Exhibit 1.1
▇▇▇▇▇▇▇ Computer Associates, Inc.
3,181,500 Shares of
Common Stock
(No Par Value Per Share)
Standby Underwriting Agreement
------------------------------
___________, 1996
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Wheat, First Securities, Inc.
Riverfront Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇ Computer Associates, Inc., a Pennsylvania corporation
(the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇ ▇▇▇▇▇▇▇" and, together with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the "▇▇▇▇▇▇▇ Selling
Stockholders"), Radnor Venture Partners, L.P., a __________________ limited
partnership ("Radnor"), and Safeguard Scientifics, Inc., a Pennsylvania
corporation ("Safeguard") (▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Radnor and Safeguard
are collectively referred to herein as the "Selling Stockholders"), hereby
confirm their respective agreements with you with respect to:
(i) the proposed distribution by the Company to the Safeguard
Shareholders up to an aggregate of 3,030,000 rights (the "Company Rights")
(which represent the right to purchase 2,006,500 shares of the Company's common
stock, no par value per share (the "Common Stock") to be sold by the Company and
1,023,500 shares of Common Stock to be sold by the Selling Stockholders upon the
exercise of 1,023,500 such Company Rights), with (A) each Company Right
entitling the holder thereof to purchase at any time prior to the Expiration
Date at a subscription price of $____ per share, one share of Common Stock of
the Company, and (B) Company Rights being distributed on the basis of one
Company Right for each ten shares of Safeguard Stock held (with the holder of
shares of Safeguard Stock not evenly divisible by ten entitled to receive the
next higher whole number of Company Rights);
(ii) the proposed sale of all Unsubscribed Shares by the
Company and the Selling Stockholders, acting severally and not jointly, with:
(A) Other Purchasers Standby Shares being deemed
to be Selling Stockholders Unsubscribed Shares to be sold
pursuant to the Other Purchasers Standby Purchase
Agreements; and
(B) all Excess Unsubscribed Shares to be sold to and
purchased by the Underwriters, severally and not jointly, in
accordance with the terms and conditions of this Agreement;
and
(iii) The grant by the Company to the Other Purchasers
of the Undistributed Rights; and
(iv) the grant by the Company to the Underwriters of the
option described in Section 3(b) hereof to purchase additional shares of Common
Stock for the purpose of covering over-allotments, if any.
The parties acknowledge that concurrently with the Offering of
the Company Rights that the Company is offering to the Direct Purchasers the
Direct Rights with each Direct Right entitling the holder thereof to purchase at
a subscription price of $_____ per share at any time prior to the Expiration
Date one share of Common Stock. The parties also acknowledge that, except as set
forth in Section 7, the shares issuable upon exercise of the Direct Rights shall
not be deemed to be Shares for purposes of this Agreement and are not otherwise
a part of this Agreement.
-2-
1. Certain Definitions. The following terms shall, when
-------------------
used in this agreement, have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Adverse Claim" means the term as used in Section 8302 of the
Pennsylvania Uniform Commercial Code.
"Associated Person Lock-Ups" means the agreements, acceptable in form
and substance to the Underwriters, pursuant to which each of the Company's
officers, directors and principal shareholders listed in Schedule A attached
hereto has agreed not to, without the prior written consent of the Underwriters,
transfer, sell offer for sale, contract to sell or otherwise dispose of any
shares Common Stock or any securities exercisable or exchangeable for or
convertible into Common Stock owned by such person or with respect to which such
person has the power of disposition during a period commencing on the date the
Registration Statement is declared effective by the Commission and ending 180
days following the Expiration Date, except as otherwise permitted in the
Associated Person Lock-Ups.
"Bona fide Purchaser" means the term as defined in Section 8302 of the
Pennsylvania Uniform Commercial Code.
"Closing" means 10:00 a.m., New York City Time on the sixth business
day after the Expiration Date (or the first business day thereafter), or at such
other time on the same or such other date, not later than ________, 199_, as
shall be agreed to by the Selling Stockholders, the Company and the
Underwriters.
"Closing Date" means the time and date of payment for and delivery of
the Excess Unsubscribed Shares.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Company Unsubscribed Shares" mans the shares of Common Stock which had
been offered by the Company pursuant to the Company Rights but which were not
acquired through the exercise of Company Rights on or prior to the Expiration
Date (after taking into account the agreement of the Company and the Selling
Stockholders that the [343,000] shares of Common Stock to be sold to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ upon exercise of the ▇▇▇▇▇▇ Rights shall be deemed to be sold by the
Selling Stockholders).
"Coopers & ▇▇▇▇▇▇▇" means Coopers & ▇▇▇▇▇▇▇ L.L.P.
"Direct Purchasers" means the certain persons selected by the Company
to whom the Direct Rights are being granted.
-3-
"Direct Rights" means the offering to the Direct Purchasers of up to
151,500 rights, which represent the right to purchase 151,500 shares of the
Common Stock upon the exercise of such Direct Rights.
"Disagreement" means the term as used in Item 304 of Regulation S-K of
the Rules and Regulations.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excess Unsubscribed Shares" means all of the Unsubscribed
Shares other than the Other Purchasers Standby Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" means 5:00 p.m., New York City time, on ____________,
1996 or such later date as may be agreed upon by the Underwriters and the
Company.
"Intellectual Property" means all patents, trademarks, service marks,
trade names, copyrights, inventions, trade secrets, proprietary techniques,
including, without limitation, all software service codes, processes and
substances, technology and know-how necessary to conduct (or used to conduct)
the business now operated or proposed to be operated by the Company and each of
its subsidiaries as described in the Prospectus.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Material Adverse Effect" means a material adverse effect on the
condition, financial or otherwise, or on the earnings, business affairs,
financial position, value, operations, properties, results of operation or
business of the Company and its subsidiaries, taken as a whole.
"▇▇▇▇▇▇ Agreement" means the agreement of the ▇▇▇▇▇▇ Group pursuant to
which the ▇▇▇▇▇▇ Group has agreed (A) to exercise all ▇▇▇▇▇▇ Rights and thereby
purchase [343,000] shares of Common Stock and (B) to the terms and conditions of
the ▇▇▇▇▇▇ Lock-Up.
"▇▇▇▇▇▇ Group" means ▇▇▇▇▇▇ ▇▇▇▇▇▇ and/or his assignees.
"▇▇▇▇▇▇ Lock-Up" means the agreement of the ▇▇▇▇▇▇ Group not to,
without the prior written consent of the Underwriters, transfer, sell, offer for
sale, contract to sell or otherwise dispose of any shares of Common Stock or any
securities exercisable or exchangeable for or convertible into Common Stock
(including the ▇▇▇▇▇▇ Rights) owned on the date hereof or acquired through the
rights offering or with respect to which the ▇▇▇▇▇▇ Group has the
-4-
power of disposition during a period commencing on the date the Registration
Statement is declared effective.
"▇▇▇▇▇▇ Rights" means the exercise of all Rights granted to the ▇▇▇▇▇▇
Group as a stockholder of Safeguard.
"NASD" means the National Association of Securities Dealers,
Inc.
"Offering" means the public offering of the Excess Unsubscribed Shares
as set forth in the Prospectus; provided that Offering shall also include the
Other Purchasers Standby Shares purchased by the Underwriters, if any, pursuant
to Section 8 hereof.
"Option Closing Date" means the time of delivery of any of the
Option Shares."
"Option Shares" means any and all shares of Common Stock to be
purchased by the Underwriters pursuant to the option described in Section 2(b)
of the Agreement.
"Other Purchasers" means certain persons selected by the
Company.
"Other Purchasers Standby Purchase Agreement" means the Other
Purchasers Standby Shares to be sold pursuant to agreements between the Selling
Stockholders and the "Other Purchasers" to be entered into after the date hereof
and obligating the Other Purchasers to purchase from the Selling Stockholders on
the Closing Date at a price of $________ per share the Other Purchasers Standby
Shares.
"Other Purchasers Standby Shares" means the first 300,000
Unsubscribed Shares.
"Preliminary Prospectus" means each prospectus subject to completion
filed with the Registration Statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration Statement
or any amendment thereto at the time of the Registration Statement was or is
declared effective).
"Prospectus" means the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act, or, if no prospectus is required to be
filed pursuant to said Rule 424(b), the prospectus included in the Registration
Statement. For purposes of Sections 2 and 8(d)(v) hereof, all references to the
"Prospectus" are deemed to include, in the alternative, the most recent
Preliminary Prospectus if the Prospectus is not in existence.
"Provided Information" means the statements made in the second
paragraph preceding the stabilization legend on the inside of the front cover
page, the stabilization legend on the inside of the front cover page and the
third paragraph under the heading
-5-
"UNDERWRITING" in the Prospectus (and the same paragraphs and stabilization
legend in any Preliminary Prospectus).
"Registration Statement" means such registration statement, as amended,
at the time when it was or is declared effective, including all financial
schedules and exhibits thereto and including any information omitted therefrom
pursuant to Rule 430A under the Act and included in the Prospectus.
"Reportable Event" means the term as used in Item 304 of Regulation S-K
of the Rules and Regulations.
"Rights" means the Direct Rights, the Company Rights and the
Undistributed Rights.
"Rights Agent" means ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services L.L.C.
"Rights Agent Agreement" means the agreement in the form previously
approved by the Underwriters, dated the date hereof, with the Selling
Stockholders and ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services L.L.C., as Rights Agent.
"Rules and Regulations" means the rules and regulations adopted by the
Commission under either the Act or the Exchange Act.
"Safeguard Shareholders" means the holders of Safeguard Stock
as of __________, 1996.
"Safeguard Stock" means the common stock, $.10 par value per
share, of Safeguard.
"Selling Stockholders Unsubscribed Shares" means the shares of Common
Stock which had been offered pursuant to the Company Rights but which were not
acquired through exercise of the Company Rights on or prior to the Expiration
Date (after taking into account the agreement of the Company and the Selling
Stockholders that the [343,000] shares of Common Stock to be sold to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ upon exercise of the ▇▇▇▇▇▇ Rights shall be deemed to be sold by the
Selling Stockholders).
"Shares" means the Option Shares and the Excess Unsubscribed
Shares to be purchased by the Underwriters.
"Underwriters" means ▇.▇. ▇▇▇▇▇▇ Securities Inc. and Wheat,
First Securities, Inc.
"Underwriters Counsel" means Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇.
"Undistributed Rights" means the undistributed Company Rights in the
event that Company Rights to purchase fewer than 3,030,000 shares of Common
Stock are granted to holders of the Safeguard
-6-
Stock of the shares of Common Stock subject to such undistributed rights.
"Unsubscribed Shares" means the Selling Stockholders
Unsubscribed Shares together with the Company Unsubscribed Shares.
2. Representations and Warranties of the Company, ▇▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Radnor and Safeguard.
--------------------------------------------
(a) Each of the Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇, jointly and severally, represent and warrant to, and agree
with, the Underwriters as follows:
(i) The Company has filed with the Commission a
registration statement on Form S-1 (No. 333-12863), including a
prospectus subject to completion, for the registration of the Rights,
the shares of Common Stock subject to the Rights, and the Option Shares
under the Act, and have filed with the Commission one or more
amendments thereto. After the execution of this Agreement, the Company
will file with the Commission either (A) if such registration
statement, as it may have been amended, has been declared by the
Commission to be effective under the Act as of the time of
effectiveness of this Agreement, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with
such changes or insertions as are required by Rule 430A under the Act
or permitted by Rule 424(b) under the Act and as have been provided to
and approved by the Underwriters prior to the execution of this
Agreement, or (B) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under
the Act as of the time of effectiveness of this Agreement, an amendment
to such registration statement, including a form of prospectus, a copy
of which amendment has been furnished to and approved by the
Underwriters prior to the execution of this Agreement;
(ii) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or any
part thereof and, to the best knowledge of the Company, no proceedings
for a stop order have been instituted or are pending or threatened.
When any Preliminary Prospectus was filed with the Commission, it
contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements of,
the Act and the Rules and Regulations except to the extent that such
Preliminary Prospectus did not contain any such required statements, or
did not so comply, in a manner corrected in the Prospectus. When the
Registration Statement or any amendment thereto was (or is) declared
effective, it (A) contained (or will contain) all statements required
to be stated therein in
-7-
accordance with, and complied in all material respects (or will comply
in all material respects) with the requirements of, the Act and the
Rules and Regulations and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement thereto is filed pursuant to
Rule 424(b) (or, if the Prospectus or such amendment or supplement is
not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and on the Closing Date and
any Option Closing Date, the Prospectus, as amended or supplemented at
any such time, (A) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Act and the Rules
and Regulations and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (ii) do not apply to the Provided
Information;
(iii) The Company and each of its subsidiaries (as
defined in Rule 405 of the Rules and Regulations) are corporations duly
organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to
transact business and are in good standing as foreign corporations in
each jurisdiction in which their respective ownership or leasing of any
properties or the character or conduct of their respective operations
requires such qualification, except where failures to be so qualified,
individually or in the aggregate, would not result in a Material
Adverse Effect. The Company does not own any stock of or other equity
in, or otherwise control directly or indirectly, any corporation, firm,
partnership, trust, joint venture or other business entity, except as
disclosed in the Prospectus. None of the subsidiaries of the Company is
a Significant Subsidiary, other than ▇▇▇▇▇▇▇ Software Ltd. and ▇▇▇▇▇▇▇
Computer Associates International, Inc.
(iv) The Company and each of its subsidiaries have
all requisite power and authority (corporate and other), and have
obtained and currently maintain in full force and effect and are
operating in compliance with any and all authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including those having
jurisdiction over environmental or similar matters) necessary or
required to own or lease their respective properties and conduct their
respective business as described in the
-8-
Registration Statement, the Prospectus and any amendment or supplement
thereto, except where the failure to so maintain or operate would not
result in a Material Adverse Effect. The Company and each of its
subsidiaries are and have been doing business in compliance with all
such authorizations, approvals, orders, licenses, certificates,
franchises and permits and all federal, state, local and foreign laws,
rules and regulations (including without limitation those relating to
employment matters and the payment of taxes) except as disclosed in the
Prospectus and except where failures to be in compliance, individually
or in the aggregate, would not result in a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any notice
or notices of proceedings relating to the revocation or modification of
any such authorization, approval, order, license, certificate,
franchise or permit that if the subject of unfavorable decisions,
rulings or findings, would, individually or in the aggregate, result in
a Material Adverse Effect;
(v) The Company has duly executed and delivered the
Rights Agent Agreement. The shares of Common Stock to be sold by the
Company hereunder and upon the exercise of the Rights are subject to
the rights and interests of the Underwriters and the Rights Agent
hereunder and under the Rights Agent Agreement. Except to the extent
otherwise provided therein, the arrangements for custody or reservation
and delivery of the certificates for such shares, made by the Company
hereunder and under the Rights Agent Agreement, are irrevocable, and
are not subject to termination by any acts of the Company, or by
operation of law;
(vi) The Company has all requisite power and
authority (corporate and other) to enter into this Agreement and the
Rights Agent Agreement, and to consummate the transactions provided for
herein and therein; and this Agreement and the Rights Agent Agreement
have each been duly authorized, executed and delivered by the Company.
Each of this Agreement and the Rights Agent Agreement, assuming due
authorization, execution and delivery by the other parties to such
agreement, constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
subject to the effect of general principles of equity (including
standards of materiality, good faith, fair dealing and reasonableness)
whether applied by a court of law or equity, and except as rights to
indemnity and contribution hereunder may be limited by applicable law,
statutory duties or public policy. The Company's execution and delivery
of this Agreement and the Rights Agent Agreement, its performance of
its obligations hereunder and thereunder, the consummation of the
transactions contemplated hereby and thereby by it, and its conduct of
its business as described in the Registration Statement, the Prospectus
and any amendment or supplement
-9-
thereto, will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any material liens, charges,
claims, encumbrances, pledges, security interests, defects or other
like restrictions or material equities of any kind whatsoever upon, any
right, property or assets (tangible or intangible) of the Company or
any of its subsidiaries pursuant to the terms of (A) the charter or
bylaws, each as amended to date, of the Company or any of its
subsidiaries, (B) any lease, license, permit, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders
agreement, note, loan or credit agreement (including any related to
indebtedness) or any other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which any of them is or may
be bound or to which any of their respective properties or assets
(tangible or intangible) is or may be subject, except to the extent
that any such conflict, breach, violation or default, individually or
in the aggregate, does not and would not result in a Material Adverse
Effect and does not and would not interfere with the Offering or (C)
any statute, judgment, decree, order, rule or regulation applicable to
the Company or any of its subsidiaries or any of their respective
activities or properties adopted or issued by an arbitrator, court,
regulatory body or administrative agency or other governmental agency
or body (including those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their respective
activities or properties (other than such as may be required under
state securities or "Blue Sky" laws and such as may be required by the
by-laws and rules of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters);
(vii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any court is
required in connection with the offer, issuance and sale of the shares
of Common Stock to be sold by the Company hereunder or upon exercise of
the Rights, the Company's performance of its obligations hereunder, or
the consummation by the Company of the other transactions contemplated
hereby, except (A) such as may be required under the state securities
or "Blue Sky" laws of any jurisdiction or as may be required by the
by-laws and rules of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters, (B) any filing of the
Prospectus pursuant to Rule 424(b) or 430A of the Rules and Regulations
and, if the Registration Statement has not been declared effective, an
order of the Commission declaring the Registration Statement effective
under the Act, and (C) such other approvals as have been obtained and
remain in full force and effect;
-10-
(viii) The authorized, issued and outstanding capital
stock of the Company is set forth and conforms to the description
thereof, contained in the Registration Statement, the Prospectus, and
any amendment or supplement thereto. All of the issued shares of
capital stock of the Company, including the shares to be sold by each
of the Selling Stockholders, have been duly authorized and validly
issued, and are fully paid and nonassessable; the holders thereof have
no rights of rescission against the Company with respect thereto and
are not subject to personal liabilities solely by reason of being such
holders (except to the extent that as a result of acquiring a
substantial number of shares of Common Stock a holder may be subject to
claims of personal liability as an affiliate or control person of the
Company, as to which no representation is made hereby); and none of
such shares have been issued in violation of the preemptive rights of
any security holders of the Company arising as a matter of law or under
or pursuant to the Company's Articles of Incorporation, as amended, the
Company's By-Laws, as amended, or any agreement or instrument to which
the Company is a party or by which it is bound. The shares of Common
Stock offered by the Company and to be sold upon the exercise of the
Rights or pursuant to this Agreement have been duly authorized and at
the Closing Date, after payment therefor in accordance herewith or in
accordance with the terms and conditions of the Rights (as the case may
be), will be validly issued, fully paid and nonassessable and not
subject to any Adverse Claim, with no personal liability attaching to
the holder solely as a result of the ownership thereof (except to the
extent that as a result of acquiring a substantial number of shares of
Common Stock a holder may be subject to claims of personal liability as
an affiliate or control person of the Company, as to which no
representation is made hereby). Upon the issuance and delivery pursuant
to this Agreement and the Rights Agent Agreement of the Shares to be
sold by the Company, assuming that each of the Underwriters is a Bona
Fide Purchaser, as defined in Section 8302 of the Pennsylvania Uniform
Commercial Code, the Underwriters will acquire good and marketable
title to the Shares free and clear of any liens, charges, claims,
preemptive rights, encumbrances, pledges, security interests, defects
or other like restrictions or like material equity of any kind
whatsoever. The shares of Common Stock offered by the Company and to be
sold upon the exercise of the Rights or pursuant to this Agreement will
conform to the description thereof contained in the Prospectus. There
are no preemptive or other rights to subscribe for or to purchase nor
any restriction upon the voting or transfer of, any Common Stock
pursuant to the Company's Articles of Incorporation or ByLaws, as each
amended to date, or pursuant to any agreement among shareholders to
which the Company is a party, by which it is bound or of which it has
knowledge, and the Shares to be sold by the Company are not otherwise
subject to any
-11-
preemptive or other similar rights of any security holder. The Company
is not a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights,
warrants, options or other securities, except for this Agreement and as
described in the Prospectus. Except as described in the Prospectus with
respect to Common Stock that may be registered by the Company in a
registration statement on Form S-8, no holders of any securities of the
Company have the right to include any securities issued by the Company
in the Registration Statement or any registration statement to be filed
by the Company during a period commencing on the date the Registration
Statement is declared effective by the Commission and ending 180 days
following the Expiration Date or to require the Company to file a
registration statement under the Act during such period. All of the (i)
Rights and (ii) outstanding shares of Common Stock and all of the
shares of Common Stock to be issued by the Company as contemplated
herein have been approved for quotation upon notice of issuance on the
Nasdaq National Market of the Nasdaq Stock Market;
(ix) The consolidated financial statements and
schedules of the Company included in the Registration Statement, the
Prospectus and any amendment or supplement thereto fairly present the
consolidated financial position and results of operations of the
Company as of the dates and for the periods therein specified. Such
financial statements and schedules have been prepared in accordance
with generally accepted accounting principles, as in effect in the
United States and as consistently applied throughout the periods
involved and in accordance with the Rules and Regulations. The selected
consolidated financial data set forth under the caption "SELECTED
CONSOLIDATED FINANCIAL DATA" in the Prospectus fairly present, on the
basis stated therein, the information included therein. The Company
maintains a system of internal accounting controls 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 asset accountability; (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. The
Company's internal accounting controls are designed to cause the
Company to comply in all material respects with the Foreign Corrupt
Practices Act of 1977, as amended. Coopers & ▇▇▇▇▇▇▇, whose reports are
filed with the Commission as a part of the Registration Statement, are
independent auditors as required by the Act and the Rules and
-12-
Regulations. Since ______________, 19__, Coopers & ▇▇▇▇▇▇▇
has been the only public accountants engaged by the Company,
and the Company has not had any Disagreement with Coopers &
▇▇▇▇▇▇▇ and has not experienced any Reportable Event since
_____________;
(x) The Company and each of its subsidiaries have
filed all federal, state, local and foreign tax returns that are
required to be filed by them or have duly requested extensions thereof,
except in any case in which the failure so to file, individually or in
the aggregate, would not have a Material Adverse Effect. The Company
and each of its subsidiaries have paid all taxes required to be paid by
them and all other assessments, fines or penalties, if any, levied
against any of them, to the extent that any of the foregoing are due
and payable, except for (A) any such assessment, fine or penalty that
is currently being contested in good faith or (B) any case in which the
failure so to pay, individually or in the aggregate, would not have a
Material Adverse Effect;
(xi) No transfer tax, stamp duty or other similar tax
is payable by or on behalf of the Underwriters in connection with the
issuance by the Company, or the purchase by the Underwriters, of the
Shares to be sold by the Company or any resales of such Shares by the
Underwriters;
(xii) The Company has good and marketable title to,
or valid and enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus to be owned or leased by it,
free and clear of all liens, charges, claims, encumbrances, pledges,
security interests, defects or other like restrictions or like equities
of any kind whatsoever, other than (A) liens for taxes not yet due and
payable, (B) liens as described or referred to in the Prospectus and
(C) liens that are not material in amount in relation to the business
of the Company and which do not interfere with the Offering;
(xiii) Except as disclosed in the Prospectus, the
Company and each of its subsidiaries own or possess adequate licenses
or other rights, in each case free of fees, charges or royalties
payable after the date hereof, to use the Intellectual Property, except
where the lack thereof would not result in a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with (and does not know of any such
infringement of or conflict with) rights or claims of others with
respect to the Intellectual Property, any of the activities engaged in,
or proposed to be engaged in, by the Company or any of its subsidiaries
or any challenge to the ownership or right of the Company or any of its
subsidiaries with respect to the Intellectual Property which could
result
-13-
in a Material Adverse Effect or which could have a material adverse
effect on the development, marketing or sale of any of the Company's
existing or contemplated products, services or processes as described
in the Prospectus. None of the products, services or processes of the
Company or any of its subsidiaries referred to in such Prospectus and
relating to the business of the Company or any of its subsidiaries now
operated or proposed to be operated by any of them as described in such
Prospectus infringes or conflicts with any right or patent, or with any
discovery, invention, product or process which is the subject of any
patent application known to the Company, in a manner which would result
in a Material Adverse Effect;
(xiv) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in
the business in which they are engaged, and the Company has no reason
to believe that it or any of its subsidiaries will not be able to renew
its respective existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its respective business at a cost that would not
result in a Material Adverse Effect;
(xv) Neither the Company nor any of its subsidiaries
is in breach of, or in default under, any term, covenant or provision
of any license, permit, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement, stockholders
agreement, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other
agreement or instrument to which it is a party or by which it may be
bound or to which any of its property or assets (tangible or
intangible) is subject or affected, except as disclosed in the
Registration Statement and Prospectus and except as to defaults that
(A) individually or in the aggregate would not have a Material Adverse
Effect and (B) would not interfere with the Offering. Neither the
Company nor any of its subsidiaries is in violation of any term or
provision of its charter or bylaws, each as amended to date;
(xvi) Other than as disclosed in the Prospectus,
there is not pending or, to the Company's knowledge, threatened against
the Company or any of its subsidiaries or involving the properties or
business of the Company or any of its subsidiaries, (or, to the
Company's knowledge, any circumstances that may give rise to the same),
any action, suit, proceeding, investigation, litigation or governmental
proceeding (including those having jurisdiction over environmental or
similar matters), domestic or foreign, that
-14-
(A) is required to be disclosed in the Registration Statement and is
not so disclosed, (B) questions the validity of the capital stock of
the Company or the validity or enforceability of this Agreement,
(C) questions the validity of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, or (D) could
materially adversely affect the present or prospective ability of the
Company to perform its obligations under this Agreement or result in a
Material Adverse Effect. Any such proceedings summarized in the
Prospectus are accurately summarized in all material respects;
(xvii) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus,
and except as may otherwise be indicated or contemplated herein or
therein, neither the Company nor any of its subsidiaries has (A) issued
any securities other than the Rights, the shares of Common Stock to be
sold by the Company upon the exercise of the Rights, the Shares to be
sold by the Company pursuant to this Agreement and shares of Common
Stock issuable upon the exercise of stock options disclosed in the
Prospectus as outstanding as of the date hereof, (B) incurred any
liability or obligation, direct or contingent, for borrowed money,
(C) entered into any transaction other than in the ordinary course of
business, (D) declared or paid any dividend or made any other
distribution on or in respect of its capital stock, or (E) entered into
any transactions with any affiliate, including, without limitation, the
Selling Stockholders or their respective affiliates;
(xviii) The Company and each of its subsidiaries have
satisfactory employer-employee relationships with their respective
employees. No labor or other dispute with the employees of the Company
or any of its subsidiaries as a group exists, or, to the best knowledge
of the Company, is imminent;
(xix) Except as disclosed in the Registration
Statement or the Prospectus, each employee benefit plan, within the
meaning of Section 3(3) of ERISA that is maintained, administered or
contributed to by the Company or any of its affiliates for employees or
former employees of the Company and its affiliates has been maintained
in compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to
ERISA and the Code; no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred with
respect to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption; and for each such plan which is
subject to the funding rules of Section 412 of the Code or Section 302
of ERISA no "accumulated funding deficiency" as defined in Section 412
of the Code has been incurred, whether
-15-
or not waived, and the fair market value of the assets of each such
plan (excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions;
(xx) The minutes books of the Company and each of its
subsidiaries made available to Underwriters' Counsel, (A) contain
minutes and consents from all meetings and actions of the Company's and
each such subsidiary's stockholders, board of directors, and the
committees of such board since the respective dates of organization of
the Company and each of its subsidiaries and (B) reflect all
transactions referred to in such minutes accurately in all material
respects;
(xxi) All agreements filed as exhibits to the
Registration Statement to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries may be
bound or to which any of their respective assets, properties or
businesses may be subject have been duly and validly authorized,
executed and delivered by the Company or such subsidiary, as
appropriate, and constitute the legal, valid and binding agreements of
the Company, or such subsidiary, as appropriate, enforceable in
accordance with their respective terms, subject in each case to the
effect of general principles of equity (including standards of
materiality, good faith, fair dealing and reasonableness) whether
applied by a court of law or equity and except as rights to indemnity
and contribution under this Agreement may be limited by applicable law,
statutory duties or public policy. The descriptions in the Registration
Statement, the Prospectus and any amendment or supplement thereto, of
agreements, whether written or oral, and of other documents are
accurate and fairly present the information required to be shown with
respect thereto by Form S-1 under the Act. There are no agreements,
whether written or oral, or other documents that are required by the
Act or the Rules and Regulations to be described in the Registration
Statement or filed as exhibits to the Registration Statement that are
not described or filed as required;
(xxii) Neither the Company nor any of its officers,
directors, or affiliates (within the meaning of the Rules and
Regulations) has taken or will take, directly or indirectly, any action
designed to or that has constituted or that might reasonably be
expected to cause or result in stabilization or manipulation of the
price of the Common Stock or the Rights in violation of Rules 10b-6 or
10b-7 under the Exchange Act;
(xxiii) There are no claims, payments, issuances,
arrangements or understandings for services in the nature of a
finder's, advisory or origination fee or otherwise, either
-16-
with respect to the sale of the shares of Common Stock to be sold by
the Company upon exercise of the Rights, the sale of the Shares
hereunder or with respect to the proceeds received by the Company from
such sales. Other than as reflected in this Agreement, there are no
other arrangements, agreements, understandings, payments or issuances
with respect to the Company or, to the Company's knowledge, any of its
officers, directors, or affiliates that may constitute "underwriter's
compensation," as determined by the NASD;
(xxiv) The Company has delivered or caused to be
delivered to the Underwriters the Associated Person Lock-Ups;
(xxv) All of the Rights have been duly authorized and
validly issued, and, when issued and distributed as set forth in the
Prospectus, will be legally issued and valid and binding obligations of
the Company having the rights summarized in the Prospectus; and none of
such Rights will have been issued in violation of the preemptive rights
of any security holders of the Company arising as a matter of law or
under or pursuant to the Company's Articles of Incorporation, as
amended, the Company's By-Laws, as amended, or any agreement or
instrument to which the Company is a party or by which it is bound;
(xxvi) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(xxvii) No relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries on the one
hand, and the directors, officers, stockholders, customers or suppliers
of the Company or any of its subsidiaries on the other hand, which is
required by the Act to be described in the Registration Statement and
the Prospectus which is not so described;
(xxviii) The Company is not and, after giving effect
to the Offering, will not be an "investment company" or entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act;
(xxix) 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 with any
person or affiliate located in Cuba;
-17-
(b) Each of the ▇▇▇▇▇▇▇ Selling Stockholders, severally
and not jointly, represents and warrants to, and agrees with the Underwriters
as follows:
(i) Such ▇▇▇▇▇▇▇ Selling Stockholder has duly
executed and delivered the Rights Agent Agreement pursuant to which
certificates in negotiable form for the shares of Common Stock to be
sold by him upon the exercise of the Rights, pursuant to the Other
Purchasers Standby Purchase Agreements and pursuant to this Agreement
have been placed in custody, for delivery pursuant to the terms of the
Rights Agent Agreement, the Other Purchasers Standby Purchase
Agreements and this Agreement. The shares represented by the
certificates so held in custody for such ▇▇▇▇▇▇▇ Selling Stockholder
are subject to the interests hereunder of the Underwriters and of the
Rights Agent under the Rights Agent Agreement. Except to the extent
provided therein, the arrangements for custody and delivery of such
certificates, made by such ▇▇▇▇▇▇▇ Selling Stockholder hereunder and
under the Rights Agent Agreement and the Other Purchasers Standby
Purchase Agreements, are to that extent irrevocable, and are not
subject to termination by any acts of such ▇▇▇▇▇▇▇ Selling Stockholder,
or by operation of law;
(ii) Such ▇▇▇▇▇▇▇ Selling Stockholder has the legal
right and power to enter into the Rights Agent Agreement, the Other
Purchasers Standby Purchase Agreements and this Agreement and to sell,
transfer and deliver the Shares proposed to be sold by him hereunder,
the shares of Common Stock to be sold by him upon the exercise of the
Rights and the shares of Common Stock to be sold by him pursuant to the
Other Purchasers Standby Purchase Agreements. The Rights Agent
Agreement has been and the Other Purchasers Standby Purchase Agreements
will be prior to the Closing Date duly executed by such ▇▇▇▇▇▇▇ Selling
Stockholder, and, assuming due execution and delivery by the other
respective parties thereto, constitute the legal, valid and binding
obligations of such ▇▇▇▇▇▇▇ Selling Stockholder enforceable against him
in accordance with their respective terms, subject to the effect of
general principles of equity (including standards of materiality, good
faith, fair dealing and reasonableness) whether applied by a court of
law or equity. This Agreement has been duly executed and delivered by
such ▇▇▇▇▇▇▇ Selling Stockholder and, assuming due authorization,
execution and delivery by the Underwriters, Radnor, the other ▇▇▇▇▇▇▇
Selling Stockholder and Safeguard, constitutes the legal, valid and
binding obligation of such ▇▇▇▇▇▇▇ Selling Stockholder enforceable
against such ▇▇▇▇▇▇▇ Selling Stockholder in accordance with the terms
hereof, subject to the effect of general principles of equity
(including standards of materiality, good faith, fair dealing and
reasonableness) whether applied by a court of law or equity,
-18-
and except as rights of indemnity and contribution hereunder
may be limited by applicable law, statutory duties or public
policy;
(iii) The execution and delivery of this Agreement,
the Rights Agent Agreement and the Other Purchasers Standby Purchase
Agreements and the performance by each ▇▇▇▇▇▇▇ Selling Stockholder of
his obligations hereunder and thereunder will not conflict with or
result in a breach or violation of any of the terms and provisions of,
or constitute a default under (A) any lease, permit, license, contract,
indenture, mortgage, deed of trust, voting trust agreement,
shareholders agreement, note, loan or credit agreement or any other
agreement or instrument to which such ▇▇▇▇▇▇▇ Selling Stockholder is a
party or by which he is or may be bound or to which any of his
properties or assets (tangible or intangible) is or may be subject, or
any indebtedness, except to the extent that any such conflict, breach,
violation or default, individually or in the aggregate, does not and
would not result in a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs, financial
position, prospects, value, operation, properties, results of operation
or business of the Company and does not and would not interfere with
the Offering, or (B) any statute, judgment, decree, order, rule or
regulation applicable to such ▇▇▇▇▇▇▇ Selling Stockholder or any of his
activities or properties adopted or issued by any arbitrator, court,
regulatory body or administrative agency or other governmental agency
or body (including those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over such
▇▇▇▇▇▇▇ Selling Stockholder or any of his activities or properties. No
consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the
consummation by each ▇▇▇▇▇▇▇ Selling Stockholder of the transactions
contemplated herein, in the Rights Agent Agreement or in the Other
Purchasers Standby Purchase Agreements, except (A) such as may be
required under the state securities or "Blue Sky" laws of any
jurisdiction or as may be required by the by-laws of the NASD in
connection with the purchase and distribution of the Shares by the
Underwriters, (B) any filing of the Prospectus pursuant to Rule 424(b)
or 430A of the Rules and Regulations and, if the Registration Statement
has not been declared effective, an order of the Commission declaring
the Registration Statement effective under the Act, and (C) such other
approvals as have been obtained and remain in full force and effect;
and
(iv) Each ▇▇▇▇▇▇▇ Selling Stockholder has, and on the
Closing Date will have, good and marketable title to the Shares
proposed to be sold by such ▇▇▇▇▇▇▇ Selling Stockholder hereunder and
the shares of Common Stock to be sold upon the
-19-
exercise of the Rights, and none of such shares will be subject to any
Adverse Claim. Upon delivery of and payment for the Shares to be sold
by such ▇▇▇▇▇▇▇ Selling Stockholder hereunder, assuming that each of
the Underwriters is a Bona Fide Purchaser, the Underwriters will
acquire good and marketable title thereto free and clear of any liens,
charges, claims, preemptive rights, encumbrances, pledges, security
interests, voting trusts, defects or other like restrictions or other
like material equity of any kind whatsoever.
(c) Safeguard represents and warrants to, and agrees
with the Underwriters as follows:
(i) Safeguard has duly executed and delivered the
Rights Agent Agreement pursuant to which certificates in negotiable
form for the shares of Common Stock to be sold by it upon the exercise
of the Rights, pursuant to the Other Purchasers Standby Purchase
Agreements and pursuant to this Agreement have been placed in custody
for delivery pursuant to the terms of the Rights Agent Agreement, the
Other Purchasers Standby Purchase Agreements and this Agreement. The
shares represented by the certificates so held in custody for Safeguard
are subject to the interests hereunder of the Underwriters, the Company
and the Rights Agent under the Rights Agent Agreement. Except to the
extent provided therein, the arrangements for custody and delivery of
such certificates, made by Safeguard hereunder, under the Other
Purchasers Standby Purchase Agreements and under the Rights Agent
Agreement, are to that extent irrevocable, and are not subject to
termination by any acts of Safeguard, or by operation of law;
(ii) Safeguard has the legal right and power to enter
into the Other Purchasers Standby Purchase Agreements, the Rights Agent
Agreement and this Agreement and to sell, transfer and deliver the
Shares proposed to be sold by it hereunder, the shares of Common Stock
to be sold by it pursuant to the Other Purchasers Standby Purchase
Agreements and the shares of Common Stock to be sold by it upon the
exercise of the Rights. This Agreement, the Other Purchasers Standby
Purchase Agreements and the Rights Agent Agreement have been duly
authorized by Safeguard. The Rights Agent Agreement has been and the
Other Purchasers Standby Purchase Agreements will be prior to the
Closing Date duly executed by Safeguard, and, assuming due execution
and delivery by the other respective parties thereto, constitutes the
legal, valid and binding obligation of Safeguard enforceable against it
in accordance with its terms, subject to the effect of general
principles of equity (including standards of materiality, good faith,
fair dealing and reasonableness) whether applied by a court of law or
equity. This Agreement has been duly executed and delivered on behalf
of Safeguard and, assuming due
-20-
authorization, execution and delivery by the Company, the Underwriters,
and the ▇▇▇▇▇▇▇ Selling Stockholders, constitutes the legal, valid and
binding obligation of Safeguard enforceable against Safeguard in
accordance with the terms hereof, subject to the effect of general
principles of equity (including standards of materiality, good faith,
fair dealing and reasonableness) whether applied by a court of law or
equity, and except as rights of indemnity and contribution hereunder
may be limited by applicable law, statutory duties or public policy;
(iii) The execution and delivery of this Agreement,
the Other Purchasers Standby Purchase Agreements and the Rights Agent
Agreement and the performance by Safeguard of its obligations hereunder
and thereunder will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under (A) the Articles of Incorporation or By-Laws of
Safeguard, as amended to date, (B) any lease, permit, license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
shareholders agreement, note, loan or credit agreement or any other
agreement or instrument to which Safeguard is a party or by which it is
or may be bound or to which any of its properties or assets (tangible
or intangible) is or may be subject, or any indebtedness, except to the
extent that any such conflict, breach, violation or default,
individually or in the aggregate, does not and would not result in a
material adverse effect on the condition, financial or otherwise, or on
the earnings, business affairs, financial position, prospects, value,
operation, properties, results of operation or business of Safeguard
and does not and would not interfere with the Offering, or (C) any
statute, judgment, decree, order, rule or regulation applicable to
Safeguard or any of its activities or properties adopted or issued by
any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including those having jurisdiction
over environmental or similar matters), domestic or foreign, having
jurisdiction over Safeguard or any of its activities or properties. No
consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the
consummation by Safeguard of the transactions contemplated herein, in
the Other Purchasers Standby Purchase Agreements or in the Rights Agent
Agreement, except (A) such as may be required under the state
securities or "Blue Sky" laws of any jurisdiction or as may be required
by the by-laws of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters, (B) any filing of the
Prospectus pursuant to Rule 424(b) or 430A of the Rules and Regulations
and, if the Registration Statement has not been declared effective, an
order of the Commission declaring the Registration Statement effective
under the Act, and (C)
-21-
such other approvals as have been obtained and remain in full
force and effect;
(iv) Safeguard has, and on the Closing Date will
have, good and marketable title to the Shares proposed to be sold by
Safeguard hereunder and the shares of Common Stock to be sold upon the
exercise of the Rights, and none of such shares will be subject to any
Adverse Claim. Upon delivery of and payment for the Shares to be sold
by Safeguard hereunder, assuming that each of the Underwriters is a
Bona Fide Purchaser the Underwriters will acquire good and marketable
title thereto free and clear of any liens, charges, claims, preemptive
rights, encumbrances, pledges, security interests, voting trusts,
defects or other like restrictions or other like material equity of any
kind whatsoever;
(v) To the best knowledge of Safeguard, the
Commission has not issued any order preventing or suspending the use of
any Preliminary Prospectus or any part thereof and, to the best
knowledge of Safeguard, no proceedings for a stop order have been
instituted or are pending or threatened. When any Preliminary
Prospectus was filed with the Commission, it contained all statements
required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the Rules and
Regulations except to the extent that such Preliminary Prospectus did
not contain any such required statements, or did not so comply, in a
manner corrected in the Prospectus. To the best knowledge of Safeguard,
when the Registration Statement (or any amendment thereto) was (or is)
declared effective, it (A) contained (or will contain) all statements
required to be stated therein in accordance with, and complied in all
material respects (or will comply in all material respects) with the
requirements of, the Act and the Rules and Regulations and (B) did not
or will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading. To the best knowledge of Safeguard, when the Prospectus or
any amendment or supplement thereto is filed pursuant to Rule 424(b)
(or, if the Prospectus or such amendment or supplement is not required
to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was
or is declared effective) and on the Closing Date and any Option
Closing Date, the Prospectus, as amended or supplemented at any such
time, (A) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the Rules and
Regulations and (B) did not or will not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they
-22-
were made, not misleading. The foregoing provisions of this
paragraph (v) do not apply to the Provided Information;
(vi) To the best knowledge of Safeguard, the
descriptions in the Registration Statement, the Prospectus and any
amendment or supplement thereto of agreements, whether written or oral,
and of other documents are accurate and fairly present the information
required to be shown with respect thereto by Form S-1 under the Act. To
the best knowledge of Safeguard, there are no agreements, whether
written or oral, or other documents that are required by the Act or the
Rules and Regulations to be described in the Registration Statement or
filed as exhibits to the Registration Statement that are not described
or filed as required;
(vii) Neither Safeguard nor any of its officers,
directors, or affiliates (within the meaning of the Rules and
Regulations) has (a) made or caused to be effected any transaction,
directly or indirectly, designed to or that has constituted or that
might reasonably be expected to cause or result in stabilization of the
price of the Common Stock or the Rights, (b) taken or will take,
directly or indirectly, any action designed to or that has constituted
or that might reasonably be expected to cause or result in manipulation
of the price of the Common Stock or the Rights in violation of Rules
10b-6 or 10b-7 under the Exchange Act, or (c) failed to comply with the
Act or the Rules and Regulations in order to effect the transactions
contemplated hereby; and
(viii) Safeguard has delivered or caused to be
delivered to the Underwriters a copy of the ▇▇▇▇▇▇ Agreement pursuant
to which the ▇▇▇▇▇▇ Group has agreed to (A) exercise the ▇▇▇▇▇▇ Rights
and (B) the ▇▇▇▇▇▇ Lock-Up.
(d) Radnor represents and warrants to, and agrees with
the Underwriters as follows:
(i) Radnor has duly executed and delivered the Rights
Agent Agreement pursuant to which certificates in negotiable form for
the shares of Common Stock to be sold by it upon the exercise of the
Rights, pursuant to the Other Purchasers Standby Purchase Agreements
and pursuant to this Agreement have been placed in custody for delivery
pursuant to the terms of the Rights Agent Agreement, the Other
Purchasers Standby Purchase Agreements and this Agreement. The shares
represented by the certificates so held in custody for Radnor are
subject to the interests hereunder of the Underwriters, the Company and
the Rights Agent under the Rights Agent Agreement. Except to the extent
provided therein, the arrangements for custody and delivery of such
certificates, made by Radnor hereunder, under the Other Purchasers
Standby
-23-
Purchase Agreements and under the Rights Agent Agreement, are to that
extent irrevocable, and are not subject to termination by any acts of
Radnor, or by operation of law;
(ii) Radnor has the legal right and power to enter
into the Other Purchasers Standby Purchase Agreements, the Rights Agent
Agreement and this Agreement and to sell, transfer and deliver the
Shares proposed to be sold by it hereunder, the shares of Common Stock
to be sold by it pursuant to the Other Purchasers Standby Purchase
Agreements and the shares of Common Stock to be sold by it upon the
exercise of the Rights. This Agreement, the Other Purchasers Standby
Purchase Agreements and the Rights Agent Agreement have been duly
authorized by Radnor. The Rights Agent Agreement has been and the Other
Purchasers Standby Purchase Agreements will be prior to the Closing
Date duly executed by Radnor, and, assuming due execution and delivery
by the other respective parties thereto, constitutes the legal, valid
and binding obligation of Radnor enforceable against it in accordance
with its terms, subject to the effect of general principles of equity
(including standards of materiality, good faith, fair dealing and
reasonableness) whether applied by a court of law or equity. This
Agreement has been duly executed and delivered on behalf of Radnor and,
assuming due authorization, execution and delivery by the Company, the
Underwriters, the ▇▇▇▇▇▇▇ Selling Stockholders and Safeguard,
constitutes the legal, valid and binding obligation of Radnor
enforceable against Radnor in accordance with the terms hereof, subject
to the effect of general principles of equity (including standards of
materiality, good faith, fair dealing and reasonableness) whether
applied by a court of law or equity, and except as rights of indemnity
and contribution hereunder may be limited by applicable law, statutory
duties or public policy;
(iii) The execution and delivery of this Agreement,
the Other Purchasers Standby Purchase Agreements and the Rights Agent
Agreement and the performance by Radnor of its obligations hereunder
and thereunder will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under (A) the relevant organizational documents or Partnership
Agreement of Radnor, as amended to date, (B) any lease, permit,
license, contract, indenture, mortgage, deed of trust, voting trust
agreement, shareholders agreement, note, loan or credit agreement or
any other agreement or instrument to which Radnor is a party or by
which it is or may be bound or to which any of its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness,
except to the extent that any such conflict, breach, violation or
default, individually or in the aggregate, does not and would not
result in a material adverse effect on the condition, financial or
otherwise, or on the
-24-
earnings, business affairs, financial position, prospects, value,
operation, properties, results of operation or business of Radnor and
does not and would not interfere with the Offering, or (C) any statute,
judgment, decree, order, rule or regulation applicable to Radnor or any
of its activities or properties adopted or issued by any arbitrator,
court, regulatory body or administrative agency or other governmental
agency or body (including those having jurisdiction over environmental
or similar matters), domestic or foreign, having jurisdiction over
Radnor or any of its activities or properties. No consent, approval,
authorization or order of, or filing with, any governmental agency or
body or any court is required for the consummation by Radnor of the
transactions contemplated herein, in the Other Purchasers Standby
Purchase Agreements or in the Rights Agent Agreement, except (A) such
as may be required under the state securities or "Blue Sky" laws of any
jurisdiction or as may be required by the by-laws of the NASD in
connection with the purchase and distribution of the Shares by the
Underwriters, (B) any filing of the Prospectus pursuant to Rule 424(b)
or 430A of the Rules and Regulations and, if the Registration Statement
has not been declared effective, an order of the Commission declaring
the Registration Statement effective under the Act, and (C) such other
approvals as have been obtained and remain in full force and effect;
(iv) Radnor has, and on the Closing Date will have,
good and marketable title to the Shares proposed to be sold by Radnor
hereunder and the shares of Common Stock to be sold upon the exercise
of the Rights, and none of such shares will be subject to any Adverse
Claim. Upon delivery of and payment for the Shares to be sold by Radnor
hereunder, assuming that each of the Underwriters is a Bona Fide
Purchaser, the Underwriters will acquire good and marketable title
thereto free and clear of any liens, charges, claims, preemptive
rights, encumbrances, pledges, security interests, voting trusts,
defects or other like restrictions or other like material equity of any
kind whatsoever;
(v) To the best knowledge of Radnor, the Commission
has not issued any order preventing or suspending the use of any
Preliminary Prospectus or any part thereof and, to the best knowledge
of Radnor, no proceedings for a stop order have been instituted or are
pending or threatened. When any Preliminary Prospectus was filed with
the Commission, it contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the Act and the Rules and Regulations except to
the extent that such Preliminary Prospectus did not contain any such
required statements, or did not so comply, in a manner corrected in the
Prospectus. To the best knowledge of Radnor, when the Registration
Statement (or any amendment
-25-
thereto) was (or is) declared effective, it (A) contained (or will
contain) all statements required to be stated therein in accordance
with, and complied in all material respects (or will comply in all
material respects) with the requirements of, the Act and the Rules and
Regulations and (B) did not or will not include any untrue statement of
a material fact or omit to state any material fact necessary to make
the statements therein not misleading. To the best knowledge of Radnor,
when the Prospectus or any amendment or supplement thereto is filed
pursuant to Rule 424(b) (or, if the Prospectus or such amendment or
supplement is not required to be so filed, when the Registration
Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and on the
Closing Date and any Option Closing Date, the Prospectus, as amended or
supplemented at any such time, (A) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the Rules and Regulations and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The foregoing provisions of this paragraph (v) do not apply to the
Provided Information;
(vi) To the best knowledge of Radnor, the
descriptions in the Registration Statement, the Prospectus and any
amendment or supplement thereto of agreements, whether written or oral,
and of other documents are accurate and fairly present the information
required to be shown with respect thereto by Form S-1 under the Act. To
the best knowledge of Radnor, there are no agreements, whether written
or oral, or other documents that are required by the Act or the Rules
and Regulations to be described in the Registration Statement or filed
as exhibits to the Registration Statement that are not described or
filed as required; and
(vii) Neither Radnor nor any of its general partners
or affiliates (within the meaning of the Rules and Regulations) has
(a) made or caused to be effected any transaction, directly or
indirectly, designed to or that has constituted or that might
reasonably be expected to cause or result in stabilization of the price
of the Common Stock or the Rights, (b) taken or will take, directly or
indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in manipulation of the
price of the Common Stock or the Rights in violation of Rules 10b-6 or
10b-7 under the Exchange Act, or (c) failed to comply with the Act or
the Rules and Regulations in order to effect the transactions
contemplated hereby.
-26-
3. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, and subject to the terms and conditions herein
set forth, the Company agrees to issue and the Company and the Selling
Stockholders agree to sell to the Underwriters, and the Underwriters agree to
purchase, all of the Excess Unsubscribed Shares at a price of $____ per share.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained and upon not less than two
business days' notice from the Underwriters, for a period of 20 days after the
Expiration Date, the Company and the Selling Stockholders agree to sell to the
Underwriters all or part of up to 303,000 Option Shares at a purchase price of
$____ per share for the sole purpose of covering over-allotments that may be
made in connection with the offering and distribution of the shares of Common
Stock and/or Excess Unsubscribed Shares. The Company and the Selling
Stockholders further agree that 151,500 of the Option Shares will be sold by the
Company and that the aggregate of 151,500 Option Shares will be sold by the
Selling Stockholders and that any such exercise will be deemed to be sold on a
pro rata basis by the Company and the Selling Stockholders on the same basis as
the portion of the 3,030,000 shares to be sold by the Company and each of the
Selling Stockholders. The Underwriters may exercise their option to purchase all
or any portion of the Option Shares from the Company and the Selling
Stockholders up to two times, provided that the aggregate number of Option
--------
Shares purchased by the Underwriters shall not exceed 303,000. Delivery of the
Option Shares shall be made concurrently with payment therefor. Option Shares
may be purchased by the Underwriters only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the shares of Common Stock and/or the Excess Unsubscribed
Shares. No Option Shares shall be delivered unless the Excess Unsubscribed
Shares (if any are purchased by the Underwriters) shall be simultaneously
delivered or shall theretofore have been delivered as herein provided.
(c) Payment of the respective aggregate purchase prices of the
Excess Unsubscribed Shares purchased from the Company and the Selling
Stockholders shall be made by the Underwriters on the Closing Date by certified
or official bank checks in next day funds, payable to or upon the order of the
Company and the Selling Stockholders at the offices of ▇.▇. ▇▇▇▇▇▇ Securities
Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall
be agreed upon by the Underwriters and the Company, upon delivery of
certificates (in form and substance satisfactory to the Underwriters)
representing the Excess Unsubscribed Shares to the Underwriters. Delivery and
payment for the Excess Unsubscribed Shares shall be made at the Closing. In
addition, in the event that any or all of the Option Shares are purchased by the
-27-
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Shares shall be made at the above mentioned office or at such
other place as shall be agreed upon by the Underwriters and the Company, on each
Option Closing Date as specified in the notice from the Underwriters to the
Company. Certificates for the Excess Unsubscribed Shares and the Option Shares,
if any, shall be in definitive, fully registered form, shall bear no restrictive
legends and shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two business days prior to the
Closing Date or the relevant Option Closing Date, as the case may be. The
certificates for the Excess Unsubscribed Shares and the Option Shares, if any,
shall be made available to the Underwriters at such office or such other place
as the Underwriters may designate for inspection, checking and packaging not
later than 9:30 a.m., New York City time, on the last business day prior to the
Closing Date or the relevant Option Closing Date, as the case may be.
(d) Delivery of certificates representing the shares of Common
Stock to be sold pursuant to the exercise of the Rights, and the payment of the
subscription price therefor to the Company and the Selling Stockholders, shall
be made at the Closing on the Closing Date, irrespective of whether or not any
Excess Unsubscribed Shares are to be purchased by the Underwriters at such
Closing.
4. Public Offering of the Excess Unsubscribed Shares.
-------------------------------------------------
As soon after the Registration Statement becomes effective as
the Underwriters deem advisable, the Underwriters shall make the Offering.
5. Registration of Common Stock in Certain States.
----------------------------------------------
(a) On the basis of the representations, warranties and
covenants herein contained, but subject to the terms and conditions herein set
forth, the Underwriters will act (or at their expense, will cause another
broker-dealer registered in such state to act) as the agent of the Company and
the Selling Stockholders to effect the offering of the Rights and the sale of
the shares of Common Stock upon exercise thereof or pursuant to the Other
Purchasers Standby Purchase Agreements in the states of Connecticut, Florida,
Nebraska, Nevada, New Hampshire, New York, such states being those states in
which applicable state law requires that a registered broker-dealer effect the
offering of the Rights or the shares of Common Stock purchasable upon exercise
thereof or pursuant to the Other Purchasers Standby Purchase Agreements. The
Underwriters may delegate their obligations under the immediately preceding
sentence through another registered broker-dealer satisfactory to them in states
where the Underwriters are not registered as such. The Underwriters shall not be
liable under this Section 5(a), except
-28-
for gross negligence, lack of good faith and for their obligations expressly
assumed hereunder.
(b) The Company will deliver to the Underwriters, on or before
the day the Registration Statement becomes effective, a "Blue Sky Memorandum"
(herein so called), prepared by ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP relating to the
securities or Blue Sky laws of any jurisdictions in which the transfer of the
Rights or the offer and sale of the Common Stock is required to be qualified or
registered, which will set forth the circumstances under which said transfer or
offers and sales may be made and advising that the appropriate action, if any,
will be taken in each of such jurisdictions so as to permit the transfer of the
Rights and the offer and sale of the Common Stock (whether upon or in connection
with the exercise of Rights, as part of the public offering of the Shares by the
Underwriters or pursuant to the Other Purchasers Standby Purchase Agreements) to
the persons resident in the jurisdictions indicated in such survey. Such Blue
Sky Memorandum may be based upon qualification of the Rights and the Common
Stock as necessary with appropriate persons in such jurisdictions and an
examination of the statutes and regulations, if any, of such jurisdictions as
reported in standard compilations and upon interpretive advice obtained from
representatives of certain securities commissions and such local counsel as may
be necessary. Such Blue Sky Memorandum will be furnished only for the
Underwriters' general information and guidance rather than as an opinion of
counsel with regard to the laws of the jurisdictions referred to therein.
6. Covenants of the Company and the Selling Stockholders.
-----------------------------------------------------
(a) The Company covenants and agrees with the
Underwriters as follows:
(i) The Company will use its best efforts to cause
the Registration Statement, if not effective at the time of execution
of this Agreement, and any amendments thereto, to become effective as
promptly as possible. Unless required by law, the Company will not file
with the Commission the prospectus or amendment referred to in the
second sentence of Section 1(a)(i) hereof, any amendment or supplement
to such prospectus, any amendment to the Registration Statement, or any
document under the Exchange Act before termination of the offering of
the Shares by the Underwriters of which the Underwriters shall not
previously have been advised and furnished with a copy, or to which the
Underwriters shall have reasonably objected by notice to the Company in
writing after having been provided a copy thereof, or which is not in
compliance with the Act, the Exchange Act or the Rules and Regulations.
During the time when a prospectus relating to the Shares is required to
be delivered under the Act, the Company will comply with all
requirements imposed upon it by
-29-
the Act and the Rules and Regulations to the extent necessary to permit
the continuance of sales of or dealings in the Shares in accordance
with the provisions hereof and of the Prospectus, as amended or
supplemented. The Company will prepare and file with the Commission,
promptly upon the reasonable request by the Underwriters or
Underwriters' Counsel, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or
advisable in connection with the distribution of the Shares by the
Underwriters, and will use its best efforts to cause the same to be
filed with the Commission as promptly as possible;
(ii) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Underwriters, with a
confirmation in writing, of (A) the time when the Registration
Statement or any amendment thereto has been filed or declared effective
or the Prospectus or any amendment or supplement thereto has been
filed, (B) the issuance by the Commission of any stop order, or of the
initiation or threatening of any proceeding, suspending the
effectiveness of the Registration Statement or any amendment thereto or
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
(C) the issuance by any state securities commission of any notice of
any proceedings for the suspension of the qualification of the Shares
for offering or sale in any jurisdiction or of the initiation, or the
threatening, of any proceeding for that purpose, (D) the receipt of any
comments from the Commission, and (E) any request by the Commission for
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information. The Company
will use its best efforts to prevent the issuance of any such order or
the imposition of any such suspension and, if any such order is issued
or suspension is imposed, to obtain the withdrawal thereof as promptly
as possible;
(iii) If required, the Company will file the
Prospectus and any amendment or supplement thereto with the Commission
in the manner and within the time period required by Rule 424(b) and
Rule 430A(a)(3) of the Rules and Regulations;
(iv) The Company will arrange for the qualification
of the shares of Common Stock for offering and sale under the
securities or "Blue Sky" laws of such jurisdictions in which recipients
of Rights and the Other Purchasers are resident and such jurisdictions
as the Underwriters may reasonably designate and will continue such
qualifications in effect for as long as may be necessary to complete
the distribution of the shares of Common Stock, provided, however, that
-------- -------
in connection therewith the Company shall not be required to
-30-
qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction;
(v) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a
result of which, in the opinion of the Company or counsel for the
Company, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is otherwise necessary at any time
to amend or supplement the Prospectus to comply with the Act or the
Rules and Regulations, the Company will promptly notify the
Underwriters thereof and, subject to Section 6(a)(i) hereof, prepare
and file with the Commission, at the Company's expense, an amendment to
the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such
compliance. If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of
which, in the opinion of the Underwriters or Underwriters' Counsel, the
Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, the Underwriters will promptly notify the Company
thereof and the Company will, subject to Section 6(a)(i) hereof,
prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement
to the Prospectus that corrects such statement or omission or effects
such compliance. The Company will furnish to the Underwriters and
dealers (whose names and addresses shall be furnished to the Company by
the Underwriters) to which Shares may have been sold on behalf of the
Underwriters and to any other dealers upon request, a reasonable number
of copies of any amendment or supplement prepared pursuant to this
paragraph (v);
(vi) The Company will furnish to each of the
Underwriters and to Underwriters' Counsel, without charge, a signed
copy of the registration statement originally filed with respect to the
Shares and each amendment thereto. So long as the Underwriters or any
dealer is required by the Act or the Rules and Regulations to deliver a
prospectus, the Company will also furnish as many copies of each
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto as the Underwriters may reasonably request. The Company will
provide to the Underwriters a copy of the report on Form SR filed by
the Company pursuant to Rule 463 of the Rules and Regulations;
-31-
(vii) As soon as practicable after the effective date
of the Registration Statement, the Company will make generally
available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Underwriters an
earnings statement that will be in the detail required by, and will
otherwise comply with, the provisions of Section 11(a) of the Act and
Rule 158(a) of the Rules and Regulations;
(viii) For a period of five years following the date
hereof, the Company will furnish to its stockholders, as soon as
practicable, annual reports (including financial statements audited by
independent public accountants) and will deliver to the Underwriters
unaudited quarterly reports of earnings (through delivery of the
Company's quarterly reports filed with the Commission on Form 10-Q or
Form 10QSB) and the following:
(A) concurrently with furnishing quarterly
reports, if any, to the stockholders, statements of income of
the Company for each quarter in the form furnished to the
Company's stockholders;
(B) concurrently with furnishing such annual
reports to its stockholders, a balance sheet of the Company as
at the end of the preceding fiscal year, together with
statements of operations, stockholders equity, and cash flows
of the Company for such fiscal year, accompanied by a copy of
the certificate thereon of independent public accountants;
(C) as soon as they are available,
copies of all reports (financial or other) mailed to its
stockholders;
(D) as soon as they are available, copies of
all reports (other than preliminary proxy materials) and
financial statements furnished to or filed with the
Commission, the NASD or Nasdaq which are available to the
public;
(E) as soon as they are available every
press release and every material news item or article of
interest to the financial community in respect of the Company
or its affairs that is released or prepared by the Company;
and
(F) any additional information of a
public nature concerning the Company that the Underwriters may
reasonably request from time to time;
-32-
(ix) The Company will maintain a Transfer Agent and
Registrar for the Common Stock. Effective as of the Closing Date, the
Company will cause the Transfer Agent for the Common Stock to make
appropriate "stop transfer" restrictions in its records relating to the
certificates representing all shares of Common Stock subject to
restrictions under the agreements described in Section 2(a)(xxiv)
hereof, Sections 2(b)(i), 2(c)(i), 2(d)(i) and Sections 6(b)(i),
6(c)(i) and 6(d)(i) hereof;
(x) During the period commencing on the date the
Registration Statement is declared effective by the Commission and
ending 180 days after the Expiration Date, the Company, will not,
without the prior written consent of the Underwriters, (A) directly or
indirectly, transfer, sell, offer for sale, contract for sale, grant
any option for the sale of, or otherwise dispose of (or announce any
transfer, sale, offer for sale, contract for sale, grant of any option
for sale of, or other disposition of) any shares of Common Stock, or
other securities convertible into, or exercisable or exchangeable for,
shares of Common Stock (except as contemplated by this Agreement) or
(B) file any registration statement relating to any such securities
with the Commission or any other authority except as contemplated
herein, provided, however, that (1) the Company may grant or issue
-------- -------
securities pursuant to any employee stock option plan or stock purchase
plan or outstanding stock options described in the Prospectus and,
commencing after the Closing Date, may file a registration statement on
Form S-8 with respect to such plans and (2) the Company may issue
Common Stock, or other securities convertible into, or exercisable or
exchangeable for shares of Common Stock, as consideration for any
acquisition by the Company so long as the party being issued such
securities signs an agreement, acceptable in form and substance to the
Underwriters, that such party will not transfer, sell, offer for sale,
contract to sell or otherwise dispose of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for
shares of Common Stock owned by such party or with respect to which
such party has the power of disposition during a period commencing on
the date of issuance of such securities and ending 180 days following
the Expiration Date;
(xi) The Company will apply the net proceeds from the
sale of the Common Stock sold by it in the manner set forth under "USE
OF PROCEEDS" in the Prospectus. Except as described in the Prospectus,
no portion of the net proceeds will be used directly or indirectly to
acquire any securities issued by the Company;
(xii) The Company will furnish to the Underwriters
as early as practicable prior to each of the date hereof, the
-33-
Closing Date and each Option Closing Date, if any, but no later than
two full business days prior thereto, a copy of the latest available
unaudited interim financial statements of the Company (which in each
case shall not be earlier than the last day of the preceding month,
unless such month-end shall be less than three business days prior to
the date such statements are to be delivered) that have been read by
the Company's independent public accountants, as stated in their
letters to be furnished pursuant to Section 8(j) hereof;
(xiii) The Company will cause the Shares and the
Rights to be approved for quotation on the Nasdaq National Market and
will use its reasonable efforts to maintain such approvals;
(xiv) The Company will file and cause to become
effective prior to the Closing Date a registration statement with
respect to the Common Stock pursuant to Section 12(g) of the Exchange
Act and will use its best efforts to maintain such registration;
(xv) The Company will apply the net proceeds from the
sale of the shares of Common Stock sold by it and conduct its
operations in a manner that will not subject it to registration as an
investment company under the Investment Company Act of 1940, as
amended; and
(xvi) The Company will furnish, without charge, to
the Underwriters and Underwriters' counsel within four months of the
Closing Date such number of closing binders as the Underwriters and
Underwriters' counsel may reasonably request.
(b) Each of the ▇▇▇▇▇▇▇ Selling Stockholders covenants
and agrees with the Underwriters as follows:
(i) During the period commencing on the date the
Registration Statement is declared effective by the Commission and
ending 180 days after the Expiration Date, each ▇▇▇▇▇▇▇ Selling
Stockholder will not, without the prior written consent of the
Underwriters, directly or indirectly, transfer, sell, offer for sale,
contract for sale, grant any option for the sale of or otherwise
dispose of any shares of Common Stock or other securities convertible
into, or exercisable or exchangeable for, shares of Common Stock,
except as contemplated in this Agreement; and
(ii) Each ▇▇▇▇▇▇▇ Selling Stockholder will pay all
applicable state transfer taxes, if any, involved in the transfer to
the Underwriters of the Shares to be purchased by the Underwriters from
such ▇▇▇▇▇▇▇ Selling Stockholder.
-34-
(c) Safeguard covenants and agrees with the Underwriters
as follows:
(i) During the period commencing on the date the
Registration Statement is declared effective by the Commission and
ending 180 days after the Expiration Date, Safeguard will not, without
the prior written consent of the Underwriters, directly or indirectly,
transfer, sell, offer for sale, contract for sale, grant any option for
the sale of or otherwise dispose of any shares of Common Stock or other
securities convertible into, or exercisable or exchangeable for, shares
of Common Stock except (A) as contemplated in this Agreement or (B)
pursuant to grants or sales of such shares to employees of Safeguard or
its subsidiaries, provided that such transferees agree to be bound by
the restrictions contained in this paragraph; and
(ii) Safeguard will pay all applicable state transfer
taxes, if any, involved in the transfer to the Underwriters of the
Shares to be purchased by the Underwriters from Safeguard.
(d) Radnor covenants and agrees with the Underwriters as
follows:
(i) During the period commencing on the date the
Registration Statement is declared effective by the Commission and
ending 180 days after the Expiration Date, Radnor will not, without the
prior written consent of the Underwriters, directly or indirectly,
transfer, sell, offer for sale, contract for sale, grant any option for
the sale of or otherwise dispose of any shares of Common Stock or other
securities convertible into, or exercisable or exchangeable for, shares
of Common Stock except (A) as contemplated in this Agreement or (B)
pursuant to grants or sales of such shares to employees of Radnor or
its subsidiaries, provided that such transferees agree to be bound by
the restrictions contained in this paragraph; and
(ii) Radnor will pay all applicable state transfer
taxes, if any, involved in the transfer to the Underwriters of the
Shares to be purchased by the Underwriters from Radnor.
(e) The Company and each of the Selling Stockholders covenant
and agree with each other and covenant and agree with the Underwriters that the
300,000 Other Purchasers Standby Shares to be sold and the [343,000] shares of
Common Stock to be sold to the ▇▇▇▇▇▇ Group upon exercise of the ▇▇▇▇▇▇ Rights
shall be deemed to be sold by the Selling Stockholders on an equal basis.
-35-
7. Payment of Expenses; Fees.
-------------------------
(a) As compensation to the Underwriters for their services in
connection with the transactions contemplated by this Agreement and their
commitment hereunder, the Company and each of the Selling Stockholders hereby
agree, jointly and severally, to pay to the Underwriters, by wire transfer, on
the sixth business day following the Expiration Date, an amount equal to the sum
of (i) 3% of the Exercise Price of each share of Common Stock subject to Rights,
and (ii) an additional fee of 4% of the Exercise Price of each share (other than
the Option Shares) purchased by the Underwriters pursuant to Section 3(a) of
this Agreement or upon the exercise of Rights by the Underwriters if such Rights
were purchased by the Underwriters at a time when the Common Stock was trading
(on a "when-issued" basis) at a per share price of less than the Exercise Price
or with the prior acknowledgement of Safeguard that the Underwriters would be
entitled to receive such compensation pursuant to the exercise of such Rights.
As compensation to the Underwriters for their commitment hereunder, the Company
hereby agrees to pay the Underwriters, by wire transfer, on each Option Closing
Date an amount equal to 7% of the Exercise Price for each Option Share purchased
on such date by the Underwriters. As additional compensation to the Underwriters
for their commitment hereunder, the Company shall reimburse the Underwriters, by
wire transfer on the sixth business day following the Expiration Date, for a
non-accountable expense allowance of (i) $125,000 if, on the Expiration Date,
the closing price for the Common Stock was trading (on a "when-issued" basis) at
a per share price of less than $10.00, (ii) $50,000 if, on the Expiration Date,
the closing price for the Common Stock was trading (on a "when- issued basis) at
a per share price between $10.00 and $12.00 or (iii) no expense allowance if, on
the Expiration Date, the closing price for the Common Stock was trading (on a
"when-issued" basis) at a per share price greater than $12.00.
(b) The Company hereby agrees to pay all expenses and fees
incident to the performance of the obligations by the Company and the Selling
Stockholders under this Agreement, including all expenses and fees of the
Company and the Selling Stockholders incurred in connection with or by (i) the
engagement of accountants, counsel for the Company, counsel for Safeguard, the
Rights Agent and the Transfer Agent and Registrar for the Common Stock, (ii)
preparation, duplication, printing, filing and distribution of the registration
statement originally filed with respect to the Shares and any amendments
thereto, any Preliminary Prospectus and the Prospectus and any amendments and
supplements thereto and related documents used in connection with the Offering,
including in each case the cost of all copies supplied to the Underwriters in
quantities as hereinabove stated, (iii) the printing, engraving, issuance and
delivery of certificates representing the Rights and the Shares, (iv) the
qualification of the Shares under state securities or "Blue Sky" laws, including
-36-
filing fees, costs of printing and mailing of a "Preliminary Blue Sky
Memorandum" and "Final Blue Sky Memorandum" and disbursements and fees of
Underwriters' Counsel in connection with the review of such materials (which
shall be paid at the Closing), (v) the approval of the Common Stock and Rights
for quotation on the Nasdaq National Market, (vi) the filing fees of the
Underwriters in connection with any filings required to be made with the NASD
and (vii) travel and out of pocket expenses of the Company and Safeguard in
connection with meetings with prospective investors in the Shares (other than
such expenses as shall have been specifically approved in writing by the
Underwriters to be paid for by the Underwriters), and (viii) any expenses
incurred by the Company in connection with a "road show" presentation to
potential investors.
(c) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 8, Sections 12(a)(vii) or (a)(viii),
or Section 13, the Company hereby agrees to reimburse and indemnify the
Underwriters for all of their reasonable accountable out-of-pocket expenses,
including the reasonable fees and disbursements of Underwriters' Counsel and any
of the state securities, "Blue Sky" and NASD fees and expenses identified in
Sections 7(b)(iv) and 7(b)(vi) above, that shall have been incurred by them in
connection with the proposed purchase and sale of the Shares.
8. Conditions of the Underwriters' Obligations.
-------------------------------------------
The obligations of the Underwriters to purchase and pay for
the Shares shall be subject, in their sole discretion, to the accuracy of the
representations and warranties of the Company and each of the Selling
Stockholders herein as of the date hereof and as of the Closing Date, as if they
had been made on and as of the Closing Date, to the accuracy on and as of the
Closing Date of the statements of the officers of the Company, Safeguard and
Radnor and of each of the ▇▇▇▇▇▇▇ Selling Stockholders made in certificates
delivered pursuant to the provisions hereof, to the performance by the Company,
Radnor, the ▇▇▇▇▇▇▇ Selling Stockholders and Safeguard on and as of the Closing
Date of their respective covenants and obligations hereunder, and to the
following further conditions:
(a) If the Registration Statement or any amendment thereto
filed prior to the Closing Date has not been declared effective as of the time
of execution hereof, the Registration Statement or such amendment shall have
been declared effective not later than the first full business day next
following the date hereof or such later date and time as shall have been
consented to in writing by the Underwriters. If required, the Prospectus shall
have been timely filed with the Commission in accordance with Rule 424(b) of the
Rules and Regulations. If required, any amendment or supplement to the
Prospectus shall have been filed in accordance with Rule 424(c) under the Act.
No stop order suspending the
-37-
effectiveness of the Registration Statement or any amendment thereto shall have
been issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company, any of the Selling Stockholders, or the
Underwriters, shall be contemplated by the Commission. The Company shall have
complied, to the reasonable satisfaction of the Underwriters and Underwriters'
Counsel, with any request of the Commission for additional information (to be
included in the Registration Statement, the Prospectus or otherwise).
(b) The Underwriters shall not have advised the Company or the
Selling Stockholders that, in the opinion of the Underwriters or Underwriters'
Counsel, (i) the Registration Statement, or any amendment thereto, includes 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 under which they
were made, not misleading or (ii) the Prospectus, or any amendment or supplement
thereto, includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(c) The Underwriters shall have received from Underwriters'
Counsel an opinion dated the Closing Date, with respect to the issuance and sale
of the Shares, the Registration Statement, the Prospectus and such other related
matters as the Underwriters reasonably may request. Underwriters' Counsel shall
have received from the Company, Radnor, the ▇▇▇▇▇▇▇ Selling Stockholders and
Safeguard such papers and information as they may request to enable them to
review or pass upon such matters or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties, or
covenants of the Company, Radnor, the ▇▇▇▇▇▇▇ Selling Stockholders or Safeguard
contained herein.
(d) The Underwriters shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel to the Company and the Selling Stockholders an opinion, on
or prior to the date Rights certificates and Prospectuses are first mailed to
Safeguard Shareholders and on the Closing Date, dated the respective dates
thereof and in form and substance satisfactory to Underwriters' Counsel, to the
effect that:
(i) The Company and each of its subsidiaries are
corporations duly incorporated, validly existing and in good standing
under the laws of their respective jurisdictions of organization and
are duly qualified to transact business as foreign corporations and are
in good standing in each jurisdiction in which the Company has
represented to such counsel that they conduct business;
-38-
(ii) The Company and each of its subsidiaries have
all requisite corporate power and authority necessary or required to
own or lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the
Prospectus;
(iii) The Company has all requisite power and
authority (corporate and other) to enter into this Agreement and the
Rights Agent Agreement and to consummate the transactions provided for
herein and therein; and this Agreement and the Rights Agent Agreement
have each been duly authorized, executed and delivered by the Company.
Each of this Agreement, assuming due authorization, execution and
delivery by the Underwriters, and the Rights Agent Agreement, assuming
due authorization, execution and delivery by the parties thereto other
than the Company and the Selling Stockholders constitutes the legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws affecting creditors' rights generally or by
general principles of equity (including standards of materiality, good
faith, fair dealing and reasonableness) whether applied by a court of
law or equity, and except as rights to indemnity and contribution
hereunder may be limited by applicable law, statutory duties or public
policy. The Company's execution and delivery of this Agreement and the
Rights Agent Agreement, its performance of its obligations hereunder
and thereunder and the consummation of the transactions contemplated
hereby and thereby do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any liens,
charges, claims, encumbrances, pledges, security interests, defects or
other like restrictions or equities of any kind whatsoever upon, any
right, property or asset (tangible or intangible) of the Company or any
of its subsidiaries pursuant to the terms of (A) the charter or bylaws,
each as amended through the date of the opinion, of the Company and
each of its subsidiaries, (B) any material lease, permit, license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which any of them is or may be bound or to which any
of their respective properties or assets (tangible or intangible) is or
may be subject, or any indebtedness, except that such counsel need not
express an opinion with respect to any violation based upon any
covenant of a financial or numerical nature or that requires arithmetic
computation and such counsel has not otherwise known of or had reason
to expect the occurrence of such default, or (C) any statute, rule or
regulation or, to
-39-
the knowledge of Company counsel, any judgment, decree or order
applicable to the Company or any of its subsidiaries or any of their
respective activities or properties adopted or issued by an arbitrator,
court, regulatory body or administrative agency or other governmental
agency or body (including those having jurisdiction over environmental
or similar matters), domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their respective
activities or properties (other than such as may be required under
state securities or "Blue Sky" laws and such as may be required by the
by-laws and rules of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters);
(iv) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or, to such counsel's
knowledge, any court is required in connection with the issuance of the
shares of Common Stock to be sold by the Company, the Company's
performance of its obligations hereunder, the Offering, or the
consummation by the Company of the other transactions contemplated
hereby, except such as may be required under the state securities or
"Blue Sky" laws of any jurisdiction or as may be required by the
by-laws and rules of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters and except such other
approvals as have been obtained and remain in full force and effect.
Upon the effectiveness of the Registration Statement, the Common Stock
will be registered pursuant to Section 12(g) of the Exchange Act, and
will be included in the Nasdaq National Market;
(v) At the date or dates indicated in the Prospectus,
the authorized, issued and outstanding capital stock of the Company was
as set forth therein, and conformed as to legal matters, to the extent
that it constitutes matters of law or legal conclusions, to the
description thereof contained therein under the captions
"CAPITALIZATION" and "DESCRIPTION OF CAPITAL STOCK." All of the issued
shares of Common Stock of the Company (including the Shares sold by the
Selling Stockholders) have been duly authorized and validly issued, and
are fully paid and non-assessable; the holders thereof are not subject
to personal liabilities solely by reason of holding such shares; and
none of such shares have been issued in violation of the preemptive
rights of any security holders of the Company known to Company counsel.
The Shares to be sold by the Company have been duly authorized and,
when paid for in accordance herewith, will be validly issued, fully
paid and non-assessable, and with no personal liability resulting
solely from the ownership thereof. Upon the issuance and delivery
pursuant to this Agreement of the Shares to be sold by the Company,
assuming the Underwriters do not have knowledge of any Adverse Claim,
the Underwriters will
-40-
acquire good and marketable title to such Shares free and clear of any
liens, charges, claims, encumbrances, pledges, security interests,
defects or other like restrictions or like equities of any kind
whatsoever. There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's Articles of
Incorporation or By-Laws, each as amended to date, or pursuant to any
agreement among stockholders to which the Company is a party or of
which it has knowledge, and the Shares to be sold by the Company are
not subject to any preemptive or other similar rights of any security
holder. The Company is not a party to or bound by any instrument,
agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this
Agreement and as described in the Prospectus. Except as described in
the Prospectus with respect to stock options (and shares issuable upon
exercise thereof) that may be registered by the Company in a
registration statement on Form S-8, no holders of any securities of the
Company or of any options, warrants or other convertible or
exchangeable securities of the Company which are exercisable for or
convertible or exchangeable for securities of the Company have the
right (which has not been waived) to include any securities issued by
the Company in the Registration Statement or any registration statement
to be filed by the Company within the period commencing on the date the
Registration Statement is declared effective by the Commission and
ending 180 days after the Expiration Date or to require the Company to
file a registration statement under the Act during such period. Based
on the form of specimen certificate filed as an exhibit to the
Registration Statement, the certificates representing the Shares are in
due and proper form;
(vi) The Registration Statement has become effective
under the Act. Any required filing of the Prospectus pursuant to Rule
424(b) and 430A(a)(3) of the Rules and Regulations has been made in
accordance with the time period required thereby. To such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been instituted or are pending or threatened, by the
Commission;
(vii) At the time the Registration Statement was
declared effective by the Commission, the Registration Statement and
the Prospectus and any amendment or supplement thereto (other than the
financial statements, and notes thereto, the financial schedules, and
the other financial and statistical data included in the Registration
Statement or the Prospectus or omitted therefrom, as to which such
counsel need express no opinion) complied as to form in all material
-41-
respects with the requirements of the Act and the Rules and
Regulations;
(viii) Such counsel has reviewed all contracts and
other documents referred to in the Registration Statement and the
Prospectus, and the summaries of and other disclosures regarding such
contracts and other documents included in the Registration Statement
and the Prospectus fairly present the information required to be shown
with respect thereto. To such counsel's knowledge, there are no
contracts or other documents of a character required to be filed as
exhibits to the Registration Statement or required to be described in
the Registration Statement or the Prospectus that were not filed or
disclosed as required;
(ix) To such counsel's knowledge, there is not
pending or threatened or contemplated against the Company, or involving
the properties or business of the Company, any action, suit,
proceeding, inquiry, investigation, litigation or governmental
proceeding (including those having jurisdiction over environmental or
similar matters), domestic or foreign, that (A) is required to be
disclosed in the Registration Statement and is not so disclosed, (B)
questions the validity of the capital stock of the Company or the
validity or enforceability of this Agreement, (C) questions the
validity of any action taken or to be taken by the Company pursuant to
or in connection with this Agreement, or (D) could materially adversely
effect the present or prospective ability of the Company to perform its
obligations under this Agreement or result in a Material Adverse
Effect;
(x) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act, nor, by receipt of the proceeds from its
sale by it of the Shares pursuant to this Agreement, will the Company
become or be deemed to be an "investment company" under such Act;
(xi) This Agreement, the Other Purchasers Standby
Purchase Agreements and the Rights Agent Agreement have each been
executed and delivered by each of the Selling Stockholders. Each of
this Agreement, assuming due authorization, execution and delivery by
the Underwriters, the Other Purchasers Standby Purchase Agreements,
assuming due authorization, execution and delivery by the parties
thereto other than the Selling Stockholders, and the Rights Agent
Agreement, assuming due authorization, execution and delivery by the
parties thereto other than the Selling Stockholders and the Company,
constitutes the legal, valid and binding obligation of each of the
▇▇▇▇▇▇▇ Selling Stockholders, enforceable against each of the ▇▇▇▇▇▇▇
Selling Stockholders in accordance with its terms, except as
enforceability may be
-42-
limited by bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws affecting creditors' rights generally or by
general principles of equity (including standards of materiality, good
faith, fair dealing and reasonableness) whether applied by a court of
law or equity, and except as rights to indemnity and contribution
hereunder may be limited by applicable law, statutory duties or public
policy. Each of the ▇▇▇▇▇▇▇ Selling Stockholders' execution and
delivery of this Agreement, the Other Purchasers Standby Purchase
Agreements and the Rights Agent Agreement, each of the ▇▇▇▇▇▇▇ Selling
Stockholders' performance of his obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and
thereby do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any liens, charges,
claims, encumbrances, pledges, security interests, defects or other
like restrictions or equities of any kind whatsoever upon, any right,
property or asset (tangible or intangible) of each of the ▇▇▇▇▇▇▇
Selling Stockholders pursuant to the terms of (A) any material lease,
permit, license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit agreement
(including any related to indebtedness) or any other agreement or
instrument to which each of the ▇▇▇▇▇▇▇ Selling Stockholders is a party
or by which he is or may be bound or to which any of his respective
properties or assets (tangible or intangible) is or may be subject, or
(B) any statute, judgment, decree, order, rule or regulation known to
such counsel of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body having
jurisdiction over each of the ▇▇▇▇▇▇▇ Selling Stockholders (provided
that as of the first date of the opinion only, such opinion need not
express any opinion set forth above with respect to the Other
Purchasers Standby Purchase Agreements that have not theretofore been
executed and delivered);
(xii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or, to such
counsel's knowledge, any court is required in connection with the
issuance of the shares of Common Stock to be sold by each of the
▇▇▇▇▇▇▇ Selling Stockholders, each of the ▇▇▇▇▇▇▇ Selling Stockholders'
performance of his obligations hereunder, the Offering, or the
consummation by each of the ▇▇▇▇▇▇▇ Selling Stockholders of the other
transactions contemplated hereby, except such as may be required under
the state securities or "Blue Sky" laws of any jurisdiction or as may
be required by the by-laws and rules of the NASD in connection with the
purchase and distribution of the Shares by the Underwriters and except
such other approvals as have been obtained and remain in full force and
effect;
-43-
(xiii) Each of the ▇▇▇▇▇▇▇ Selling Stockholders has
full right, power and authority to enter into this Agreement, the Other
Purchasers Standby Purchase Agreements and the Rights Agent Agreement
and to sell, transfer and deliver the shares of Common Stock proposed
to be sold by him hereunder on such Closing Date, the shares of Common
Stock to be sold by him upon the exercise of the Rights and the shares
of Common Stock to be sold by him pursuant to the Other Purchasers
Standby Purchase Agreements; and upon delivery to the Underwriters of
the Common Stock to be sold to them by each of the ▇▇▇▇▇▇▇ Selling
Stockholders against payment therefor in accordance with this
Agreement, the Underwriters, assuming that they have purchased such
Common Stock in good faith and without notice of any adverse claim,
will acquire good and marketable title to such Common Stock free and
clear of all liens;
(xiv) No transfer taxes are required to be paid in
connection with the sale and delivery of the Common Stock by the
Company and the Selling Stockholders to the Underwriters hereunder;
(xv) The certificates evidencing the Rights to be
distributed to the Safeguard Shareholders and the shares of Common
Stock to be delivered hereunder are in due and proper form under
Pennsylvania law; and
(xvi) All of the Rights have been duly authorized and
validly issued, and, when issued and distributed as set forth in the
Prospectus, will be legally issued and valid and binding obligations of
the Company having the rights summarized in the Prospectus; and none of
such Rights will have been issued in violation of the preemptive rights
of any security holders of the Company arising as a matter of law or
under or pursuant to the Company's Articles of Incorporation, as
amended, the Company's By-Laws, as amended, or any agreement or
instrument to which the Company is a party or by which it is bound.
(xvii) Safeguard has the legal right and power to
enter into this Agreement, the Other Purchasers Standby Purchase
Agreements and the Rights Agent Agreement and to sell, transfer and
deliver hereunder the Shares proposed to be sold by it hereunder. This
Agreement, the Other Purchasers Standby Purchase Agreements and the
Rights Agent Agreement have each been duly authorized by Safeguard,
have been duly executed and delivered by or on behalf of Safeguard and
constitute the legal, valid, and binding obligations of Safeguard
enforceable against Safeguard in accordance with their respective
terms, subject to the effect of general principles of equity (including
standards of materiality, good faith, fair dealing and reasonableness)
whether applied by a court of law or equity and except as rights to
indemnity and
-44-
contribution hereunder or thereunder may be limited by applicable law,
statutory duties or public policy (provided that as of the first date
of the opinion only, such opinion need not express any opinion set
forth above with respect to the Other Purchaser Standby Purchase
Agreements that have not theretofore been executed and delivered);
(xviii) The execution and delivery of this Agreement,
the Other Purchasers Standby Purchase Agreements and the Rights Agent
Agreement, the performance by Safeguard of its obligations hereunder
and thereunder will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under (A) the Articles of Incorporation or By-Laws of
Safeguard, as amended through the date of the opinion, (B) any lease,
permit, license, contract, indenture, mortgage, deed of trust, voting
trust agreement, shareholders agreement, note, loan or credit agreement
or any other agreement or instrument, known to such counsel, to which
Safeguard is a party or by which it is or may be bound or to which any
of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, except to the extent that any such
conflict, breach, violation or default, individually or in the
aggregate, does not and would not result in a material adverse effect
on the condition, financial or otherwise, or on the earnings, business
affairs, financial position, prospects, value, operation, properties,
results of operation or business of Safeguard and does not and would
not interfere with the Offering, or (C) any statute, judgment, decree,
order, rule or regulation, known to such counsel, applicable to
Safeguard or any of its activities or properties adopted or issued by
any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including those having jurisdiction
over environmental or similar matters), having jurisdiction over
Safeguard or any of its activities or properties, in each case except
where such breach, violation or default would not (i) affect the
enforceability of this Agreement, the Other Purchasers Standby Purchase
Agreements or the Rights Agent Agreement, (ii) affect the Offering or
the sale of the Common Stock contemplated hereby, or (iii) have a
material impact, financial or otherwise, on Safeguard or any of its
subsidiaries. To such counsel's knowledge, no consent, approval,
authorization or order of, or filing with, any governmental agency or
body or any court is required for the consummation by Safeguard of the
transactions contemplated herein, in the Other Purchasers Standby
Purchase Agreements or in the Rights Agent Agreement, except such as
may be required under the state securities or "Blue Sky" laws of any
jurisdiction or as may be required by the by-laws and rules of the NASD
in connection with the purchase and distribution of the Shares by the
Underwriters and except such other approvals as have been obtained and
remain in full force and effect;
-45-
(xix) To such counsel's knowledge, Safeguard has
title to the Shares proposed to be sold by Safeguard hereunder free of
any adverse claims and upon delivery of and payment for such Shares
hereunder, assuming that each Underwriter is a Bona Fide Purchaser, the
Underwriters will acquire title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests,
preemptive rights, voting trusts, adverse claims or other defects of
title whatsoever;
(xx) The descriptions in the Registration Statement,
the Prospectus and any amendment or supplement thereto of agreements,
whether written or oral, and of other documents to which Safeguard or
any of its affiliates (other than the Company or any of its
subsidiaries) is a party, are accurate and fairly present the
information required to be shown with respect thereto by Form S-1 under
the Act. There are no agreements, whether written or oral, or other
documents to which Safeguard or any of its affiliates (other than the
Company or any of its subsidiaries) is a party, which, to the knowledge
of such counsel, exist that are required by the Act or the Rules and
Regulations to be described in the Registration Statement or filed as
exhibits to the Registration Statement that are not described or filed
as required; and
(xxi) The ▇▇▇▇▇▇ Agreement has been duly executed by
the ▇▇▇▇▇▇ Group and constitutes the valid, legal and binding
obligation of the ▇▇▇▇▇▇ Group, enforceable against the ▇▇▇▇▇▇ Group in
accordance with its terms.
(xxii) Radnor has the legal right and power to enter
into this Agreement, the Other Purchasers Standby Purchase Agreements
and the Rights Agent Agreement and to sell, transfer and deliver
hereunder the Shares proposed to be sold by it hereunder. This
Agreement, the Other Purchasers Standby Purchase Agreements and the
Rights Agent Agreement have each been duly authorized by Radnor, have
been duly executed and delivered by or on behalf of Radnor and
constitute the legal, valid, and binding obligations of Radnor
enforceable against Radnor in accordance with their respective terms,
subject to the effect of general principles of equity (including
standards of materiality, good faith, fair dealing and reasonableness)
whether applied by a court of law or equity and except as rights to
indemnity and contribution hereunder or thereunder may be limited by
applicable law, statutory duties or public policy (provided that as of
the first date of the opinion only, such opinion need not express any
opinion set forth above with respect to the Other Purchaser Standby
Purchase Agreements that have not theretofore been executed and
delivered);
-46-
(xxiii) The execution and delivery of this Agreement,
the Other Purchasers Standby Purchase Agreements and the Rights Agent
Agreement, the performance by Radnor of its obligations hereunder and
thereunder will not conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under
(A) the relevant organizational documents or Partnership Agreement of
Radnor, as amended through the date of the opinion, (B) any lease,
permit, license, contract, indenture, mortgage, deed of trust, voting
trust agreement, shareholder agreement, note, loan or credit agreement
or any other agreement or instrument, known to such counsel, to which
Radnor is a party or by which it is or may be bound or to which any of
its properties or assets (tangible or intangible) is or may be subject,
or any indebtedness, except to the extent that any such conflict,
breach, violation or default, individually or in the aggregate, does
not and would not result in a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs, financial
position, prospects, value, operation, properties, results of operation
or business of Radnor and does not and would not interfere with the
Offering, or (C) any statute, judgment, decree, order, rule or
regulation, known to such counsel, applicable to Radnor or any of its
activities or properties adopted or issued by any arbitrator, court,
regulatory body or administrative agency or other governmental agency
or body (including those having jurisdiction over environmental or
similar matters), having jurisdiction over Safeguard or any of its
activities or properties, in each case except where such breach,
violation or default would not (i) affect the enforceability of this
Agreement, the Other Purchasers Standby Purchase Agreements or the
Rights Agent Agreement, (ii) affect the Offering or the sale of the
Common Stock contemplated hereby, or (iii) have a material impact,
financial or otherwise, on Radnor or any entity owned or controlled by
it. To such counsel's knowledge, no consent, approval, authorization or
order of, or filing with, any governmental agency or body or any court
is required for the consummation by Radnor of the transactions
contemplated herein, in the Other Purchasers Standby Purchase
Agreements or in the Rights Agent Agreement, except such as may be
required under the state securities or "Blue Sky" laws of any
jurisdiction or as may be required by the by-laws and rules of the NASD
in connection with the purchase and distribution of the Shares by the
Underwriters and except such other approvals as have been obtained and
remain in full force and effect;
(xxiv) To such counsel's knowledge, Radnor has title
to the Shares proposed to be sold by Radnor hereunder free of any
adverse claims and upon delivery of and payment for such Shares
hereunder, assuming that each Underwriter is a Bona Fide Purchaser, the
Underwriters will acquire title
-47-
thereto, free and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, preemptive rights, voting trusts,
adverse claims or other defects of title whatsoever;
(xxv) The descriptions in the Registration Statement,
the Prospectus and any amendment or supplement thereto of agreements,
whether written or oral, and of other documents to which Radnor or any
of its affiliates (other than the Company or any of its subsidiaries)
is a party, are accurate and fairly present the information required to
be shown with respect thereto by Form S-1 under the Act. There are no
agreements, whether written or oral, or other documents to which Radnor
or any of its affiliates (other than the Company or any of its
subsidiaries) is a party, which, to the knowledge of such counsel,
exist that are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to the
Registration Statement that are not described or filed as required; and
In addition, such opinion shall contain statements
substantially to the following effect:
In the course of the preparation by the Company and
its counsel of the Registration Statement and the Prospectus, such
counsel attended conferences with certain of the officers of, and the
independent public accountants for, the Company, at which the
Registration Statement and the Prospectus were discussed. Between the
date of effectiveness of the Registration Statement and the Closing
Date, such counsel attended additional conferences with certain of
the officers of, and the independent public accountants for, the
Company, at which the contents of the Registration Statement and the
Prospectus were discussed. Given the limitations inherent in the
independent verification of factual matters and the character of
determinations involved in the registration process, 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 Prospectus. Subject to the foregoing
and on the basis of the information such counsel gained in the
performance of the services referred to above, including information
obtained from officers and other representatives of the Company,
Radnor and Safeguard, no facts have come to such counsel's attention
that cause such counsel to believe that (x) the Registration
Statement, at the time it was declared effective by the Commission,
contained an untrue statement of a material fact or omitted to state
a material fact relating to Safeguard or Radnor or any of
-48-
their affiliates (other than the Company or Radnor) required to be
stated therein or necessary to make the statements therein not
misleading or (y) the Prospectus, as of its date or the Closing Date,
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact relating to Safeguard or
Radnor or any of its affiliates (other than the Company or Radnor)
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
The Underwriters are entitled to rely on the opinion of such
firm, filed as an exhibit to the Registration Statement, as to the matters
discussed in the Prospectus under the heading "THE OFFERING -- Federal Income
Tax Consequences" in the Prospectus.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent they deem proper, on certificates and written statements
of the ▇▇▇▇▇▇▇ Selling Stockholders and of responsible officers of the Company,
Radnor and Safeguard, as appropriate, and certificates or other written
statements of officers of departments of various jurisdictions having custody of
documents respecting the corporate or partnership existence or good standing of
the Company, Radnor or Safeguard, provided that copies of any such statements or
--------
certificates shall be delivered to Underwriters' Counsel if requested.
(e) The Underwriters shall have received a certificate, dated
the Closing Date, of the Company signed by each of the President and Chief
Executive Officer and the Vice President and Chief Operating Officer of the
Company to the effect that each of such officers has carefully examined the
Registration Statement, the Prospectus and this Agreement and, to his best
knowledge, that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of the
Closing Date, and the Company has complied in all material respects
with all agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or satisfied at
or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best of such
officers' knowledge, are contemplated or threatened by the Commission;
and
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(A) there has been no material adverse change, or development involving
a prospective material adverse change
-49-
(including a change in management or control of the Company), in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, on a
consolidated basis, except in each case as described in or contemplated
by the Prospectus; (B) neither the Company nor any of its subsidiaries
has entered into any transactions not in the ordinary course of
business; (C) neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or contingent,
other than as disclosed in the Registration Statement and the
Prospectus; (D) neither the Company nor any of its subsidiaries has
sustained a loss material to the Company and its subsidiaries on a
consolidated basis, by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act, whether or not such
loss shall have been insured, or from any labor dispute or from any
legal or governmental proceeding; (E) no action, suit or proceeding, at
law or in equity, is pending or, to the knowledge of such officer,
threatened against the Company or any of its subsidiaries or affecting
any of their respective properties or businesses before or by any court
or federal, state or foreign commission, board or other administrative
agency that (1) alleges that the conduct of such business as currently
conducted or as proposed to be conducted infringes on any trademarks,
service marks, copyrights, service names, trade names, patents or
patent applications currently held by any third party and (2) if
decided unfavorably may have a Material Adverse Effect; and (F) there
has not occurred any other event required to be set forth in the
Prospectus that has not been so set forth.
Except as otherwise provided in clause (iii)(A) above,
references to the Prospectus and Registration Statement in this Section 8(e)
shall include any amendment or supplement thereto at the date of such
opinion.
(f) The Underwriters shall have received a certificate, dated
the Closing Date, of each of the Chairman and the Vice President and General
Counsel of Safeguard to the effect that such officers have carefully examined
the Registration Statement, the Prospectus and this Agreement and that the
representations and warranties of Safeguard in this Agreement are true and
correct on and as of the Closing Date, and that Safeguard has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.
(g) The Underwriters shall have received a certificate, dated
the Closing Date, of the General Partner of Radnor to the effect that such
General Partner has carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties of
Radnor in this Agreement are true and correct on and as of the Closing Date, and
that Radnor has
-50-
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date.
(h) The Underwriters shall have received a certificate, dated
the Closing Date, from each of the ▇▇▇▇▇▇▇ Selling Stockholders to the effect
that he has carefully examined the Registration Statement, Prospectus and this
Agreement and that his representations and warranties in this Agreement are true
and correct on and as of the Closing Date, and that he has complied with all
agreements and satisfied all conditions on his part to be performed or satisfied
at or prior to the Closing Date.
(i) The Underwriters shall have received from Coopers & ▇▇▇▇▇▇▇
letters dated, respectively, the date hereof and the Closing Date, in
form and substance satisfactory to the Underwriters and Underwriters' Counsel,
with respect to matters set forth below relating to each of the years ended
December 31, 1993, 1994 and 1995:
(i) confirming that they are and were independent
public accountants with respect to the Company within the meaning of
the Act and the Rules and Regulations;
(ii) stating that it is their opinion that the
audited financial statements and schedules examined by them and
included in the Registration Statement and the Prospectus comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations;
(iii) stating that, on the basis of certain procedures
which included a reading of the latest available unaudited interim
consolidated financial statements of the Company (with an indication
of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of meetings
and actions of the shareholders and board of directors and the
various committees of the board of directors of the Company,
inquiries of officers and other employees of the Company responsible
for financial and accounting matters and other specified procedures
and inquiries, nothing came to their attention that caused them to
believe that (A) the unaudited consolidated financial statements, if
any, and schedules of the Company included in the Registration
Statement and the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Rules and Regulations or are not fairly presented in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the consolidated audited
financial statements of the Company included in the
-51-
Registration Statement and the Prospectus, (B) at a specified date
not more than five days prior to the date of such letter, there was
any change in the capital stock or consolidated long-term debt of the
Company, or any decrease in the consolidated stockholders' equity, or
net current assets of the Company, in each case, as compared with
amounts shown in the December 31, 1995 consolidated balance sheet
included in the Registration Statement and the Prospectus, except for
changes set forth in such letter, and (C) during the period from
December 31, 1995 to such specified date, there was any decrease in
consolidated revenues, income before income taxes, or net income, or
any decrease in net income per common share of the Company, in each
case as compared with the corresponding period beginning January 1,
1995, except for changes set forth in such letter;
(iv) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings,
statements and other financial information pertaining to the Company
set forth in the Prospectus in each case to the extent that such
amounts, numbers, percentages, statements and information may be
derived from the general accounting records, including work sheets,
of the Company with the results obtained from the application of
specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in the letter and
found them to be in agreement; and
(v) statements as to such other matters incident to
the transaction contemplated hereby as the Underwriters may
reasonably request.
In the event that either of the letters referred to above set
forth any such changes, decreases or increases, it shall be a further condition
of the obligations of the Underwriters that (A) such letter shall be accompanied
by a written explanation of the Company as to the significance thereof, unless
the Underwriters deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Underwriters, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the registration statement originally filed with
respect to the Shares, as amended as of the date hereof.
References to the Registration Statement and the Prospectus in
this Section 8(i) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
-52-
(j) The Associated Person Lock-Ups with respect to each person
listed on Schedule A annexed hereto and the ▇▇▇▇▇▇ Lock-Up shall be in full
force and effect.
(k) The outstanding shares of Common Stock and the shares of
Common Stock to be issued by the Company as contemplated by this Agreement shall
have been approved for quotation on the Nasdaq National Market (upon notice of
issuance in the case of the latter shares).
(l) No order suspending the sale of the Shares in any
jurisdiction designated by the Underwriters pursuant to Section 6(a)(iv) hereof
shall be in effect on the Closing Date and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the Underwriters,
shall be contemplated.
(m) The Other Purchasers and the Selling Stockholders shall
have entered into the Other Purchasers Standby Purchase Agreements, copies of
the same shall have been delivered to the Underwriters at least ten days prior
to the Closing Date and the sale of the 300,000 shares of Common Stock to the
Other Purchasers pursuant to the Other Purchasers Standby Purchase Agreements
shall have been consummated at a per share purchase price of not less than
$____________.
(n) The ▇▇▇▇▇▇ Group shall have exercised all of the Rights
distributed to it and purchased [343,000] shares of Common Stock in connection
therewith.
(o) On or prior to the date that Rights certificates are first
mailed to Safeguard Shareholders and on the Closing Date, dated the respective
dates thereof and in form and substance satisfactory to Underwriters' counsel,
the Company and the Selling Stockholders shall furnish to the Underwriters such
information, certificates and documents as either of the Underwriters may
reasonably request.
If any condition of the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date is not so fulfilled, the
Underwriters may terminate this Agreement or, if the Underwriters so elect, they
may waive any such conditions that have not been fulfilled or extend the time
for their fulfillment; provided, however, that if the Underwriters waive the
-------- -------
fulfillment of Section 8(m) and 8(n) hereof due to the failure of the Selling
Stockholders to sell all of the Other Purchasers Standby Shares, the
Underwriters agree to purchase, at a price of $______ per share, all of the
Other Purchasers Standby Shares that have not been sold pursuant to the Other
Purchasers Standby Purchase Agreements as well as all other Shares required to
be purchased by the Underwriters pursuant to this Agreement. In the event the
Underwriters so elect to terminate this Agreement, all Rights and
-53-
the Other Purchasers Standby Purchase Agreements shall become immediately null
and void and any payments received by the Company or the Selling Stockholders in
respect of the exercise price relating thereto shall be promptly returned. All
opinions, certificates, letters and documents delivered pursuant to this
Agreement will comply with the provisions hereof only if they are reasonably
satisfactory in all material respects to the Underwriters and Underwriters'
Counsel. The Company shall furnish to the Underwriters such conformed copies of
such opinions, certificates, letters and documents in such quantities as the
Underwriters and Underwriters' Counsel shall reasonably request.
The obligations of the Underwriters to purchase and pay for
any Option Shares after having exercised an option set forth in Section 3(b)
hereof shall be subject, in its discretion, to each of the foregoing conditions
of this Section 8 to purchase the Excess Unsubscribed Shares, with all
references to the Excess Unsubscribed Shares and the Closing Date being deemed
to refer to such Option Shares and the related Option Closing Date,
respectively.
9. Indemnification.
---------------
(a) The Company and 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 either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any Preliminary
Prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, the Selling Stockholders and each person who
controls the Company within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only with reference to the Provided
Information.
-54-
(c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "Indemnified Person")
shall promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters
and such control persons of Underwriters shall be designated in writing by ▇.▇.
▇▇▇▇▇▇ Securities Inc. and any such separate firm for the Company, its
directors, its officers who sign the Registration Statement and such control
persons of the Company or any Selling Stockholder and such control persons of
any Selling Stockholder, as applicable, shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person,
-55-
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and
(b) of this Section 9 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person there- under, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand from the offering of the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company or the Selling Stockholders on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company or the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company or the Selling Stockholders
and the total underwriting discounts and the commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company or the Selling Stockholders on the one hand and
the Underwriters on the other 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 Stockholders or by the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(e) The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purposes) or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph
-56-
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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 9 are several in proportion to the respective number of Shares set forth
opposite their names in Schedule B hereto, and not joint.
(f) The remedies provided for in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution agreements contained in
this Section 9 and the representations and warranties of the Company set forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors, or any Selling Stockholder or
any other person controlling the Company or any Selling Stockholder and (iii)
acceptance of and payment for any of the Shares.
10. Representations and Agreements to Survive Delivery.
--------------------------------------------------
All representations, warranties, agreements and covenants contained in
this Agreement or contained in certificates of each of the ▇▇▇▇▇▇▇ Selling
Stockholders, of officers of the Company or of Safeguard or of the General
Partner of Radnor submitted pursuant hereto, shall be deemed to be
representations, warranties, agreements and covenants at the Closing Date and
the Option Closing Date, as the case may be, and such representations,
warranties, agreements and covenants of the Underwriters, each of the ▇▇▇▇▇▇▇
Selling Stockholders, Radnor, the Company and Safeguard, and the indemnity
agreements contained in Section 9 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Underwriters, each of the ▇▇▇▇▇▇▇ Selling Stockholders, Radnor, the Company and
Safeguard, or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Shares to the Underwriters,
provided that to the extent any such representations,
--------
-57-
warranties, agreements or covenants are expressly waived in writing by the
Underwriters, the survival of the same shall be as set forth in such waiver, or,
if not so set forth, as provided in this Section 10.
11. Effective Date.
--------------
This Agreement shall become effective at 9:00 a.m., New York City
time, on the next full business day following the date hereof or upon the
commencement of the rights offering, whichever is earlier; provided, however,
--------- -------
that the provisions of Sections 6, 7, 9 and 10 of this Agreement shall at all
times be effective.
12. Termination.
-----------
(a) Subject to subsection (c) of this Section 12, the Underwriters
shall have the right to terminate this Agreement (i) if any calamitous domestic
or international event or act or occurrence has disrupted or, in the
Underwriters' opinion, will in the immediate future materially disrupt, the
general securities market in the United States; (ii) if trading in the Common
Stock (on a when-issued basis) shall have been suspended by the Commission or
the Nasdaq National Market; (iii) if trading on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market or in the over-the-counter
market shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required on the over-the-counter market by the NASD or by order of the
Commission or any other government authority having jurisdiction; (iv) if the
United States shall have become involved in a war or major hostilities which, in
the Underwriters' opinion, will affect the general securities market in the
United States; (v) if a banking moratorium has been declared by a New York,
Virginia, Pennsylvania or federal authority; (vi) if a moratorium in foreign
exchange trading has been declared; (vii) if the Company shall have sustained a
loss material to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act, whether or not such loss
shall have been insured, or from any labor dispute or any legal or governmental
proceeding; (viii) if there shall have been such material adverse change, or any
development involving a prospective material adverse change (including a change
in management or control of the Company) in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company since December 31, 1995; or (ix) on any date commencing on the date
hereof and ending on the Closing Date, if there shall be such material adverse
market conditions (whether occurring suddenly or gradually between the date
hereof and the Closing Date) affecting the markets generally or technology
issues particularly as in the Underwriters' reasonable judgment would make it
inadvisable to proceed with the offering, sale or delivery of the Shares.
-58-
(b) If the Underwriters elect to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this Section
12, they shall so notify the Company on the same day as such election is made by
telephone or telegram, confirmed by letter.
(c) Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement
(including pursuant to Section 13 hereof), and whether or not this Agreement is
otherwise carried out, the provisions of Section 7 and Section 8 shall not be in
any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
13. Default by the Company or the Selling Stockholders.
--------------------------------------------------
If the Company or any of the Selling Stockholders shall fail to sell
and deliver to the Underwriters the Excess Unsubscribed Shares to be sold and
delivered by the Company or the Selling Stockholders at the Closing Date or the
Option Shares to be sold and delivered by the Company at any Option Closing Date
under the terms of this Agreement, then the Underwriters may at their option, by
written notice to the Company and the Selling Stockholders, either (a) terminate
this Agreement without any liability on the part of any non-defaulting party
other than pursuant to Section 12 or (b) purchase the Shares which the Company
and the Selling Stockholders have agreed to sell and deliver in accordance with
the terms hereof. In the event of a failure of the Selling Stockholders to sell
and deliver as referred to in this Section, either the Underwriters or the
Company shall have the right to postpone the Closing Date or the Option Closing
Date, as the case may be, 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, as may be effected. No
action taken pursuant to this Section shall relieve the Company or the Selling
Stockholders from liability in respect of such default.
14. Notices.
-------
All notices and communications hereunder may be mailed or transmitted
by any standard form of telecommunication and, except as herein otherwise
specifically provided, shall be in writing and shall be deemed to have been duly
given when delivered to a notice party hereto at the address specified herein or
at the address subsequently communicated in writing by the notice parties.
Notices to the Underwriters shall be directed to the Underwriters in care of
▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: [▇▇▇▇ ▇▇▇▇▇▇▇▇], Vice President and Wheat, First Securities, Inc.,
Riverfront Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
[▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇], Vice President, with a copy to Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇,
1000
-▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Berwyn, Pennsylvania,
19132, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. Notices to the Company
shall be directed to the address of the Company as set forth on the
facing page to the Registration Statement, with a copy to ▇▇▇▇▇▇,
▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: N. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. Notices to
Safeguard shall be directed to Safeguard Scientifics, Inc., ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇
and ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: N. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. In each case a party
may change its address for notice hereunder by a written
communication to the other parties.
15. Parties.
-------
This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Company, each of the ▇▇▇▇▇▇▇ Selling
Stockholders, Radnor and Safeguard and the controlling persons, directors and
officers or general partners referred to in Section 9 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Shares from the Underwriters shall be deemed to be a
successor by reason merely of such purchase.
16. Construction.
------------
This Agreement shall be governed by the laws of the State of New York
without giving effect to the choice of law or conflict of laws principles
thereof. The word "including" as used herein shall not be construed so as to
exclude any other thing not referred to or described.
17. Counterparts.
------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to be one and the same instrument.
18. Entire Agreement.
----------------
This Agreement contains the entire agreement between parties hereto in
connection with the subject matter hereof.
-60-
If the foregoing correctly sets forth the understanding among the
Underwriters, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Radnor, the Company and Safeguard,
please so i ndicate in the space provided below for that purpose, thereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
▇▇▇▇▇▇▇ COMPUTER ASSOCIATES,
INC.
By:
-----------------------------------
Name:
Title:
SAFEGUARD SCIENTIFICS, INC.
By:
-----------------------------------
Name:
Title:
RADNOR VENTURE PARTNERS, a
-------------------
partnership, by its general
partner,
-------------------
By:
-----------------------------------
Name:
Title:
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[signatures continued on next page]
-61-
[signatures continued from previous page]
Confirmed and accepted
as of the date first
above written:
▇.▇. ▇▇▇▇▇▇ SECURITIES INC. WHEAT, FIRST SECURITIES, INC.
By: By:
------------------------- -----------------------------
Name: Name:
Title: Title:
-62-
Schedule A
Name
Safeguard Scientifics, Inc.
Radnor Venture Partners, L.P.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ A. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-63-
Schedule B
Name of Underwriters % of Underwriter Shares
-------------------- -----------------------
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Wheat, First Securities, Inc.
-64-
