bylaws of the Company or (C) result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or
any of their properties where such violation would have a Material
Adverse Effect (provided, however, that no opinion is expressed in this
clause (C) with respect to the antifraud provisions of the federal and
any state's securities laws or the rules and regulations promulgated
thereunder);
(ix) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement, except
the registration under the Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters; and
(x) The Registration Statement and the Prospectus and any further
amendment thereto made by the Company prior to such Time of Delivery
(other than the financial statements and
12
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder;
Such counsel shall state that such counsel has participated in
conferences with directors, officers and other representatives of the Company,
representatives of the independent public accountants of the Company and your
representatives at which the contents of the Registration Statement and
Prospectus and related matters were discussed, have participated in the
preparation of the Registration Statement and the Prospectus, have reviewed all
documents referred to in the Prospectus or annexed as an exhibit to the
Registration Statement, as well as certain other corporate documents furnished
to such counsel by the Company and, on the basis of the foregoing and without
independent check or verification, no facts have come to the attention of such
counsel to lead such counsel to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion) 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, in
light of the circumstances in which they were made, not misleading or that, as
of its date, the Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as of such Time
of Delivery, either the Registration Statement or the Prospectus or any further
amendment thereto made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules therein, as to which such counsel
need express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
Such counsel shall also state that because the primary purpose of such
counsel's engagement was not to establish or confirm factual matters or
financial, accounting or statistical matters or related data and because of the
wholly or partially non-legal character of many of the statements contained in
the Registration Statement and the Prospectus, such counsel is not passing upon,
and does not assume responsibility for and have not verified, the accuracy,
completeness and fairness of, the statements contained in the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
that without limiting the foregoing, such counsel assumes no responsibility for
and has not independently verified the accuracy, completeness or fairness of the
financial statements and schedules and other financial, statistical and related
data included in the Registration Statement and the Prospectus (and such counsel
has not examined the accounting, financial or statistical records from which
such financial statements, schedules and related data are derived), and that,
although certain portions of the Registration Statement and the Prospectus
(including financial statements and schedules and related data) have been
included therein on the authority of "experts" within the meaning of the Act,
such counsel is not an expert with respect to any portion of the Registration
Statement;
In rendering such opinion, such counsel may also state that as used in
such opinion, the words "to our knowledge," "known to us," or words of similar
import mean that during the course of such counsel's representation of the
Company, which commenced on July 3, 1996, no information has come to the
attention of the attorneys of such firm who have devoted substantive attention
to the transactions described herein which would give such attorneys actual
knowledge that the opinions expressed are factually incorrect. Such counsel may
also state that except as described therein, they have not reviewed the
13
records of any court or governmental agency or undertaken any independent
factual investigation for the purpose of rendering any opinion which is
expressed to be to such counsel's knowledge;
Such counsel may also state that they express no opinion as to the laws
of any jurisdiction other than the laws of the State of Texas (excluding
conflict of law rules), the General Corporation Law of the State of Delaware,
and the federal laws of the United States;
Such opinion may state that it is being delivered to you for your sole
use and benefit in connection with the transaction above, and may not be
duplicated, distributed or relied upon by any other person, except with such
counsel's written consent;
(d) [ ], counsel for the Selling Stockholder, as indicated in Schedule
II hereto, shall have furnished to you their written opinion with respect to
each of such Selling Stockholder, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
authorized, executed and delivered by each such Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder in
accordance with their terms;
(ii) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder; and the sale of
the Shares to be sold by such Selling Stockholder hereunder and the
compliance by such Selling Stockholder with all of the provisions of
this Agreement, the Power of Attorney and the Custody Agreement and the
consummation of the transactions herein and therein contemplated will
not (a) conflict with the laws of the State of Texas or the State of
Delaware or the federal laws of the United States by which such Selling
Stockholder is bound, or (b) result in a breach or violation of any
order, rule or regulation known to such counsel of any court or
governmental agency or body which, to such counsel's knowledge, has
jurisdiction over such Selling Stockholder or the Stock of such Selling
Stockholder;
(iii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the
Shares to be sold by such Selling Stockholder hereunder, except such as
have been obtained under the Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of such Shares by the Underwriters; and
(iv) Title to such Shares, free of all adverse claims, has been
transferred to each of the several Underwriters who have purchased such
Shares in good faith and without notice of any such adverse claim within
the meaning of the Uniform Commercial Code;
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the State of
Texas (excluding conflict of law rules), the General Corporation Law of the
State of Delaware, and the federal laws of the United States;
(e) At 9:00 a.m., Dallas time, on the effective date of the Registration
Statement and the effective date of the most recently filed post-effective
amendment to the Registration Statement and also at each Time of Delivery,
Deloitte & Touche LLP shall have furnished to you a letter dated the respective
date of delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto;
14
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, that has had a
Material Adverse Effect, and (ii) since the respective dates as of which
information is given in the Prospectus and except as set forth or contemplated
therein, there shall not have been any change in the capital stock (other than
issuances of stock upon the exercise of stock options or restricted stock awards
which were outstanding on the date of the latest balance sheet included in the
Prospectus), short-term or long-term debt of the Company or any of its
subsidiaries or any Material Adverse Effect, or any development involving a
prospective Material Adverse Effect, the effect of which, in any such case
described in clause (i) or (ii), is in your judgment so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares being delivered at such Time of Delivery on the terms
and in the manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a general moratorium on
commercial banking activities in New York declared by either Federal or New York
authorities; or (iii) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this Clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the public
offering or delivery of the Shares being delivered at such Time of Delivery on
the terms and in the manner contemplated by the Prospectus;
(h) The Shares to be sold by the Company and the Selling Stockholder at
such Time of Delivery shall have been duly accepted, subject to notice of
issuance, for quotation on the Nasdaq National Market;
(i) The Company and the Selling Stockholder shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of officers
of the Company and of the Selling Stockholder, respectively, satisfactory to you
as to the accuracy of the representations and warranties of the Company and the
Selling Stockholder, respectively, herein at and as of such Time of Delivery, as
to the performance by the Company and the Selling Stockholder of all of their
respective obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section and as to such
other matters as you may reasonably request; and
(j) On or prior to the First Time of Delivery, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇ shall have entered into
a Lock-up Agreement with the Underwriters that, during the period beginning from
the date hereof and continuing to and including the date 180 days after the date
of the Prospectus, not to, directly or indirectly, offer, sell, contract to
sell, grant any option to sell or otherwise dispose of any Stock, or other
securities which are substantially similar to the Stock, or securities which are
convertible into or exercisable or exchangeable for or any rights to purchase or
acquire Stock or other securities which are substantially similar to the Stock,
without your prior written consent.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the
15
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or 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, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and
such Selling Stockholder shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through you
expressly for use therein.
(b) The Selling Stockholder will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or 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, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that (i) the Selling Stockholder shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you expressly for use
therein and (ii) in no event shall the liability of any Selling Stockholder
under this subsection (b) exceed the total gross proceeds from the sale of
Shares by such Selling Stockholder hereunder.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or 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 any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through you expressly for use
therein; and will reimburse the Company and each Selling Stockholder for any
legal or other expenses reasonably incurred by the Company or such Selling
Stockholder in connection with investigating or defending any such action or
claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is
16
to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
(e) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholder on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholder on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholder on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholder bear to the total underwriting discounts and commissions received by
the Underwriters with respect to the Shares purchased under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Stockholder on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, each
of the Selling Stockholder and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (e) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no
17
Selling Stockholder shall be required to contribute any amount in excess of the
gross proceeds from the sale of Shares by such Selling Stockholder hereunder. 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 in
this subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint. The Selling Stockholder's obligations in
this subsection (e) to contribute are several and not joint.
(f) The obligations of the Company and the Selling Stockholder under
this Section 8 shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or any Selling Stockholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at the Time of Delivery,
you may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within 36 hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company and the Selling Stockholder shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company and the
Selling Stockholder that you have so arranged for the purchase of such Shares,
or the Company and the Selling Stockholder notify you that they have so arranged
for the purchase of such Shares, you or the Company and the Selling Stockholder
shall have the right to postpone such Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholder as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-tenth of the
aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholder shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholder as provided in subsection (a) above, the aggregate
number of Shares which remains unpurchased exceeds one-tenth of the aggregate
number of all the Shares to be purchased at such Time of Delivery, or if the
Company and the Selling Stockholder shall not exercise the right described in
subsection (b) above to require non-
18
defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company and
the Selling Stockholder to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any nondefaulting Underwriter or the Company or
the Selling Stockholder, except for the expenses to be borne by the Company and
the Selling Stockholder and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholder and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Stockholder or any officer or
director or controlling person of the Company, or controlling person of any
Selling Stockholder, and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder shall be under any liability to
any Underwriter except as provided in Section 6 and Section 8 hereof; but, if
for any other reason any Shares are not delivered by on behalf of the Company
and the Selling Stockholder as provided herein, the Company and each of the
Selling Stockholder pro rata (based on the number of Shares to be sold by the
Company and such Selling Stockholder hereunder) will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company and the Selling Stockholder shall then be under no
further liability to any Underwriter in respect of the Shares not so delivered
except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc. on behalf of you as the
Representative, and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices, and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representative in care of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Refsnes, Inc. at Cityplace, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Corporate Syndicate Department; if to any Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to counsel for such Selling Stockholder at its address set forth in Schedule II
hereto; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company or the Selling
Stockholder by you on request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
19
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholder and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company and each person who controls the Company, any Selling
Stockholder or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right by virtue of this Agreement. No purchaser of any of the Shares
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Stockholder. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company and the Selling Stockholder for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
Any person executing and delivering this Agreement as Attorneys-in-Fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as Attorneys-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorneys-in-Fact to take
such action.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
20
Very truly yours,
ALLSTAR SYSTEMS, INC.
By:
Name:
Title:
SELLING STOCKHOLDER:
▇▇▇▇ ▇. ▇▇▇▇▇
By: __________________________
▇▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
As Attorney-in-Fact acting on behalf
of the Selling Stockholder
Accepted as of the date hereof:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REFSNES, INC.
SUTRO & CO. INCORPORATED
By: _________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.
On behalf of each of the Underwriters
SCHEDULE I
=====================================================================================================
Number of Optional Shares
Total Number of Firm to be Purchased if
UNDERWRITER SHARES TO BE PURCHASED MAXIMUM OPTION EXERCISED
-----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.
Sutro & Co. Incorporated
[Names of other Underwriters]
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total 2,035,000 305,250
========= =======
=====================================================================================================
I-1
SCHEDULE II
=====================================================================================================
Number of Optional Shares
Total Number of Firm to be Sold if
UNDERWRITER SHARES TO BE SOLD MAXIMUM OPTION EXERCISED
-----------------------------------------------------------------------------------------------------
The Company 1,500,000 305,250
-----------------------------------------------------------------------------------------------------
The Selling Stockholder 535,000 ---
(▇▇▇▇ ▇. ▇▇▇▇▇)
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total 2,035,000 305,250
========= =======
=====================================================================================================
(a) This Selling Stockholder is represented by [SELLING STOCKHOLDER'S COUNSEL
NAME AND ADDRESS], and has appointed ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and
each of them, as Attorneys-in-Fact and Custodians.
I-II
ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, Deloitte & Touche
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included in the Prospectus or the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim financial
statements, selected financial data, pro forma financial information,
prospective financial statements and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) any unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows as of dates or for periods beginning after December 31,
1995 included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the related published rules and regulations
thereunder, or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with the basis for the audited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus;
(B) any other unaudited income statement data and balance
sheet items for the periods or as of the dates referred to in
Clause (A) above included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements as of dates or for
periods beginning after December 31, 1995 and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated long-term debt of
the Company and its subsidiaries, or any decreases in
consolidated net current assets or net assets or other items
specified by the Representatives or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus; except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified
by the Representatives, or any increases in any items specified
by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period
of corresponding length specified by the Representative[s],
except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(iv) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraph (iii) above,
they have carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards, with respect
to certain amounts, percentages and financial information specified by the
Representative[s], which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus, or in Part
II of, or in exhibits and schedules to, the Registration Statement specified
by the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
EXHIBIT A
CORPORATE JURISDICTION OF
SUBSIDIARIES INCORPORATION
1) Stratasoft, Inc. Texas
