METRO INFORMATION SERVICES, INC.
3,100,000 Shares of Common Stock
UNDERWRITING AGREEMENT
January __, 1997
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
As Representatives of the Several Underwriters
Identified in Schedule I Annexed Hereto
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SECTION 1. Introductory. Metro Information Services, Inc.,
a Virginia corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇ (the "Principal
Shareholder") propose to sell 3,100,000 shares (the "Firm Shares") of common
stock, $.01 par value per share (the "Common Stock"), to the several
underwriters identified in SCHEDULE I annexed hereto (the "Underwriters"), who
are acting severally and not jointly. In addition, certain other shareholders
of the Company (together with the Principal Shareholder, the "Selling
Shareholders") have agreed to grant to the Underwriters an option to purchase up
to 465,000 additional shares of Common Stock (the "Optional Shares") as provided
in Section 6 hereof. The Firm Shares and, to the extent such option is
exercised, the Optional Shares are hereinafter collectively referred to as the
"Shares."
You, as representatives of the Underwriters (the
"Representatives"), have advised the Company and the Selling Shareholders
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon hereafter as in your judgment is advisable and
that the public offering price of the Shares initially will be $_____ per
share.
The Company and the Selling Shareholders hereby confirm their
respective agreements with the Underwriters and each other as follows:
SECTION 2. Representations and Warranties of the Company and the
Principal Shareholder. The Company and the Principal Shareholder, jointly and
severally, represent and warrant to, and agree with, the several Underwriters,
and shall be deemed to represent and warrant to the several Underwriters on
each Closing Date (as hereinafter defined), that:
(a) The Company was duly incorporated and is validly existing as a
corporation and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as presently conducted
and described in the Prospectus (as hereinafter defined) and the
Registration Statement; the Company is duly registered and qualified to do
business as a foreign corporation under the laws of, and is in good
standing as such in, each jurisdiction in which such registration or
qualification is required, except where the failure to so register or
qualify would not have a material adverse effect on the condition
(financial or other), business, property, net worth, results of operations
or prospects of the Company ("Material Adverse Effect"); and no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. Complete and correct copies of the articles of
incorporation and by laws, as amended or restated ("Articles of
Incorporation" and "By-laws," respectively), of the Company as in effect on
the date hereof have been delivered to the Representatives, and no changes
thereto will be made on or subsequent to the date hereof and prior to each
Closing Date.
(b) The shares of Common Stock issued and outstanding immediately
prior to the issuance and sale of the Shares to be sold by the Company
hereunder as set forth in the Prospectus have been duly authorized and
validly issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus and the Registration
Statement. There are no preemptive, preferential or, except as described
in the Prospectus, other rights to subscribe for or purchase any shares of
Common Stock (including the Shares), and no shares of Common Stock have
been issued in violation of such rights. The Shares to be issued and sold
by the Company to the Underwriters have been duly authorized and, when
issued, delivered and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus and the Registration Statement. The
delivery of certificates for the Shares to be issued and sold by the
Company hereunder and payment therefor pursuant to the terms of this
Agreement will pass valid title to such Shares to the Underwriters, free
and clear of any lien, claim, encumbrance or defect in title. Except as
described in the Prospectus, there are no outstanding options, warrants or
other rights of any description, contractual or otherwise, entitling any
person to be issued any class of security by the Company, and there are no
holders of Common Stock or other securities of the Company, or of
securities that are convertible or exchangeable into Common Stock or other
securities of the Company, that have rights to the registration of such
Common Stock or securities under the Securities Act of 1933, as amended,
and the regulations thereunder (together, the "Act") or the securities laws
or regulations of any of the states (the "Blue Sky Laws").
(c) The Company has no subsidiaries and does not own any equity
interest in or control, directly or indirectly, any other corporation,
limited liability company, partnership, joint venture, association, trust
or other business organization.
(d) The Company has full corporate power and authority to enter into
and perform this Agreement, and the execution and delivery by the Company
of this
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Agreement and the performance by the Company of its obligations
hereunder and the consummation of the transactions described herein, have
been duly authorized with respect to the Company by all necessary corporate
action and will not: (i) violate any provisions of the Articles of
Incorporation or By-laws of the Company; (ii) violate any provisions of, or
result in the breach, modification or termination of, or constitute a
default under, any provision of any agreement, lease, franchise, license,
indenture, permit, mortgage, deed of trust, evidence of indebtedness or
other instrument to which the Company is a party or by which the Company,
or any property owned or leased by the Company; may be bound or affected;
(iii) violate any statute, ordinance, rule or regulation applicable to the
Company; or order or decree of any court, regulatory or governmental body,
arbitrator, administrative agency or instrumentality of the United States
or other country or jurisdiction having jurisdiction over the Company; or
(iv) result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company. No consent,
approval, authorization or other order of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of
the United States or other country or jurisdiction is required for the
execution and delivery of this Agreement by the Company, the performance of
its obligations hereunder or the consummation of the transactions
contemplated hereby, except for compliance with the Act, the Securities
Exchange Act of 1934, as amended, and the regulations thereunder (together,
the "Exchange Act"), the Blue Sky Laws applicable to the public offering of
the Shares by the several Underwriters and the clearance of such offering
and the underwriting arrangements evidenced hereby with the National
Association of Securities Dealers, Inc. (the "NASD"). This Agreement has
been duly executed and delivered by and on behalf of the Company and is a
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms.
(e) A registration statement on Form S-1 (Reg. No. 333-16585) with
respect to the Shares, including a preliminary form of prospectus, has been
carefully prepared by the Company in conformity with the requirements of
the Act and has been filed with the Securities and Exchange Commission (the
"Commission"). Such registration statement, as finally amended and revised
at the time such registration statement was or is declared effective by the
Commission (including the information contained in the form of final
prospectus, if any, filed with the Commission pursuant to Rule 424(b) and
Rule 430A under the Act and deemed to be part of the registration statement
if the registration statement has been declared effective pursuant to Rule
430A(b) under the Act) and as thereafter amended by post-effective
amendment, if any, is herein referred to as the "Registration Statement."
The related final prospectus in the form first filed with the Commission
pursuant to Rule 424(b) under the Act or, if no such filing is required, as
included in the Registration Statement, or any supplement thereto, is
herein referred to as the "Prospectus." The Company has prepared and filed
such amendments to the Registration Statement since its initial filing with
the Commission, if any, as may have been required to the date hereof, and
will file such additional amendments thereto as may hereafter be required.
There have been delivered to the Representatives two signed copies of the
Registration Statement and each amendment thereto, if any, together with
two copies of each exhibit filed therewith or incorporated by
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reference therein, and such number of conformed copies for each of the
Underwriters of the Registration Statement and each amendment thereto, if
any (but without exhibits), and of each Preliminary Prospectus and of the
Prospectus as the Representatives have requested.
(f) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary
Prospectus, nor, to the knowledge of the Company or the Principal
Shareholder, have any proceedings for that purpose been initiated or
threatened, and each Preliminary Prospectus filed with the Commission as
part of the Registration Statement as originally filed or as part of any
amendment or supplement thereto complied when so filed with the
requirements of the Act and, as of its date, did not include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. As of the effective date of the Registration Statement, and at
all times subsequent thereto up to each Closing Date, the Registration
Statement and the Prospectus contained or will contain all statements that
are required to be stated therein in accordance with the Act and conformed
or will conform in all respects to the requirements of the Act, and neither
the Registration Statement nor the Prospectus included or will include any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither the Company, nor any person
that controls, is controlled by or is under common control with the
Company, has distributed or will distribute prior to each Closing Date any
offering material in connection with the offering and sale of the Shares
other than a Preliminary Prospectus, the Prospectus, the Registration
Statement or other materials permitted by the Act and provided to the
Representatives.
(g) KPMG Peat Marwick, LLP, which has expressed its opinion with
respect to the financial statements and schedules (other than the pro forma
financial statements) filed with the Commission and included as a part of
each Preliminary Prospectus, the Prospectus or the Registration Statement
are independent accountants as required by the Act.
(h) The financial statements (other than pro forma financial
statements) and the related notes thereto included in each Preliminary
Prospectus, the Prospectus and the Registration Statement present fairly
the financial position, results of operations and cash flows of the Company
as of their respective dates or for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The financial
statement schedules, if any, included in the Registration Statement present
fairly the information required to be stated therein on a basis consistent
with the financial statements of the Company contained therein. The
Company had an outstanding capitalization as set forth in the Registration
Statement and under "Capitalization" in the Prospectus as of the date
indicated therein, and there has been no material change thereto since such
date except as disclosed in the Prospectus. The financial and statistical
information and data (other than pro forma financial information and data)
relating to the Company in each Preliminary Prospectus, the Prospectus and
the Registration Statement are accurately presented and prepared on a
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basis consistent with the audited financial statements and books and records
of the Company. The financial statements and schedules and the related
notes thereto included or incorporated by reference in each Preliminary
Prospectus, the Prospectus or the Registration Statement are the only such
financial statements and schedules required under the Act to be set forth
therein.
(i) The Company is not, or with the giving of notice or passage of
time or both, would not be, in violation or in breach of: (i) its
respective Articles of Incorporation or By-laws; (ii) any statute,
ordinance, order, rule or regulation applicable to the Company; (iii) any
order or decree of any court, regulatory body, arbitrator, administrative
agency or other instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company; or (iv) any provision of
any agreement, lease, franchise, license, indenture, permit, mortgage, deed
of trust, evidence of indebtedness or other instrument to which the Company
is a party or by which any property owned or leased by the Company is bound
or affected. The Company has not received notice of any violation of any
applicable statute, ordinance, order, rule or regulation applicable to the
Company. The Company has obtained and holds, and is in compliance with,
all permits, certificates, licenses, approvals, registrations, franchises,
consents and authorizations of governmental or regulatory authorities
required under all laws, rules and regulations in connection with its
businesses (hereinafter "permit" or "permits"), and all of such permits are
in full force and effect; and the Company has fulfilled and performed all
of its obligations with respect to each such permit and no event has
occurred which would result in, or after notice or lapse of time would
result in, revocation or termination of any such permit or result in any
other impairment of the rights of the holder of such permit. The Company
is not or has not been (by virtue of any action, omission to act, contract
to which it is a party or other occurrence) in violation in any material
respect of any applicable foreign, federal, state, municipal or local
statutes, laws, ordinances, rules, regulations or orders (including those
relating to environmental protection, occupational safety and health and
equal employment practices) heretofore or currently in effect.
(j) There are no legal or governmental proceedings or investigations
pending or, to the knowledge of the Company or the Principal Shareholder,
threatened to which the Company is or may be a party or to which any
property owned or leased by the Company is or may be subject, including,
without limitation, any such proceedings that are related to environmental
or employment discrimination matters, which are required to be described in
the Registration Statement or the Prospectus which are not so described, or
which question the validity of this Agreement or any action taken or to be
taken pursuant hereto. Except as described in the Registration Statement
or the Prospectus, the Company: (i) is not in violation in any material
respect of any statute, ordinance, rule or regulation, or any decision,
order or decree of any court, regulatory body, arbitrator, administrative
agency or other instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environmental or human exposure to
hazardous or toxic substances (collectively, "environmental laws");
(ii) does not own or operate any real property contaminated with any
substance that is subject to any environmental laws; (iii) is not liable for
any off-site disposal or contamination
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pursuant to any environmental laws; or (iv) is not subject to
any claim relating to any environmental laws, which violation,
contamination, liability or claim could have a Material Adverse Effect.
(k) There is no transaction, relationship, obligation, agreement or
other document required to be described in the Registration Statement or
the Prospectus or to be filed or deemed to be filed as an exhibit to the
Registration Statement by the Act, which has not been described or filed as
required. All such contracts or agreements to which the Company is a party
have been duly authorized, executed and delivered by the Company,
constitute valid and binding agreements of the Company, and are enforceable
by and against the Company, in accordance with the respective terms
thereof.
(l) The Company has good and valid title to all property and assets
reflected as owned by the Company in the Company's financial statements
included in the Registration Statement (or elsewhere in the Registration
Statement or the Prospectus), free and clear of all liens, claims,
mortgages, security interests or other encumbrance of any kind or nature
whatsoever except those, if any, reflected in such financial statements (or
elsewhere in the Registration Statement or the Prospectus). All property
(real and personal) held or used by the Company under leases, licenses,
franchises or other agreements is held by the Company under valid,
subsisting, binding and enforceable leases, franchises, licenses or other
agreements.
(m) Neither the Company nor any person that controls, is controlled
by or is under common control with the Company has taken or will take,
directly or indirectly, any action designed to cause or result in, or which
constituted, or which could cause or result in, stabilization or
manipulation, under the Exchange Act or otherwise, of the price of any
security of the Company to facilitate the sale or resale of the Common
Stock.
(n) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in
the Registration Statement or the Prospectus and prior to each Closing
Date: (i) the Company has not or will not have incurred any liability or
obligation, direct or contingent, or entered into any transaction, that is
material to the Company, except as in the ordinary course of business; (ii)
the Company has not and will not have paid or declared any dividend or
other distribution with respect to its capital stock and the Company is not
or will not be delinquent in the payment of principal or interest on any
outstanding debt obligation; and (iii) there has not been and will not have
been any change in the capital stock, any material change in the
indebtedness of the Company, or any change or development involving or
which could be expected to involve, a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business.
(o) Neither the Company nor any person that controls, is controlled
by or is under common control with the Company has, directly or indirectly:
(i) made any unlawful contribution to any candidate for political office,
or failed to disclose fully any contribution in violation of law; or (ii)
made any payment to any federal, state or foreign governmental officer or
official, or other person charged with similar public or quasi-
6
public duties, other than payments required or permitted by the laws of the
United States or any jurisdiction thereof or applicable foreign
jurisdictions.
(p) The Company owns or possesses adequate rights to use all patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights and licenses
presently used in or necessary for the conduct of its business or ownership
of its properties, and the Company has not violated or infringed upon the
rights of others, or received any notice of conflict with the asserted
rights of others, in respect thereof.
(q) Except as described in the Registration Statement or the
Prospectus, the Company has in place and effective such policies of
insurance, with limits of liability in such amounts, as are normal and
prudent in the ordinary course of the business of the Company.
(r) No labor dispute with the employees of the Company exists or, to
the knowledge of the Company and the Principal Shareholder, is imminent,
and the Company is not a party to any collective bargaining agreement and,
to the knowledge of the Company and the Principal Shareholder, no union
organizational attempts have occurred or are pending. Except as described
in the Registration Statement or the Prospectus, there has been no change
in the relationship of the Company with any of its principal suppliers,
manufacturers, contractors or customers resulting in or that could result
in a Material Adverse Effect.
(s) The Company is not an "investment company", an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940,
as amended.
(t) All federal, state and local tax returns required to be filed by
or on behalf of the Company have been filed (or are the subject of valid
extension) with the appropriate federal, state and local authorities, and
all such tax returns, as filed, are accurate in all material respects; all
federal, state and local taxes (including estimated tax payments) required
to be shown on all such tax returns or claimed to be due from or with
respect to the business of the Company have been paid or reflected as a
liability on the financial statements of the Company for appropriate
periods; all deficiencies asserted as a result of any federal, state or
local tax audits have been paid or finally settled, and no issue has been
raised in any such audit which, by application of the same or similar
principles, reasonably could be expected to result in a proposed deficiency
for any other period not so audited; no state of facts exist or has existed
which would constitute grounds for the assessment of any tax liability with
respect to the periods which have not been audited by appropriate federal,
state or local authorities; there are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal,
state or local tax return of any period; and the Company has not been a
member of an affiliated group of corporations filing consolidated federal
income tax returns, other than a group of which the Company is and has been
the common parent. A valid election with respect to the taxation of the
Company under Subchapter S of the Internal Revenue Code of 1986, as
7
amended, has been continuously in effect with respect to the Company from
January 1, 1987 through January 1, 1997.
(u) Except for the Company's Long Term Disability Plan, Cafeteria
Plan, Health Benefit Plan and its Retirement Savings Plan and Trust
(collectively, the "Plans"), the Company is not a participating employer or
plan sponsor with respect to any employee pension benefit plan as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any employee welfare benefit plan as defined in
Section 3(1) of ERISA, including, without limitation, any multiemployer
welfare or pension plan. With respect to the Plans, the Company is in
substantial compliance with all applicable regulations, including ERISA and
the Code. With respect to each defined benefit retirement plan, such plan
does not have benefit liabilities (as defined in Section 4001(a)(16) of
ERISA) exceeding the assets of the plan. The Company or the administrator
of each of the Plans, as the case may be, has timely filed the reports
required to be filed by ERISA and the Code in connection with the maintenance
of the Plans, and no facts, including, without limitation, any "reportable
event" as defined by ERISA and the regulations thereunder, exist in
connection with the Plans which, under applicable law, would constitute
grounds for the termination of any of the Plans by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer any of the Plans.
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorizations; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(w) None of the Company, any officer or director of the Company, or
any person who owns, of record or beneficially, any class of securities
issued by the Company is: (i) an officer, director or partner of any
brokerage firm, broker or dealer that is a member of the NASD ("NASD
Member"); or (ii) directly or indirectly, a "person associated with" an
NASD member or an "affiliate" of an NASD member, as such terms are used in
the NASD By-laws. In addition the Company has not issued or transferred
any Common Stock, warrants, options or other securities, or any other items
of value, to any of the Underwriters or any "related person" of any
Underwriter, as such term is used in the NASD Conduct Rules, except as
provided in this Agreement.
(x) The Company has prepared and filed with the Commission a
registration statement for the Common Stock pursuant to Section 12 of the
Exchange Act. Such registration statement either has been declared
effective by the Commission under the Exchange Act or will be declared
effective by the Commission prior to or concurrently with the commencement
of the public offering of the Shares. The Common Stock has been approved
for designation upon notice of issuance as a Nasdaq National Market
8
security on The Nasdaq Stock Market ("Nasdaq") concurrently with the
effectiveness of the Registration Statement.
(y) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075 of the Florida
Statutes, and the Company agrees to comply with such Section if, prior to
the completion of the distribution of the Shares, the Company, or any
affiliate of the Company commences doing such business.
(z) All offers and sales of the securities of the Company prior to
the date hereof were made in compliance with the Act and all other
applicable state and federal laws or regulations.
(aa) The Company has obtained for the benefit of the Underwriters the
agreement, enforceable by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated ("Baird"), of
each of the officers and directors of the Company and certain of the
shareholders of the Company who are not listed on SCHEDULE II hereof, who
own of record the number of shares of Common Stock set forth on SCHEDULE II
opposite such shareholder's name, that for a period of 180 days after the
date of the Prospectus, such persons will not, without the prior written
consent of Baird, directly or indirectly, offer, sell, transfer, or pledge,
contract to sell, transfer or pledge, or cause or in any way permit to be
sold, transferred, pledged, or otherwise disposed of, any: (i) shares of
Common Stock; (ii) rights to purchase shares of Common Stock (including,
without limitation, shares of Common Stock that may be deemed to be
beneficially owned by any such shareholder in accordance with the applicable
regulations of the Commission and shares of Common Stock that may be issued
upon the exercise of a stock option, warrant or other convertible security);
or (iii) securities that are convertible or exchangeable into shares of
Common Stock.
(bb) A copy of the Irrevocable Power of Attorney and Custody Agreement
executed by each Selling Shareholder and a copy of each Directors',
Officers' and Selling Shareholders' Questionnaire has been furnished to
counsel for the Underwriters prior to the date hereof, along with such
other information as such counsel may reasonably request in connection with
their review thereof.
A certificate signed by any officer of the Company and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company and the Principal Shareholders to the
Underwriters as to the matters covered thereby. A certificate delivered by the
Company to its counsel for purposes of enabling such counsel to render the
opinion referred to in Section 10(d) will also be furnished to the
Representatives and counsel for the Underwriters and shall be deemed to be
additional representations and warranties to the Underwriters by the Company as
to the matters covered thereby.
SECTION 3. Representations and Warranties of the Selling
Shareholders. Each Selling Shareholder, severally and not jointly, represents
and warrants to and agrees with the
9
several Underwriters and the Company, and shall be deemed to represent and
warrant to the several Underwriters and the Company on each Closing Date,
that:
(a) Such Selling Shareholder has duly executed a durable power of
attorney and custody agreement ("Irrevocable Power of Attorney and Custody
Agreement") naming ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or either of them,
as such Selling Shareholder's attorney(s)-in-fact ("Attorneys-in-Fact") for
the purpose of entering into and carrying out this Agreement and naming
▇▇▇▇ ▇. ▇▇▇▇, as custodian ("Custodian") of the Shares of such Selling
Shareholder for the purpose of selling such Shares to the Underwriters on
each Closing Date and receiving payment therefor.
(b) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Shareholder of this Agreement,
the Irrevocable Power of Attorney and Custody Agreement and the Tax
Indemnification Agreement by and among the Company and the shareholders of
the Company and included as an exhibit to the Registration Statement (the
"Tax Indemnification Agreement"), and for the sale and delivery of the
Shares to be sold by such Selling Shareholder hereunder, as set forth on
SCHEDULE II annexed hereto, have been obtained. Such Selling Shareholder
has, and at the time of delivery thereof hereunder such Selling Shareholder
will have, good and valid title to the Shares proposed to be sold by such
Selling Shareholder hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, security interests, equities, claims and
community or marital property rights, other than any created by the
Irrevocable Power of Attorney and Custody Agreement or this Agreement for
the benefit of the Underwriters. Such Selling Shareholder has full right,
power and authority to enter into this Agreement, the Irrevocable Power of
Attorney and Custody Agreement and the Tax Indemnification Agreement and to
sell, assign, transfer and deliver such Shares hereunder, free and clear of
all voting trust arrangements, liens, encumbrances, security interests,
equities, claims and community or marital property rights, other than any
created by the Irrevocable Power of Attorney and Custody Agreement or this
Agreement for the benefit of the Underwriters. Upon delivery of and
payment for such Shares hereunder, the Underwriters will acquire good and
valid title thereto, free and clear of all voting trust arrangements,
liens, encumbrances, security interests, equities, claims and community or
marital property rights.
(c) Such Selling Shareholder has not distributed and will not
distribute any Preliminary Prospectus, the Prospectus or any other material
in connection with the offering and sale of the Shares. Such Selling
Shareholder has not taken and will not take, directly or indirectly, any
action designed to or which could cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Common
Stock.
(d) The execution, delivery and performance by such Selling
Shareholder of this Agreement, the Irrevocable Power of Attorney and
Custody Agreement and the Tax Indemnification Agreement will not, if
applicable, result in the violation of any provisions of the Articles of
Incorporation, By-laws or other governing documents of such Selling
Shareholder, or constitute a breach, or be in contravention, of any
provision of any
10
agreement, franchise, license, indenture, mortgage, deed of trust or other
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder or such Selling Shareholder's property may be bound or
affected, or any statute, rule or regulation applicable to such Selling
Shareholder, or violate any order or decree of any court, regulatory body,
administrative agency or other governmental body having jurisdiction over
such Selling Shareholder or any of such Selling Shareholder's property. No
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of, and performance under, this Agreement by such
Selling Shareholder or the consummation by such Selling Shareholder of the
transactions contemplated by this Agreement, except for compliance with the
Act, the Exchange Act, the Blue Sky Laws applicable to the public offering
of the Shares by the Underwriters and the clearance of such offering with
the NASD. Such Selling Shareholder hereby represents and warrants that each
Attorney-in-Fact has been duly appointed as attorney-in-fact by such Selling
Shareholder for the purpose of entering into and carrying out this
Agreement, and the Irrevocable Power of Attorney and Custody Agreement has
been duly executed and delivered by or on behalf of such Selling
Shareholder to the Representatives.
(e) This Agreement, the Irrevocable Power of Attorney and Custody
Agreement and the Tax Indemnification Agreement are each valid and binding
agreements of such Selling Shareholder enforceable in accordance with their
respective terms.
(f) Such Selling Shareholder has deposited in custody, under the
Irrevocable Power of Attorney and Custody Agreement, certificates in
negotiable form for the Shares to be sold hereunder by such Selling
Shareholder as set forth opposite such Selling Shareholder's name on
SCHEDULE II annexed hereto (including the maximum number of Optional Shares
set forth on SCHEDULE II) for the purpose of further delivery pursuant to
this Agreement. Such Selling Shareholder agrees that the Shares of such
Selling Shareholder on deposit with the Custodian are subject to the
interests of the Company, the Underwriters and the other Selling
Shareholders, that the arrangements made for such custody, and the
appointment of the Attorneys-in-Fact pursuant to the Irrevocable Power of
Attorney and Custody Agreement, are to that extent irrevocable, and that
the obligations of such Selling Shareholder hereunder and under the
Irrevocable Power of Attorney and Custody Agreement shall not be
terminated, except as provided in this Agreement and the Irrevocable Power
of Attorney and Custody Agreement, by any act of such Selling Shareholder,
by operation of law, whether in the case of an individual Selling
Shareholder, by the death or incapacity of such Selling Shareholder or, in
the case of a trust or estate, by the death of the trustee or trustees or
the executor or executors or the termination of such trust or estate, or,
in the case of a partnership or corporation, by the dissolution, winding up
or other event affecting the legal life of such entity, or by the
occurrence of any other event. If any individual Selling Shareholder,
trustee or executor should die or become incapacitated, or any such trust,
estate, partnership or corporation should be terminated, or if any other
event should occur before the delivery of the Shares hereunder, the
certificates for Shares then on deposit with the Custodian shall, to the
extent such Shares are purchased by the Underwriters, be delivered by the
Custodian in accordance with the terms and conditions of this Agreement and
the Irrevocable Power of
11
Attorney and Custody Agreement as if such death, incapacity, termination or
other event had not occurred, regardless of whether or not the Custodian
shall have received notice thereof. Such Selling Shareholder represents
that each Attorney-in-Fact has been authorized by such Selling Shareholder
to execute and deliver this Agreement and the Custodian has been authorized
to receive and acknowledge receipt of the proceeds of sale of the Shares
sold by such Selling Shareholder against delivery thereof and otherwise to
act on behalf of such Selling Shareholder.
(g) Insofar as it relates to such Selling Shareholder, each
Preliminary Prospectus, as of its date, has conformed in all material
respects with the requirements of the Act and, as of its date, has not
included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading; and
on the effective date of the Registration Statement and at all times
subsequent thereto up to each Closing Date; (i) the Registration Statement
and the Prospectus, as they relate to such Selling Shareholder, did or will
conform to the requirements of the Act; and (ii) neither the Registration
Statement nor the Prospectus as it relates to such Selling Shareholder did
or will include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(h) To the knowledge of each Selling Shareholder who is not a
Principal Shareholder, the representations and warranties of the Company
and the Principal Shareholders set forth in Section 2 hereof are true and
correct.
(i) The information contained in such Directors', Officers' and
Selling Shareholders' Questionnaire completed in connection with the
Company's public offering and delivered to the Representatives was, as of
the date of such questionnaire, and is, as of the date of this Agreement,
true and correct.
A certificate signed by or on behalf of any Selling Shareholder
as such and delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by such Selling Shareholder to the
Underwriters as to the matters covered thereby. A certificate delivered by or
on behalf of any Selling Shareholder to counsel for the Selling Shareholders for
purposes of enabling such counsel to render the opinion referred in Section
10(e) will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and warranties
to the Underwriters by such Selling Shareholder as to the matters covered
thereby.
SECTION 4. Representation of Underwriters. The Representatives
will act as the representatives for the several Underwriters in connection with
the public offering of the Shares, and any action under or in respect of this
Agreement taken by the Representatives will be binding upon all of the
Underwriters.
SECTION 5. Information Furnished by the Underwriters. The
information set forth in the last paragraph on the outside front cover page of
the Prospectus concerning the terms of the offering by the Underwriters, the
paragraph on the inside front cover page of the
12
Prospectus relating to stabilization practices, and the concession and
reallowance amounts appearing under the caption "Underwriting" in the
Prospectus constitute all of the information furnished to the Company by and
on behalf of the Underwriters for use in connection with the preparation of
the Registration Statement and the Prospectus, as such information is
referred to in this Agreement.
SECTION 6. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to the Underwriters identified in SCHEDULE I
annexed hereto _________ Firm Shares, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company the number of Firm
Shares as hereinafter set forth at the price per share of $__________. The
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full Firm Shares which (as nearly as practicable in
full shares as determined by the Representatives) bears the same proportion
to the number of Firm Shares to be sold by the Company as the number of
shares set forth opposite the name of such Underwriter in SCHEDULE I
annexed hereto bears to the total number of Firm Shares to be purchased by
all of the Underwriters under this Agreement.
(b) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Principal Shareholder agrees, severally and not jointly, to sell to the
Underwriters _____________________ full Firm Shares, and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Principal Shareholder the number of Firm Shares as hereinafter set forth at
the same purchase price per share as stated in the preceding paragraph.
The obligation of each Underwriter to the Principal Shareholder shall be to
purchase from the Principal Shareholder that number of full Firm Shares
which (as nearly as practicable in full shares as determined by the
Representatives) bears the same proportion to the number of Firm Shares to
be sold by such Principal Shareholder as the number of shares set forth
opposite the name of such Underwriter in SCHEDULE I annexed hereto bears to
the total number of Firm Shares to be purchased by all of the Underwriters
under this Agreement.
(c) On the First Closing Date (as hereinafter defined), the Company
and the Custodian on behalf of the Principal Shareholder will deliver to
the Representatives, at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or through the facilities of The
Depository Trust Company, for the accounts of the several Underwriters,
certificates representing the Firm Shares to be sold by them against
payment of the purchase price therefor by certified or official bank check
or checks in New York Clearing House (next day) funds payable to the order
of the Company with respect to the Firm Shares being sold by the Company
and to the order of the Custodian with respect to the Firm Shares being
sold by the Principal Shareholder. As referred to in this Agreement, the
"First Closing Date" shall be on the third full business day after the date
of the Prospectus, at 9:00 a.m., Washington, D.C. time, or at such other
date or time not later than ten full business days after the date of the
Prospectus as the Representatives,
13
and the Company may agree. The certificates for the Firm Shares to be so
delivered will be in denominations and registered in such names as the
Representatives request by notice to the Company and the Attorneys-in-Fact,
or either of them, prior to the First Closing Date, and such certificates
will be made available for checking and packaging at 9:00 a.m., Washington,
D.C. time on the first full business day preceding the First Closing Date
at a location to be designated by the Representatives.
(d) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein
set forth, the Selling Shareholders hereby agree to sell to the
Underwriters that number of Optional Shares set forth opposite the name of
such Selling Shareholder in Schedule II annexed hereto (a total of 465,000
shares from the Selling Shareholders), and the Underwriters, severally and
not jointly, shall have the right at any time within thirty days after the
date of the Prospectus to purchase up to 465,000 Optional Shares from the
Selling Shareholders at the purchase price per share to be paid for the
Firm Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised upon notice by the Representatives to
the Company and the Attorneys-in-Fact, or either of them, within thirty
days after the date of the Prospectus setting forth the aggregate number of
Optional Shares to be purchased by the Underwriters and sold by the Selling
Shareholders, the names and denominations in which the certificates for
such shares are to be registered and the date and place at which such
certificates will be delivered. Such date of delivery (the "Second Closing
Date") shall be determined by the Representatives, provided that the Second
Closing Date, which may be the same as the First Closing Date, shall not be
earlier than the First Closing Date and, if after the First Closing Date,
shall not be earlier than three nor later than ten full business days after
delivery of such notice to exercise. The number of Optional Shares to be
sold by each Selling Shareholder pursuant to such notice shall equal that
number of full Optional Shares which (as nearly as practicable in full
shares as determined by the Representatives) bears the same proportion to
the number of Optional Shares to be purchased by the Underwriters as the
number of Firm Shares to be sold by such Selling Shareholder bears to the
total number of Firm Shares. Certificates for the Optional Shares will be
made available for checking and packaging at 9:00 a.m., Washington, D.C.
time, on the first full business day preceding the Second Closing Date at a
location to be designated by the Representatives. The manner of payment
for and delivery of (including the denominations of and the names in which
certificates are to be registered) the Optional Shares shall be the same as
for the Firm Shares.
(e) The Representatives have advised the Company and the
Attorneys-in-Fact that each Underwriter has authorized the Representatives
to accept delivery of the Shares and to make payment therefor. It is
understood that the Representatives, individually and not as a
representatives of the Underwriters, may (but shall not be obligated to)
make payment for any Shares to be purchased by any Underwriter whose funds
shall not have been received by the Representatives by the First Closing
Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter
from any obligation under this Agreement. As referred to in
14
this Agreement, "Closing Date" shall mean either the First Closing Date or
the Second Closing Date.
SECTION 7. Covenants of the Company. The Company covenants and
agrees with the several Underwriters that:
(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, the Company will use its
best efforts to cause the Registration Statement to become effective at the
earliest possible time and, upon notification from the Commission that the
Registration Statement has become effective, will so advise the
Representatives and counsel to the Underwriters promptly. If the effective
time of the Registration Statement is prior to the execution and delivery
of this Agreement and any information shall have been omitted therefrom in
reliance upon Rule 430A under the Act, the Company, at the earliest
possible time, will furnish the Representatives with a copy of the
Prospectus to be filed by the Company with the Commission to comply with
Rule 424(b) and Rule 430A under the Act and, if the Representatives do not
object to the contents thereof, will comply with such Rules. Upon
compliance with such Rules, the Company will so advise the Representatives
promptly. The Company will advise the Representatives and counsel to the
Underwriters and the Attorneys-in-Fact promptly of the issuance by the
Commission or any state securities commission of any stop order suspending
the effectiveness of the Registration Statement or of the institution of
any proceedings for that purpose, or of any notification of the suspension
of qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceedings for that purpose, and will
also advise the Representatives and counsel to the Underwriters and the
Attorneys-in-Fact promptly of any request of the Commission for amendment
or supplement of the Registration Statement, of any Preliminary Prospectus
or of the Prospectus, or for additional information, and the Company will
not file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), to any Preliminary Prospectus or to
the Prospectus (including a prospectus filed pursuant to Rule 424(b) under
the Act) if the Representatives have not been furnished with a copy prior
to such filing (with a reasonable opportunity to review such amendment or
supplement) or if the Representatives object to such filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact, or would omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to supplement the
Prospectus to comply with the Act, the Company promptly will advise the
Representatives and counsel to the Underwriters and the Attorneys-in-Fact
thereof and will promptly prepare and file with the Commission, at its
expense, an amendment to the Registration Statement which will correct such
statement or omission or an amendment which will effect such compliance;
and, if any Underwriter is required to deliver a prospectus after the
effective date of the Registration Statement, the Company, upon request of
the Representatives, will prepare promptly such prospectus or prospectuses
as may be necessary to permit compliance with
15
the requirements of Section 10(a)(3) of the Act. The Company consents to
the use, in accordance with the provisions of the Act and with the Blue Sky
Laws of the jurisdictions in which the Shares are offered by the several
Underwriters and by dealers, of each Preliminary Prospectus.
(c) The Company will not, prior to the Second Closing Date, if any,
incur any liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, or
enter into any transaction with an "affiliate," as defined in Rule 405
under the Act, which is required to be described in the Prospectus pursuant
to Item 404 of Regulation S-K under the Act, except as described in the
Prospectus.
(d) The Company will not, prior to the Second Closing Date, if any,
acquire any of the Common Stock nor will the Company declare or pay any
dividend or make any other distribution upon its Common Stock payable to
shareholders of record on a date prior to such earlier date, except as
described in the Prospectus.
(e) The Company will make generally available to its security holders
and the Representatives an earnings statement as soon as practicable, but
in no event later than sixty days after the end of its fiscal quarter in
which the first anniversary of the effective date of the Registration
Statement occurs, covering a period of twelve consecutive calendar months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the
Act and Rule 158 promulgated thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company
will furnish to the Representatives, at the expense of the Company, copies
of the Registration Statement, the Prospectus, any Preliminary Prospectus
and all amendments and supplements to any such documents in each case as
soon as available and in such quantities as the Representatives may
reasonably request.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Prospectus.
(h) The Company will cooperate with the Representatives and counsel
to the Underwriters in qualifying or registering the Shares for sale under
the Blue Sky Laws of such jurisdictions as the Representatives designates,
and will continue such qualifications or registrations in effect so long as
reasonably requested by the Representatives to effect the distribution of
the Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified. In each jurisdiction
where any of the Shares shall have been qualified as provided above, the
Company will file such reports and statements as may be required to
continue such qualification for a period of not less than one year from the
date of the Prospectus. The Company shall promptly prepare and file with
the Commission, from time to time, such reports as may be required to be
filed by the Act and the Exchange
16
Act, and the Company shall comply in all respects with the undertakings
given by the Company in connection with the qualification or registration
of the Shares for offering and sale under the Blue Sky Laws.
(i) During the period of three years from the date of the Prospectus,
the Company will furnish to each of the Representatives and to each of the
other Underwriters who may so request, as soon as available, each report,
statement or other document of the Company or its Board of Directors mailed
to its shareholders or filed with the Commission, and such other
information concerning the Company as the Representatives may reasonably
request.
(j) The Company shall deliver the requisite notice of issuance to
Nasdaq and shall take all necessary or appropriate action within its power
to maintain the authorization for trading of the Common Stock as a Nasdaq
National Market security, for a period of at least thirty-six months after
the date of the Prospectus.
(k) Except for the issuance and sale by the Company of Common Stock
upon exercise of presently existing outstanding stock options, the sale of
the Shares to be sold by the Company pursuant to this Agreement, and the
grant of employee stock options pursuant to the Company's 1997 Incentive
Stock Option Plan, the Outside Directors Stock Plan, and the Company's
Employee Stock Purchase Plan, copies of which are filed as exhibits to the
Registration Statement, and provided that none of such options shall be
exercisable during the 180-day period herein described, the Company shall
not, for a period of 180 days after the date of the Prospectus, without the
prior written consent of ▇▇▇▇▇, directly or indirectly, offer, sell or
otherwise dispose of, contract to sell or otherwise dispose of, or cause or
in any way permit to be sold or otherwise disposed of, any: (i) shares of
Common Stock; (ii) rights to purchase shares of Common Stock; or (iii)
securities that are convertible or exchangeable into shares of Common Stock.
(l) The Company will maintain a transfer agent and, if required by
law or the rules of The Nasdaq Stock Market or any national securities
exchange on which the Common Stock is listed, a registrar (which, if
permitted by applicable laws and rules, may be the same entity as the
transfer agent) for its Common Stock. The Company shall, as soon as
practicable after the date hereof, use its best efforts to obtain listing
in Standard and Poor's Stock Guide, or such other recognized securities
manuals for which it may qualify for listing, and the Company shall use its
best efforts to maintain such listings for at least five years after the
First Closing Date.
(m) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any rumor, publication or event
relating to of affecting the Company shall occur as a result of which, in
the opinion of ▇▇▇▇▇, the market price of the Common Stock has been or is
likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to the Prospectus), the
Company will, after written notice from ▇▇▇▇▇ advising the Company of any
of the matters set forth above, promptly consult with ▇▇▇▇▇ concerning the
advisability and substance of, and, if
17
the Company and ▇▇▇▇▇ determine that it is appropriate, disseminate, a
press release or other public statement responding to or commenting on,
such rumor, publication or event.
(n) If the sale to the Underwriters of the Shares is not consummated
for any reason other than termination of this Agreement pursuant to Section
13 hereof, without limiting any other rights the Underwriters may have, the
Company agrees to reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and expenses of counsel
for the Underwriters), that shall have been incurred by the Underwriters in
connection with the proposed purchase and sale of the Shares, and the
provisions of Sections 9 and 12 hereof shall at all times be effective and
apply. Notwithstanding the foregoing sentence, if the sale to the
Underwriters of the Shares is not consummated for any reason other than
termination of this Agreement by the Underwriters pursuant to Section 13
hereof, and the Company or any of the shareholders of the Company enter
into an agreement on or before June 30, 1997 with respect to the sale,
lease, disposition or other transfer of all or substantially all of the
Company's assets or a majority interest in its capital stock, directly or
indirectly, by merger, share exchange, business combination or otherwise
(such sale, lease, disposition or other transfer of assets or stock is
hereinafter referred to as a "Business Combination"), then the Company
shall engage the Representatives as its financial advisors for any such
Business Combination and the Company shall pay the Representatives a
financial advisory fee in the amount of $700,000 or 0.4% of the aggregate
consideration paid or payable in connection with such Business Combination,
whichever is greater, in immediately available funds upon consummation of
such Business Combination for financial advisory services to be rendered
by the Representatives in connection therewith.
(o) The Company will comply or cause to be complied with the
conditions to the obligations of the Underwriters in Section 10 hereof.
SECTION 8. Covenants of the Selling Shareholders. Each Selling
Shareholder, severally and not jointly, covenants and agrees with the several
Underwriters and the Company as follows:
(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, such Selling Shareholder
will cooperate to the extent necessary to cause the Registration Statement
to become effective at the earliest possible time; and such Selling
Shareholder will do and perform all things to be done and performed by such
Selling Shareholder prior to each Closing Date, pursuant to this Agreement
or the Irrevocable Power of Attorney and Custody Agreement.
(b) Such Selling Shareholder agrees to deliver to the Custodian on or
prior to the First Closing Date a properly completed and executed United
States Treasury Department Form W-9 (or other applicable substitute form or
statement specified by Treasury Department regulations in lieu thereof).
(c)Such Selling Shareholder will pay all federal and other taxes, if
any, on the transfer or sale of the Shares being sold by such Selling
Shareholder to the Underwriters.
18
(d) For a period of 180 days after the date of the Prospectus, such
Selling Shareholder will not, without the prior written consent of ▇▇▇▇▇,
directly or indirectly, offer, sell, transfer, or pledge, contract to sell,
transfer or pledge or cause or in any way permit to be sold, transferred,
pledged or otherwise disposed of any: (i) shares of Common Stock; (ii)
rights to purchase shares of Common Stock (including, without limitation,
shares of Common Stock that may be deemed to be beneficially owned by such
Selling Shareholder in accordance with the rules and regulations of the
Commission and shares of Common Stock that may be issued upon exercise of a
stock option, warrant or other convertible security); or (iii) securities
that are convertible or exchangeable into shares of Common Stock.
(e) Such Selling Shareholder will furnish any documents, instruments
or other information which the Representatives may reasonably request in
connection with the sale and transfer of the Shares to the Underwriters.
SECTION 9. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective, or
if this Agreement is terminated for any reason, the Company will pay the costs,
fees and expenses incurred in connection with the public offering of the Shares.
Such costs, fees and expenses to be paid by the Company include, without
limitation:
(a) All costs, fees and expenses (excluding the expenses incurred by
the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in
subsection (b) of this Section 9) incurred in connection with the
performance of the Company's obligations hereunder, including without
limiting the generality of the foregoing: the registration fees related to
the filing of the Registration Statement with the Commission; the fees and
expenses related to the quotation or listing of the Shares on Nasdaq or
other national securities exchange; the fees and expenses of the Company's
counsel, accountants, transfer agent and registrar; the costs and expenses
incurred in connection with the preparation, printing, shipping and
delivery of the Registration Statement, each Preliminary Prospectus and the
Prospectus (including all exhibits and financial statements) and all
agreements and supplements provided for herein, this Agreement and the
Preliminary and Supplemental Blue Sky Memoranda and the Irrevocable Power
of Attorney and Custody Agreement, including, without limitation, shipping
expenses via overnight delivery and/or courier service to comply with
applicable prospectus delivery requirements; and the costs and expenses
associated with the production of materials related to, and travel expenses
incurred by the management of the Company in connection with, the various
meetings to be held between the Company's management and prospective
investors.
(b) All registration fees and expenses, including legal fees and
disbursements of counsel for the Underwriters incurred in connection with
qualifying or registering all or any part of the Shares for offer and sale
under the Blue Sky Laws and the clearing of the public offering and the
underwriting arrangements evidenced hereby with the NASD.
19
(c) All fees and expenses related to printing of the certificates for
the Shares, and all transfer taxes, if any, with respect to the sale and
delivery of the Shares.
Notwithstanding the foregoing, each Selling Shareholder shall be solely
responsible for any transfer or sales tax imposed upon the transfer and sale of
such Selling Shareholder's Shares to the Underwriters. All costs and expenses
incident to the performance of any Selling Shareholder's obligations hereunder
which are not otherwise specifically provided for in this section will be borne
and paid solely by the Company.
SECTION 10. Conditions to the Obligations of the
Underwriters. The obligations of the several Underwriters under this
Agreement shall be subject to the accuracy of the representations and
warranties on the part of the Company, the Principal Shareholder and the
Selling Shareholders herein set forth as of the date hereof and as of each
Closing Date, to the accuracy of the statements of the Company's officers,
the Selling Shareholders and the Attorneys-in-Fact on behalf of the Selling
Shareholders made pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholders of their respective obligations
hereunder, and to the following additional conditions, unless waived in
writing by the Representatives:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m., Washington, D. C. time, on the
date of this Agreement, or such later time as shall have been consented to
by the Representatives, which consent shall be deemed to have been given if
the Registration Statement shall have been declared effective on or before
the date and time requested in the acceleration request submitted on behalf
of the Representatives pursuant to Rule 461 under the Act; all filings
required by Rules 424(b) and 430A under the Act shall have been timely
made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission or any state securities
commission nor, to the knowledge of the Company or the Principal
Shareholders, shall any proceedings for that purpose have been initiated or
threatened; and any request of the Commission or any state securities
commission for inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to the reasonable
satisfaction of the Representatives.
(b) Since the dates as of which information is given in the
Registration Statement:
(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a Material Adverse
Effect, whether or not arising from transactions in the ordinary
course of business; and
(ii) the Company shall not have sustained any material loss or
interference from any labor dispute, strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court
or governmental action, order or decree,
20
the effect of which on the Company, in any such case described in clause (i) or
(ii) above, is in the opinion of the Representatives so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus.
(c) The Representatives shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the opinion of the Representatives or counsel for the
Underwriters, is material, or omits to state a fact that, in the opinion of
the Representatives or such counsel, is material and is required to be
stated therein or necessary to make the statements therein not misleading.
(d) The Representatives shall have received an opinion of ▇▇▇▇▇ &
Stant, P.C., counsel for the Company, addressed to the Representatives, as
the representatives of the Underwriters, and dated the First Closing Date
or the Second Closing Date, as the case may be, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own, lease and operate its properties and conduct its business as
presently conducted and as described in the Prospectus and the
Registration Statement; the Company is duly registered and qualified
to do business as a foreign corporation under the laws of, and is in
good standing as such in, each jurisdiction in which such registration
or qualification is required, except where the failure to so register
or qualify would not have a Material Adverse Effect;
(ii) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $.01 per share, and
1,000,000 shares of Preferred Stock, par value $.01 per share, and all
such stock conforms as to legal matters to the descriptions thereof in
the Prospectus and the Registration Statement;
(iii) The issued and outstanding shares of capital stock of
the Company immediately prior to the issuance and sale of the Shares
to be sold by the Company hereunder have been duly authorized and
validly issued, are fully paid and nonassessable, and there are no
preemptive, preferential or, except as described in the Prospectus,
other rights to subscribe for or purchase any shares of capital stock
of the Company, and to such counsel's knowledge, no shares of capital
stock of the Company have been issued in violation of such rights;
(iv) The Company has no subsidiaries, and the Company does not
own any equity interest in or control, directly or indirectly, any
other corporation, limited liability company, partnership, joint
venture, association, trust or other business organization except as
described in the Prospectus and the Registration Statement;
21
(v) The certificates for the Shares to be delivered hereunder
are in due and proper form and conform to the requirements of
applicable law; and when duly countersigned by the Company's transfer
agent, and delivered to the Representatives or upon the order of the
Representatives against payment of the agreed consideration therefor
in accordance with the provisions of this Agreement, the Shares to be
sold by the Company represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, and free of any
preemptive, preferential or other rights to subscribe for or purchase
shares of Common Stock;
(vi) The Registration Statement has become effective under the
Act, and 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 initiated or are threatened
under the Act or any Blue Sky Laws; the Registration Statement and the
Prospectus and any amendment or supplement thereto (except for the
financial statements and other statistical or financial data included
therein as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act; no
facts have come to the attention of such counsel which lead it to
believe that either the Registration Statement or the Prospectus or
any amendment or supplement thereto contains any untrue statement of a
material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of the First Closing
Date or the Second Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made (except for the financial statements and other
financial data included therein as to which such counsel need express
no opinion); to such counsel's knowledge, (x) there are no legal or
governmental proceedings pending or threatened, including, without
limitation, any such proceedings that are related to environmental or
employment discrimination matters, required to be described in the
Registration Statement or the Prospectus which are not so described or
which question the validity of this Agreement or any action taken or
to be taken pursuant thereto, (y) nor is there any transaction,
relationship, agreement, contract or other document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to or incorporated by
reference in the Registration Statement by the Act, which is not
described as required;
(vii) The Company has full corporate power and authority to
enter into and perform this Agreement; the performance of the
Company's obligations hereunder and the consummation of the
transactions described herein have been duly authorized by the Company
by all necessary corporate action and this Agreement has been duly
executed and delivered by and on behalf of the Company, and is a
legal, valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except that rights to
indemnity or contribution may be limited by applicable law and except
as enforceability of
22
this Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally, and by equitable principles limiting the
right to specific performance or other equitable relief and rights to
indemnification and contribution may be limited by state or federal
securities laws or the policies underlying such laws; no consent,
approval, authorization or other order or decree of any court,
regulatory or governmental body, arbitrator, administrative agency or
other instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement (except for compliance
with the Act, the Exchange Act, applicable Blue Sky Laws and the
clearance of the underwriting arrangements by the NASD);
(viii) The execution, delivery and performance of this
Agreement by the Company will not: (A) violate any provisions of the
Articles of Incorporation or By-laws of the Company; (B) violate any
provisions of, or result in the breach, modification or termination
of, or constitute a default under, any material agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, other
evidence of indebtedness or other material instrument to which the
Company is a party or by which the Company, or any of its owned or
leased property is bound, and which is filed as an exhibit to the
Registration Statement; or (C) violate any statute, ordinance, order,
rule, decree or regulation of any court, regulatory or governmental
body, arbitrator, administrative agency or other instrumentality of
the United States or other country or jurisdiction having jurisdiction
over the Company (assuming compliance with all applicable federal and
state securities laws);
(ix) To such counsel's knowledge, except as described in the
Prospectus, there are no holders of Common Stock or other securities
of the Company, or securities that are convertible or exchangeable
into Common Stock or other securities of the Company, that have rights
to the registration of such securities under the Act or any Blue Sky
Laws;
(x) The Common Stock has been designated for inclusion as a
National Market security on The Nasdaq Stock Market and is registered
under the Exchange Act;
(xi) The Company is not, nor with the giving of notice or passage
of time or both would be, in violation of its Articles of
Incorporation or By-laws or, to such counsel's knowledge, in default
in any material respect in the performance of any agreement, lease,
franchise, license, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument, or any other document that is filed
as an exhibit to in the Registration Statement, to which the Company
is subject or bound;
(xii) The Company is not an "investment company", an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company", as such terms are defined in the Investment
Company Act of 1940, as
23
amended, and, upon its receipt of any proceeds from the sale of the
Shares, the Company will not become or be deemed to be an "investment
company" thereunder;
(xiii) The description in the Registration Statement and the
Prospectus of statutes, law, regulations, legal and governmental
proceedings, and contracts and other legal documents described therein
fairly and correctly present, in all material respects, the
information required to be included therein by the Act; and
(xiv) All offers and sales by the Company of its capital
stock before the date hereof were at all relevant times duly
registered under or exempt from the registration requirements of the
Act, and were duly registered under or the subject of an available
exemption from the registration requirements of any applicable Blue
Sky Laws.
In rendering such opinion, counsel for the Company may rely, to the extent
counsel deems such reliance proper, as to matters of fact upon certificates of
officers of the Company and of governmental officials, and copies of all such
certificates shall be furnished to the Representatives and for the Underwriters
on or before each Closing Date.
(e) The Representatives shall have received an opinion from ▇▇▇▇▇ &
Stant, P.C., special counsel for the Selling Shareholders, dated the First
Closing Date or the Second Closing Date, as the case may be, to the effect
that:
(i) Each of this Agreement and the Irrevocable Power of Attorney
and Custody Agreement has been duly authorized, executed and delivered
by or on behalf of each Selling Shareholder and such agreement
constitutes the valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its respective terms,
except that rights to indemnity or contribution thereunder may be
limited by applicable law and except as enforceability of such
agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws generally affecting the rights of creditors
and by equitable principles limiting the right to specific performance
or other equitable relief and rights to indemnification and
contribution may be limited by state or federal securities laws or
the policies underlying such laws;
(ii) The execution and delivery of this Agreement and the
Irrevocable Power of Attorney and Custody Agreement and the
consummation of the transactions herein and therein contemplated will
not, if applicable, result in the violation of any provisions of the
Articles of Incorporation, By-laws or other governing documents of
such Selling Shareholder, or constitute a breach, or be in
contravention, of any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust or other instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder or
such Selling Shareholder's property may be bound or affected, or any
statute, rule or regulation applicable to such Selling Shareholder, or
violate any order or decree of any court, regulatory or governmental
body, administrative body or instrumentality of the United States or
other jurisdiction having jurisdiction over such
24
Selling Shareholder or any of such Selling Shareholder's property,
which violation would reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business, properties,
net worth or results of operations of such Selling Shareholder;
(iii) Such Selling Shareholder has full legal right, power
and authority, and has secured any consent, approval, authorization
and order required to enter into and perform this Agreement and the
Irrevocable Power of Attorney and Custody Agreement and to sell,
assign, transfer and deliver title to the Shares to be sold by such
Selling Shareholder as provided herein; and upon delivery to the
Underwriters or upon the order of the Representatives against payment
of the agreed consideration therefor in accordance with the provisions
of this Agreement, the Underwriters will acquire good and marketable
title to the Shares to be sold hereunder by such Selling Shareholder,
free and clear of all voting trust arrangements, liens, encumbrances,
security interests, equities, claims and community or marital property
rights; and
(iv) To such counsel's knowledge, the information concerning the
Selling Shareholders contained in the Prospectus under the caption
"Principal and Selling Shareholders" complies in all material respects
with the Act.
In rendering such opinion, counsel for the Selling Shareholders may rely, to the
extent counsel deems such reliance proper, as to matters of fact upon
certificates of the Selling Shareholders, and copies of all such certificates
shall be furnished to the Representatives and counsel for the Underwriters on or
before each Closing Date.
(f) The Representatives shall have received an opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the issuance and
sale of the Shares by the Company, the Registration Statement and other
related matters as the Representatives may require, and the Company shall
have furnished to such counsel such documents and shall have exhibited to
them such papers and records as they reasonably request for the purpose of
enabling them to pass upon such matters.
(g) The Representatives shall have received on each Closing Date, a
certificate of the Company executed by ▇▇▇▇ ▇. ▇▇▇▇, President and Chief
Executive Officer, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Treasurer and Director of Finance,
of the Company, to the effect that:
(i) The representations and warranties of the Company and the
Principal Shareholders set forth in Section 2 hereof are true and
correct as of the date of this Agreement and as of the date of such
certificate, and the Company has complied with all the agreements and
satisfied all the conditions to be performed or satisfied by it at or
prior to the date of such certificate;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment or
25
supplement thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the knowledge of the
respective signatories, no proceedings for that purpose have been
initiated or are pending or contemplated under the Act or under the
Blue Sky Laws of any jurisdiction;
(iii) Each of the respective signatories has carefully
examined the Registration Statement and the Prospectus, and any
amendment or supplement thereto and such documents contain all
statements required to be stated therein, and do not include any
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and since the date on which the Registration
Statement was initially filed, no event has occurred that was required
to be set forth in an amended or supplemented prospectus or in an
amendment to the Registration Statement that has not been so set
forth; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there has not occurred any change
or development involving, or which could be expected to involve, a
Material Adverse Effect, whether or not arising from transactions in
the ordinary course of business, except as disclosed in the Prospectus
and the Registration Statement as heretofore amended or (but only if
the Representatives expressly consent thereto in writing) as disclosed
in an amendment or supplement thereto filed with the Commission and
delivered to the Representatives after the execution of this
Agreement; since such date and except as so disclosed or in the
ordinary course of business, the Company has not incurred any
liability or obligation, direct or indirect, or entered into any
transaction which is material to the Company; since such date and
except as so disclosed, there has not been any change in the
outstanding capital stock of the Company or any change that is
material to the Company in the short-term debt or long-term debt of
the Company; since such date and except as so disclosed, the Company
has not acquired any of the Common Stock or other capital stock of the
Company nor has the Company declared or paid any dividend, or made any
other distribution, upon its outstanding Common Stock payable to
shareholders of record on a date prior to such Closing Date; since
such date and except as so disclosed, the Company has not incurred any
material contingent obligations, and no material litigation is pending
or threatened against the Company; and, since such date and except as
so disclosed, the Company has not sustained any material loss or
interference from any strike, fire, flood, windstorm, accident or
other calamity (whether or not insured) or from any court or
governmental action, order or decree.
The delivery of the certificate provided for in this subsection (g)
shall be and constitute a representation and warranty of the Company as to the
facts required in the immediately foregoing clauses (i), (ii), (iii) and (iv) to
be set forth in said certificate.
(h) The Representatives shall have received a certificate from each
Selling Shareholder (which may be signed by such Selling Shareholder's
Attorneys-in-Fact, or
26
either of them), dated the First Closing Date or the Second Closing Date,
as the case may be, to the effect that: (i) the representations and
warranties of such Selling Shareholder in Section 3 of this Agreement are
true and correct as of the date of this Agreement and as of the date of such
certificate, as if again made on and as of such Closing Date, and such
Selling Shareholder has complied with all of the agreements and satisfied
all of the conditions to be performed or satisfied by such Selling
Shareholder at or prior to such Closing Date; and (ii) such Selling
Shareholder has no reason to believe that the Registration Statement or any
amendment thereto at the time it was declared effective by the Commission
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as amended or
supplemented, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(i) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Representatives a letter addressed to
the Representatives, as the representatives of the Underwriters, from KPMG
Peat Marwick LLP, the Company's independent accountants, the first letter
to be dated the date of this Agreement, the second letter to be dated the
First Closing Date and the third letter (if applicable) to be dated the
Second Closing Date, which shall be in form and substance satisfactory to
the Representatives and shall contain information as of a date within five
days of the date of such letter. There shall not have been any change set
forth in any of the letters referred to in this subsection (i) which makes
it impracticable or inadvisable in the judgment of the Representatives to
proceed with the public offering or purchase of the Shares as contemplated
hereby.
(j) The Shares shall have been qualified or registered for sale under
the Blue Sky Laws of such jurisdictions as shall have been specified by the
Representatives, the underwriting terms and arrangements for the offering
shall have been cleared by the NASD, and the Common Stock shall have been
designated for inclusion as a Nasdaq National Market security on the Nasdaq
Stock Market and shall have been registered under the Exchange Act.
(k) At or prior to the First Closing Date, the Tax Indemnification
Agreement, by and among the Company and each of the shareholders of the
Company, in the form included as an exhibit to the Registration Statement
at the time the Registration Statement was declared effective by the
Commission, or in such other form as shall be acceptable to the
Representatives, shall have been executed and delivered by the parties
thereto.
(l) Such further certificates and documents as the Representatives
may reasonably request (including certificates of officers of the Company).
All such opinions, certificates, letters and documents shall be
in compliance with the provisions hereof only if they are reasonably
satisfactory to the Representatives and to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Underwriters. The Company and the Selling Shareholders shall
27
furnish the Representatives with such manually signed or conformed copies of
such opinions, certificates, letters and documents as the Representatives may
reasonably request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at either Closing Date is not so satisfied, this Agreement
at the election of the Representatives will terminate upon notification to the
Company and the Attorneys-in-Fact, or any one of them, for the Selling
Shareholders without liability on the part of any Underwriter, including the
Representatives and the Company or the Selling Shareholders, except for the
provisions of Section 7(n) hereof, the expenses to be paid by the Company and
the Selling Shareholders pursuant to Section 9 hereof and except to the extent
provided in Section 12 hereof.
SECTION 11. Maintain Effectiveness of Registration Statement. The
Company will use its best efforts and the Selling Shareholders will use their
best efforts to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement, and, if such stop order is issued,
to obtain as soon as possible the lifting thereof.
SECTION 12. Indemnification.
(a) The Company, subject to the last paragraph of this Section 12,
agrees to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act or the
Exchange Act (a "Controlling Person"), from and against any losses, claims,
damages, expenses, liabilities or actions in respect thereof ("Claims"),
joint or several, to which such Underwriter or each such Controlling Person
may become subject under the Act, the Exchange Act, Blue Sky Laws or other
federal or state statutory laws or regulations, at common law or otherwise
(including payments made in settlement of any litigation), insofar as such
Claims arise out of or are based upon any breach of any representation,
warranty or covenant made by the Company in this Agreement, or any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or in any application filed under any Blue
Sky Law or other document executed by the Company for that purpose or based
upon written information furnished by the Company and filed in any state or
other jurisdiction to qualify any or all of the Shares under the securities
laws thereof (any such document, application or information being
hereinafter called a "Blue Sky Application") or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading. The Company, subject to the last paragraph of this Section
12, agree to reimburse each Underwriter and each Controlling Person for any
legal fees or other expenses incurred by such Underwriter or any such
Controlling Person in connection with investigating or defending any such
Claim; provided, however, that the Company will not be liable in any such
case to the extent that any such Claim arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus or supplement thereto or in any Blue Sky Application in
reliance upon and in conformity with the written information furnished to
the Company pursuant to Section 5 of this Agreement. The indemnification
obligations of
28
the Company, as provided above are in addition to and in no way limit any
liabilities the Company may otherwise have.
(b) Each of the Selling Shareholders, severally and jointly, subject
to the last paragraph of this Section 12, agrees to indemnify and hold
harmless each Underwriter and Controlling Person, from and against any
Claims, joint or several, to which such Underwriter or each such
Controlling Person may become subject under the Act, the Exchange Act, Blue
Sky Laws or other federal or state statutory laws or regulations, at common
law or otherwise (including payments made in settlement of any litigation),
insofar as such Claims arise out of or are based upon any breach of any
representation, warranty or covenant made by the Company or the Selling
Shareholders in this Agreement, or any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or in any application filed under any Blue Sky Law or other
document executed by the Company for that purpose or based upon written
information furnished by the Company and filed in any Blue Sky Application
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading. Each of the Selling Shareholders,
jointly and severally, subject to the last paragraph of this Section 12,
agrees to reimburse each Underwriter and each such Controlling Person for
any legal fees or other expenses incurred by such Underwriter or any such
Controlling Person in connection with investigating or defending any such
Claim; provided, however, that each of the Selling Shareholders will not be
liable in any such case to the extent that any such Claim arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or supplement thereto or in any Blue Sky
Application in reliance upon and in conformity with the written information
furnished to the Company pursuant to Section 5 of this Agreement. The
indemnification obligations of each Selling Shareholder as provided above
are in addition to and in no way limit any liabilities that any Selling
Shareholder may otherwise have.
(c) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its officers
who signs the Registration Statement, and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act, the
Principal Shareholder and each Selling Shareholder against any Claim to
which the Company, or any such director, officer, controlling person,
Principal Shareholder or Selling Shareholder may become subject under the
Act, the Exchange Act, Blue Sky Laws or other federal or state statutory
laws or regulations, at common law or otherwise (including payments made in
settlement of any litigation, if such settlement is effected with the
written consent of such Underwriter and Baird), insofar as such Claim
arises out of or are based upon any breach of any representation, warranty
or covenant made by such Underwriter in this Agreement, or any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, or arises out of or is
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary
29
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, in reliance solely upon
and in conformity with the written information furnished by the
Representatives to the Company pursuant to Section 5 of this Agreement.
Each Underwriter will severally reimburse any legal fees or other expenses
incurred by the Company, or any such director, officer, controlling person,
the Principal Shareholder or any Selling Shareholder in connection with
investigating or defending any such Claim, and from any and all Claims
solely resulting from failure of an Underwriter to deliver a Prospectus, if
the person asserting such Claim purchased Shares from such Underwriter and
a copy of the Prospectus (as then amended if the Company shall have
furnished any amendments thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended) would have
cured the defect giving rise to such Claim. The indemnification
obligations of each Underwriter as provided above are in addition to any
liabilities any such Underwriter may otherwise have. Notwithstanding the
provisions of this section, no Underwriter shall be required to indemnify
or reimburse the Company, or any officer, director, controlling person, the
Principal Shareholder or any Selling Shareholder in an aggregate amount in
excess of the total price at which the Shares purchased by any such
Underwriter hereunder were offered to the public, less the amount of any
damages such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(d) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors and each of
its officers who signs the Registration Statement, and each person, if any,
controlling the Company within the meaning of the Act or the Exchange Act
to the same extent as the foregoing indemnity from the Company to each
Underwriter set forth in subsection (a) of this section. In case any Claim
shall be brought or asserted against the Company, its directors, such
officers or any such controlling person, in respect of which indemnity may
be sought against any Selling Shareholder, such Selling Shareholder shall
have the rights and duties given to the Company, and the Company, such
directors or officers and any such controlling person shall have the rights
and duties given to the Underwriters by subsection (a) of this section.
(e) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action in respect of a Claim, such
indemnified party will, if a Claim in respect thereof is to be made against
an indemnifying party under this section, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve an indemnifying party from any
liability it may have to any indemnified party under this section or
otherwise, provided such failure to notify shall not result in the loss of
a defense for such party. In case any such action is brought against any
indemnified party, and such indemnified party notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate in and, to the extent that he, she or it may wish, jointly
with all other indemnifying parties,
30
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and any
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to the indemnified
party and/or other indemnified parties which are different from or
additional to those available to any indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties.
(f) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will not
be liable to such indemnified party under this section for any legal fees
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with
the proviso to the last sentence of subsection (e) of this section (it
being understood, however, that the indemnifying party shall not be
liable for the legal fees and expenses of more than one separate
counsel, approved by Baird, if one or more of the Underwriters or
their controlling persons are the indemnified parties);
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the
action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(g) If the indemnification provided for in this section is
unavailable to an indemnified party under subsection (a), (b) (c) or (d)
hereof in respect of any Claim referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall, subject to
the limitations hereinafter set forth, contribute to the amount paid or
payable by such indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Principal Shareholder, each
Selling Shareholder and the Underwriters 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, the Principal
Shareholder, each Selling Shareholder and the Underwriters in
31
connection with the statements or omissions which resulted in such
Claim, as well as any other relevant equitable considerations.
The relative benefits received by each of the Company, the
Principal Shareholder, each Selling Shareholder and the Underwriters shall be
deemed to be in such proportion so that the Underwriters are responsible for
that portion represented by the percentage that the amount of the
underwriting discounts and commissions per share appearing on the cover page
of the Prospectus bears to the public offering price per share appearing
thereon, and the Company (including its officers and directors and
controlling persons), and the Principal Shareholder, and each of the Selling
Shareholders who is not a Principal Shareholder, are responsible for the
remaining portion. The relative fault of the Company, the Principal
Shareholder, each Selling Shareholder and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, such
Principal Shareholder, such Selling Shareholder or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the Claims referred to above shall be deemed to include,
subject to the limitations set forth in subsections (e) and (f) of this
section, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
(h) The Company, the Principal Shareholder, the Selling Shareholders
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this section were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method or allocation which does not take into
account the equitable considerations referred to in subsection (g) of this
section. Notwithstanding the other provisions of this section, no
Underwriter shall be required to contribute any amount that is greater than
the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. 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 are
several in proportion to their respective underwriting commitments and not
joint.
(i) Notwithstanding any provision of this Section 12 to the contrary,
the liability of each of the Selling Shareholders arising under this
Section 12 shall not exceed the purchase price received by such Selling
Shareholder from the Underwriters for the Shares sold by such Selling
Shareholder.
SECTION 13. Default of Underwriters. It shall be a condition to
the obligations of each Underwriter to purchase the Shares in the manner as
described herein, that, except as hereinafter provided in this section, each of
the Underwriters shall purchase and pay for all the Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Representatives
32
of all such Shares in accordance with the terms hereof. If any Underwriter
or Underwriters default in their obligations to purchase Shares hereunder on
either the First Closing Date or the Second Closing Date and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed ten percent (10%) of the total number of
Shares which the Underwriters are obligated to purchase on such Closing Date,
the Representatives may make arrangements for the purchase of such Shares by
other persons, including any of the Underwriters, but if no such arrangements
are made by such Closing Date the nondefaulting Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder,
to purchase the Shares which such defaulting Underwriters agreed but failed
to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Shares with respect to which such default
or defaults occur is greater than ten percent (10%) of the total number of
Shares which the Underwriters are obligated to purchase on such Closing Date,
and arrangements satisfactory to the Representatives for the purchase of such
Shares by other persons are not made within thirty-six hours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter, the Company, any Principal Shareholder or any
Selling Shareholder except for the expenses to be paid by the Company and the
Selling Shareholders pursuant to Section 9 hereof and except to the extent
provided in Section 12 hereof.
In the event that Shares to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties, the
Representatives shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, for not more than seven business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 14. Effective Date. This Agreement shall become effective
upon the execution and delivery of this Agreement by the parties hereto. Such
execution and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
SECTION 15. Termination. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representatives prior to or on the First Closing Date and the
over-allotment option from the Selling Shareholders referred to in Section 6
hereof, if exercised, may be canceled by the Representatives at any time prior
to or on the Second Closing Date, if in the judgment of the Representatives,
payment for and delivery of the Shares is rendered impracticable or inadvisable
because:
(a) additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities
generally or trading in securities generally shall have been suspended or
materially limited on either such exchange or on The Nasdaq Stock Market or
a general banking moratorium shall have been established by either federal
or state authorities in New York, Virginia or Wisconsin;
33
(b) any event shall have occurred or shall exist which makes untrue
or incorrect in any material respect any statement or information contained
in the Registration Statement or which is not reflected in the Registration
Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(c) an outbreak or escalation of hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated to such
extent, in the judgment of the Representatives, as to have a material
adverse effect on the financial markets of the United States, or to make it
impracticable or inadvisable to proceed with completion of the sale of and
payment for the Shares as provided in this Agreement.
Any termination pursuant to this Section shall be without
liability on the part of any Underwriter to the Company, the Principal
Shareholder or any Selling Shareholder, or on the part of the Company, the
Principal Shareholder or any Selling Shareholder to any Underwriter, except
for expenses to be paid by the Company pursuant to Section 9 hereof or
reimbursed by the Company pursuant to Section 7(n) hereof and except as to
indemnification to the extent provided in Section 12 hereof.
SECTION 16. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties, covenants
and other statements of the Company, of its officers or directors, of the
Principal Shareholder, of the Selling Shareholders, and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter, the Principal Shareholder, Selling Shareholder or the Company or
any of its or their partners, officers, directors or any controlling person, as
the case may be, and will survive delivery of and payment for the Shares sold
hereunder.
SECTION 17. Notices. All communications hereunder will be in
writing and, if sent to the Representatives, will be mailed, delivered,
telecopied (with receipt confirmed) or telegraphed and confirmed to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ & Co. Incorporated at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; and if
sent to the Company, Selling Shareholders or the Principal Shareholder, will be
mailed, delivered, telecopied (with receipt confirmed) or telegraphed and
confirmed to the Company at ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇. ▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esq., ▇▇▇▇▇ & Stant, P.C., ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇; and the Selling Shareholders, will be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to the Attorneys-in-Fact, or
either of them, in care of the Company.
SECTION 18. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors,
personal representatives and assigns, and to the benefit of the officers and
directors and controlling persons referred to in Section 12 hereof and no other
person will have any right or obligation hereunder. The term
34
"successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
SECTION 19. Partial Unenforceability. If any section,
paragraph, clause or provision of this Agreement is for any reason determined
to be invalid or unenforceable, such determination shall not affect the
validity or enforceability of any other section, paragraph clause or provision
hereof.
SECTION 20. Applicable Law; Counterparts. This Agreement
shall be governed by and construed in accordance with the internal laws of
the State of Wisconsin without reference to conflict of law principles
thereunder. This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument, and shall be effective
when at least one counterpart hereof shall have been executed by or on behalf
of each party hereto.
35
If the foregoing is in accordance with
your understanding of our agreement, kindly sign and return to us the
enclosed duplicates hereof, whereupon it will become a binding agreement
among the Company, the Principal Shareholder, each of the Selling
Shareholders and the several Underwriters, including the Representatives, all
in accordance with its terms.
Very truly yours,
METRO INFORMATION SERVICES, INC.
By:
---------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
THE PRINCIPAL SHAREHOLDER:
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
THE SELLING SHAREHOLDERS:
By:
----------------------------
▇▇▇▇ ▇. ▇▇▇▇
Attorney-in-Fact
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attorney-in-Fact
By:
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Attorney-in-Fact
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney-in-Fact
By:
----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Attorney-in-Fact
36
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
Acting as Representatives of the several
Underwriters (including themselves) identified
in SCHEDULE I annexed hereto.
By:
------------------------------------
AUTHORIZED REPRESENTATIVE
37
METRO INFORMATION SERVICES, INC.
Schedule I
[Underwriters]
METRO INFORMATION SERVICES, INC.
Schedule II
[Selling Shareholders]
METRO INFORMATION SERVICES, INC.
Schedule III
[Lock-up Agreement Shareholders]
