EXHIBIT 1.1
Donnelley Enterprise Solutions Incorporated
2,600,000 Shares*
Common Stock
($.01 par value)
Underwriting Agreement
New York, New York
October __, 1996
Salomon Brothers Inc
▇▇▇▇▇▇▇▇▇▇ Securities
▇.▇. ▇▇▇▇▇▇ Securities Inc.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
Donnelley Enterprise Solutions Incorporated, a Delaware corporation
(the "Company"), proposes to issue and sell to the underwriters named in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), 1,855,000 shares of Common Stock, $.01
par value (the "Common Stock"), of the Company and ▇. ▇. ▇▇▇▇▇▇▇▇▇ & Sons
Company, a Delaware corporation (the "Selling Stockholder"), proposes to sell to
the Underwriters 745,000 shares of Common Stock (said shares to be issued and
sold by the Company and shares to be sold by the Selling Stockholder
collectively being hereinafter called the "Underwritten Securities"). Upon the
terms and conditions more fully set forth herein, the Selling Stockholder also
proposes to grant to the Underwriters an option to purchase up to 390,000
additional shares of Common Stock (the "Option Securities"; the Option
Securities, together with the Underwritten Securities, being hereinafter called
the "Securities").
--------------------
* Plus an option to purchase up to 390,000 additional shares from the
Selling Stockholder to cover over-allotments.
1. Representations and Warranties.
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(a) The Company and the Selling Stockholder, jointly and severally,
represent and warrant to, and agree with, each Underwriter that:
(i) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (file number 333-10127) on Form
S-1, including a related preliminary prospectus, for the registration under
the Securities Act of 1933, as amended (the "Act"), of the offering and
sale of the Securities. The Company may have filed one or more amendments
thereto, including the related preliminary prospectuses, each of which has
previously been furnished to you. The Company will next file with the
Commission either, (A) prior to effec tiveness of such registration
statement, a further amendment thereto (including the form of final pro
spectus) or (B) after effectiveness of such registration statement, a final
prospectus in accordance with Rules 430A and 424(b). In the case of clause
(B), the Company has included in such registration statement, as amended at
the Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules and regulations thereunder to be included
in the Prospectus with respect to the Securities and the offering thereof.
As filed, such amendment and form of final prospectus, or such final
prospectus, shall include all Rule 430A Information and, except to the
extent the Representatives shall agree in writing to a modification (which
agreement shall not be unreasonably withheld), shall be in all substantive
respects in the form last furnished to you prior to the Execution Time or,
to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date
and time that this Agreement is executed delivered by the parties
hereto. "Preliminary Prospectus" shall mean any preliminary prospectus
referred to in the preceding paragraph and any preliminary prospectus
included in the
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Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the Execution
Time or, if no filing pursuant to Rule 424(b) is required, shall mean the
form of final prospectus relating to the Securities included in the
Registration Statement at the Effective Date. "Registration Statement"
shall mean the registration statement referred to in the preceding
paragraph, including exhibits and financial statements and schedule, in the
form in which it has or shall become effective and, in the event any post-
effective amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined) or settlement date pursuant to Section 3 hereof, shall
also mean such registration statement as so amended on such date. Such term
shall include a registration statement, if any, filed pursuant to Rule
462(b) under the Act increasing the size of the offering registered under
the Act and Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 424," "Rule 430A" and "Rule
462(b)" refer to such rules under the Act. "Rule 430A Information" means
information with respect to the Securities and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A. "Knowledge of the Company", "Company's
knowledge" or words of similar import shall mean the collective knowledge
of the Company and the Selling Stockholder.
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the applicable requirements of the Act and the rules and
regulations thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that no representations or warranties are made as to the
information contained in or omitted from any Preliminary Prospectus in
reliance upon and in conformity with information furnished in writing to
the Company or the Selling Stockholder by or on behalf of any Underwriter
through the Representatives specifically for inclusion therein.
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(iii) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b), on the Closing Date and on any settlement date pursuant to
Section 3 hereof, the Prospectus (and any supplements thereto) will, comply
in all material respects with the applicable requirements of the Act and
the rules thereunder; on the Effective Date, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective Date,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b), on the Closing Date
and on any settlement date pursuant to Section 3 hereof, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that no
representations or warranties are made as to the information contained in
or omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company or the Selling Stockholder by or on
behalf of any Underwriter through the Representatives specifically for
inclusion therein.
(iv) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, any
statute, any indenture, mortgage, deed of trust, credit agreement or other
material agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the property of the Company
is subject, the Company's certificate of incorporation or by-laws, or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its properties; no consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance
or sale of the Securities except such as may be required by the National
Association of Securities Dealers, Inc. or under the Act or state
securities laws.
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(v) Except as described in the Prospectus, the Company is not in
violation of any term of its certificate of incorporation or by-laws, and
the Company is not in violation of any term of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to it which violation or violations could reasonably be expected
to individually or in the aggregate result in a material adverse effect on
the Company or the offering of the Securities contemplated by the
Prospectus (the "Offering").
(vi) Except as described in the Prospectus, the Company is operating
in compliance in all material respects with all material franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or regulatory body required for
the conduct of its businesses, and it owns or possesses all material
patents, trademarks, service marks, trade names, copyrights and licenses,
and rights with respect to the foregoing, necessary for the conduct of its
businesses as now conducted and as proposed to be conducted, without any
known conflict with the rights of others.
(vii) All contracts, agreements, instruments, leases and licenses
required to be described in the Registration Statement or the Prospectus
and/or to be filed as an exhibit to the Registration Statement have been so
described in all material respects and/or filed.
(viii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as set forth
or contemplated in the Prospectus, (i) the Company has not incurred any
material liabilities or obligations, direct or contingent, nor entered into
any material transactions not in the ordinary course of business, and (ii)
there has not been any material adverse change in the condition (financial
or otherwise), earnings, business or operations of the Company, or any
change in the capital stock or material increase in the long-term debt or
advances due to related party of the Company.
(ix) The financial statements, together with the related notes and
schedule set forth in the Prospectus and elsewhere in the Registration
Statement, fairly present in all material respects, on the basis stated in
the Registration Statement, the financial position and
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the results of operations and cash flows of the entities covered thereby at
the respective dates or for the respective periods therein specified. Such
financial statements and related notes and schedule have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the respective periods involved. The selected
historical financial data set forth in the Prospectus under the captions
"Summary Consolidated Financial Data," "Risk Factors," "Capitalization,"
"Selected Consolidated Financial Data," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," taken together
with the other information in the Prospectus fairly presents in all
material respects, on the basis stated in the Registration Statement, the
information set forth therein. The pro forma consolidated statements of
income and balance sheet set forth in the Prospectus under the caption
"Unaudited Pro Forma Consolidated Financial Information" fairly presents in
all material respects the information shown therein, has been prepared in
all material respects in accordance with the Commission's rules and
guidelines with respect to pro forma information, have been properly
compiled on the pro forma basis described therein, and, in the opinion of
the Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate under the circumstances.
No financial statements other than those included in the Registration
Statement are required by Form S-1 or otherwise under the Act to be
included in the Registration Statement or the Prospectus.
(x) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which it is engaged; the Company
has not been refused any insurance coverage sought or applied for; and the
Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations
of the Company, except as described in or contemplated by the Prospectus.
(xi) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified the consolidated
financial statements of the Company, and the
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related schedule included in the Registration Statement, are, and during
the periods covered by their reports included in the Registration Statement
were, independent public accountants with respect to the Company as
required by the Act and the applicable rules and regulations thereunder.
(xii) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business makes
such qualification necessary, except for those failures to be so qualified
or in good standing that will not in the aggregate have a material adverse
effect on the Company. The Company has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, to own, lease and operate
its properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, except for
those consents, approvals, authorizations, orders, registrations,
qualifications, licenses or permits the failure of which to hold will not,
in the aggregate, have a material adverse effect on the Company.
(xiii) None of the Company's subsidiaries, considered in the
aggregate as a single subsidiary, would constitute a significant subsidiary
as defined in Rule 1-02(w) of Regulation S-X under the Act.
(xiv) As of the date of this Agreement, the Company has an authorized
and outstanding capitalization as set forth under the heading "Pro Forma"
beneath the caption "Capitalization" in the Prospectus and immediately
following the purchase of the Underwritten Securities hereunder, the
Company will have an authorized and outstanding capitalization as set forth
under the heading "Pro Forma As Adjusted" beneath the caption
"Capitalization" in the Prospectus; the issued shares of Common Stock of
the Company conform in all material respects to the description thereof in
the Prospectus under the caption "Description of Capital Stock and
Corporate Charter" and have been duly authorized and validly issued and are
fully paid and nonassessable and
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were not issued in violation of or subject to any preemptive rights; on the
Closing Date, the stockholders of the Company will have no preemptive
rights with respect to any shares of capital stock of the Company; and, as
of the Execution Time, all outstanding shares of the Company are owned
directly by the Selling Stockholder. There is no commitment, plan or
arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the Company, or
any security or other instrument which by its terms is convertible into or
exercisable or exchangeable for capital stock of the Company, except as
described in the Prospectus. Except as described in the Prospectus, there
is outstanding no security or other instrument which by its terms is
convertible into or exercisable or exchangeable for capital stock of the
Company. The Securities to be sold by the Company to the Underwriters
hereunder, when delivered and sold in accordance with this Agreement, will
be duly and validly issued and outstanding, fully paid and nonassessable,
and will not have been issued in violation of or subject to any preemptive
rights.
(xv) Except as described in the Prospectus, to the knowledge of the
Company and the Selling Stockholder there are no legal or governmental
proceedings or other actions, suits, proceedings or investigations pending
before any court or before or by any public, regulatory or governmental
agency or body (including, without limitation, any state regulatory agency,
board or department) to which the Company is a party or of which any
property of the Company is the subject, which, if determined adversely to
the Company would have a material adverse effect on the Company or the
Offering; and to the knowledge of the Company and the Selling Stockholder,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(xvi) The Company has the full corporate power and authority to enter
into this Agreement and to perform the obligations to be performed by it
hereunder and this Agreement has been duly and validly authorized, executed
and delivered by the Company.
(xvii) The Company has good and marketable title in fee simple
absolute to all real properties and good title to all other properties and
assets that the Prospectus indicates are owned by it, free and clear of all
liens, security interests, pledges, charges, encumbrances and
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mortgages (except as described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a material
adverse effect on the Company or the Offering).
(xviii) The Company has filed all necessary federal and state income
and franchise tax returns and has paid all taxes shown as due thereon, and
there is no tax deficiency that has been asserted against the Company or
any of its properties or assets that could reasonably be expected to have a
material adverse effect on the Company.
(xix) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement or otherwise.
(xx) The Securities have been approved for quotation on the Nasdaq
National Market subject to notice of issuance or sale, as the case may be.
(xxi) To the knowledge of the Company and the Selling Stockholder and
except as would not, individually or in the aggregate, have a material
adverse effect on the Company (a) the Company is not in violation of any
Federal, state or local laws and regulations relating to pollution
(including regulations relating to noise) or protection of human health or
the environmental (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of toxic or hazardous substances, materials
or wastes, or petroleum and petroleum products ("Materials of Environmental
Concern"), or otherwise relating to the storage, disposal, transport or
handling of Materials of Environmental Concern (collectively,
"Environmental Laws"), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations issued
in respect of any Environmental Laws; (b) the Company has not received any
communication (written or oral), whether from a governmental authority or
otherwise, alleging any such violation or noncompliance; and (c) there is
no pending or threatened claim, action, investigation or notice (written or
oral) by any person or entity alleging potential liability for
investigatory, cleanup, or governmental response costs, or natural
resources or property damages, or personal
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injuries, attorneys' fees or penalties relating to (x) the presence, or
release into the environment, of any Material of Environmental Concern at
any location owned or operated by the Company, now or in the past, or (y)
circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
(xxii) The Company is not involved in any labor dispute nor, to the
knowledge of the Company and the Selling Stockholder, is any labor dispute
with respect to the Company imminent, other than routine disciplinary and
grievance matters, which would have a material adverse effect on the
Company.
(xxiii) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Act and the rules and regulations
thereunder), has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or otherwise in stabilization or manipulation of the
price of any security of the Company, to facilitate the sale or resale of
the Securities.
(xxiv) The Company is not an "investment company" as defined in
Section 3(a) of the Investment Company Act of 1940, as amended.
(xxv) The Company is in compliance with Florida blue sky law relating
to disclosure of issuers doing business with Cuba. The Company is not
currently doing business with the government of Cuba or with any person or
affiliate located in Cuba and the Company will notify the Florida
Department of Banking and Finance, Division of Securities and Investor
Protection, if the Company commences doing business with the government of
Cuba or any person or affiliate located in Cuba.
(b) The Selling Stockholder represents and warrants to, and agrees with,
each Underwriter that:
(i) The Selling Stockholder has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Selling Stockholder, on the Closing Date, will have good
title to the Securities to be sold and delivered by it hereunder and upon
sale and delivery of,
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and payment for, such Securities, as provided herein, the Selling
Stockholder will convey good title to such Securities, free and clear of
all liens, encumbrances, pledges, equities and claims whatsoever.
(iii) The Selling Stockholder has the full corporate power and
authority to enter into and deliver this Agreement, to sell and deliver the
Securities to be sold and delivered by it hereunder and to otherwise
perform the obligations to be performed by it hereunder, and this Agreement
has been duly and validly authorized, executed and delivered by the Selling
Stockholder.
(iv) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the Exchange
Act or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities
and has not effected any sales of shares of Common Stock which, if effected
by the Company, would be required to be disclosed in response to Item 701
of Regulation S-K.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution and delivery by
the Selling Stockholder of this Agreement and for the consummation by such
Selling Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required by the
National Association of Securities Dealers, Inc. or under the blue sky laws
of any jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters and such other approvals as have been
obtained.
(vi) None of the sale of the Securities being sold by the Selling
Stockholder, the execution and delivery by the Selling Stockholder of this
Agreement nor the consummation of any other of the transactions
contemplated herein by the Selling Stockholder or the fulfillment of the
terms hereof by the Selling Stockholder will conflict with, result in a
breach of, or constitute a default under, the certificate of incorporation
or by-laws of the Selling Stockholder, or the terms of any indenture or
other material agreement or instrument to which the Selling Stockholder is
a party or bound, or any order or regulation applicable to the Selling
Stockholder of any court, regulatory body,
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administrative agency, governmental body or arbitrator having jurisdiction
over the Selling Stockholder.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and the Selling Stockholder agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Stockholder, at a purchase price of
$[__________] per share, the amount of the Underwritten Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling Stockholder hereby
grants an option to the several Underwriters to purchase, severally and not
jointly, up to 390,000 shares of the Option Securities, all at the same purchase
price per share as the Underwriters shall pay for the Underwritten Securities.
Said option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised in
whole or in part at any time (but not more than once) on or before the 30th day
after the date of the Prospectus upon written or facsimile notice by the
Representatives to the Company and the Selling Stockholder setting forth the
number of shares of the Option Securities as to which the several Underwriters
are exercising the option and the settlement date. Delivery of certificates for
the shares of Option Securities by the Selling Stockholder, and payment therefor
to the Selling Stockholder, shall be made as provided in Section 3 hereof. The
number of shares of the Option Securities to be purchased by each Underwriter
shall be the same percentage of the total number of shares of the Option
Securities to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Securities, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the second business day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on [ ],
1996, or such later date (not later than [ ], 1996) as the
Representatives shall designate, which date and time may be postponed by
agreement among the Representatives, the Company and the Selling Stockholder or
as provided in Section 9 hereof (such date and time of delivery and payment for
the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several
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Underwriters through the Representatives of the aggregate purchase price of the
Securities being sold by the Company and the Selling Stockholder to or upon the
order of the Company and the Selling Stockholder, by wire transfer of
immediately available funds. Delivery of the Underwritten Securities and the
Option Securities shall be made at such location as the Representatives shall
reasonably designate at least one business day in advance of the Closing Date
and the closing of the sale of the Underwritten Securities shall occur at the
offices of Sidley & Austin, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
Certificates for the Securities shall be registered in such names and in such
denominations as the Representatives may request not less than two full business
days in advance of the Closing Date.
The Company and the Selling Stockholder agree to have the Securities
available for inspection, checking and packaging by the Representatives in New
York, New York, not later than 1:00 PM on the business day prior to the Closing
Date.
The Selling Stockholder will pay all applicable state transfer taxes, if
any, involved in the transfer to the several Underwriters of the Securities to
be purchased by them from the Selling Stockholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after the
second business day prior to the Closing Date, the Selling Stockholder will
deliver (at the expense of the Selling Stockholder) to the Representatives, at
such location as the Representatives shall reasonably designate, on the date
specified by the Representatives (which shall be within three business days
after exercise of said option), certificates for the Option Securities in such
names and denominations as the Representatives shall have requested against
payment of the purchase price therefore to or upon the order of the Selling
Stockholder by wire transfer of immediately available funds. If settlement for
the Option Securities occurs after the Closing Date, the Company and the Selling
Stockholder will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof and all
references in this Agreement to "Closing Date" shall be deemed to be a reference
to such settlement date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
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5. Agreements.
(a) The Company agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution
Time, to become effective. Prior to the termination of the Offering, the
Company will not file any amendment of the Registration Statement or
supplement to the Prospectus without your prior consent. Subject to the
foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will file the Prospectus, properly
completed, pursuant to Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Representatives (A) when the
Registration Statement shall have become effective, (B) when the
Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b), (C) when, prior to the
termination of the Offering, any amendment to the Registration Statement
shall have been filed or become effective, (D) of any request by the
Commission for any amendment of the Registration Statement or supplement to
the Prospectus or for any additional information, (E) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (F) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to supplement the Prospectus to comply with the Act or the
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rules and regulations thereunder, the Company promptly will prepare and
file with the Commission, subject to paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or omission or
effect such compliance.
(iii) As soon as practicable, the Company will, make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(iv) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, four (4) signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of the
Prospectus and each Preliminary Prospectus and any supplements thereto as
the Representatives may reasonably request. The Company will furnish or
cause to be furnished to the Representatives copies of all reports on Form
SR required by Rule 463 under the Act.
(v) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as
required for the distribution of the Securities; provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will also pay the fee of the National Association of Securities
Dealers, Inc., in connection with its review of the Offering.
(vi) The Company and the Selling Stockholder agree, severally and not
jointly, to not, for a period of 180 days following the Execution Time,
without the prior written consent of Salomon Brothers Inc, on behalf of the
Underwriters, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any other shares of
Common Stock or any securities convertible into, or exercisable or
15
exchangeable for, shares of Common Stock; provided, however, that (A) the
Company may issue and sell Common Stock, or securities convertible into, or
exercisable or exchangeable for, shares of Common Stock, pursuant to the
Company's 1996 Stock Incentive Plan or 1996 Broad-Based Employee Stock
Plan, which are described in the Prospectus, and the Company may issue
Common Stock issuable upon the conversion, exercise or exchange of
securities that have been granted as of the date of the Prospectus under
the 1996 Stock Incentive Plan or 1996 Broad-Based Employee Stock Plan and
(B) the Selling Stockholder may sell any or all of the Option Securities in
accordance with the terms of this Agreement.
(vii) To the extent required by law, the Company will furnish to its
stockholders annual reports containing financial statements certified by
independent public accountants and with quarterly summary financial
information in reasonable detail which may be unaudited. During the period
of five years from the date hereof, the Company will promptly deliver to
the Representatives and, upon request, to each of the other Underwriters,
(A) copies of each annual report of the Company containing financial
statements certified by independent public accountants and each other
report furnished by the Company to its stockholders, (B) as soon as they
are available, copies of any other reports (financial or other) that the
Company shall publish or otherwise make available to any of its security
holders as such, and (C) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission
or any national securities exchange.
(viii) The Company will use its best efforts to obtain and maintain
the quotation of the Securities to be sold hereunder on the Nasdaq National
Market, unless the Company's Board of Directors determines otherwise.
(ix) The Company will promptly deliver to the Representatives copies
of all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Securities under the
Act.
(x) The Company will not become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
16
(xi) Prior to the Closing Date, the Company will issue no press
release or other communication directly or indirectly and hold no press
conference with respect to the Company, or with respect to the condition,
results of operations, business, properties, assets or liabilities of the
Company, or the Offering, without your prior consent, which consent shall
not be unreasonably withheld.
(xii) To document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, the Company agrees to deliver to you prior to or at the
Closing Date a properly completed and executed United States Treasury
Department Form W-9 of the Selling Stockholder (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof).
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholder contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholder made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholder of their respective obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement shall have become effective not later than
(i) 6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM New York City time on the
business day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City time
on such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus shall have been filed in
the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or threatened.
17
(b) The Company and the Selling Stockholder shall have furnished to the
Representatives the opinion of Sidley & Austin, counsel for the Company and the
Selling Stockholder, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its properties and conduct
its business as described in the Registration Statement and the Prospectus,
to execute and deliver this Agreement and to perform the obligations to be
performed by it hereunder;
(ii) this Agreement has been duly authorized, executed and delivered
by the Company;
(iii) the authorized capital stock of the Company is as set forth in
the Prospectus under the heading "Capitalization";
(iv) (A) the Securities being sold by the Company have been duly and
validly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be fully paid and non-assessable and (B)
except as described in the Prospectus and to the knowledge of such counsel,
there are no outstanding rights, subscriptions, warrants, calls,
registration rights, preemptive rights, options or other arrangements of
any kind with respect to the capital stock of the Company;
(v) the capital stock of the Company, including the Securities,
conforms in all material respects to the description thereof contained in
the Registration Statement and the Prospectus under the caption
"Description of Capital Stock and Corporate Charter;" and the certificates
for the Securities are in due and proper form;
(vi) all consents, approvals, authorizations or orders of, or filings
with, any court or governmental agency or body required in connection with
consummation by the Company of the transactions contemplated in this
Agreement have been obtained, except such counsel need express no opinion
as to any necessary qualification in connection with the purchase and
distribution of the Securities by the Underwriters (A) under the securities
18
or blue sky laws of any jurisdiction; or (B) with the National Association
of Securities Dealers, Inc.;
(vii) neither the execution, delivery and performance of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, will conflict with or result in any
breach of, or constitute a default under (or constitute any event which
with notice, lapse of time, or both, would constitute a breach of or
default under), any provisions of the certificate of incorporation or by-
laws of the Company;
(viii) the statements in the Registration Statement under the captions
"Risk Factors - Antitakeover Matters," "Management - Employment Agreements
and -Stock Plans," "Relationship with ▇.▇. ▇▇▇▇▇▇▇▇▇," "Shares Eligible for
Future Sale" and "Description of Capital Stock and Corporate Charter," in
each case, insofar as such statements constitute summaries of the legal
matters or documents described therein, fairly summarize in all material
respects the matters purported to be summarized;
(ix) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) have been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
threatened; and the Registration Statement and the Prospectus (and any
supplements thereto) (other than the financial statements and schedule and
other financial and statistical information contained therein as to which
such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the rules and
regulations thereunder;
(x) to the knowledge of such counsel, there are no contracts,
licenses, agreements, leases or documents of a character which are required
to be filed as exhibits to the Registration Statement or to be described in
the Prospectus which have not been so filed or described;
(xi) the Company is not an "investment company" or a person
"controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
19
(xii) the Selling Stockholder has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware;
(xiii) the delivery by the Selling Stockholder to the several
Underwriters of the certificate or certificates for the Securities being
sold hereunder by the Selling Stockholder against payment therefor as
provided herein will convey good title to such Securities to the several
Underwriters, free and clear of all liens, encumbrances, equities and
claims whatsoever (assuming the Underwriters are purchasing such Securities
in good faith and without knowledge of any such lien, encumbrance, equity
or claim);
(xiv) all consents, approvals, authorizations or orders of, or
filings with, any court or government agency or body required in connection
with the consummation by the Selling Stockholder of the transactions
contemplated in this Agreement have been obtained, except such counsel need
express no opinion as to the necessity of receiving any qualification under
(A) the securities or blue sky laws of any jurisdiction in connection with
the purchase and distribution of the securities by the Underwriters or (B)
from the National Association of Securities Dealers, Inc.;
(xv) neither the execution, delivery and performance of this
Agreement by the Selling Stockholder, nor the consummation by the Selling
Stockholder of the transactions contemplated hereby will conflict with,
result in a breach of, or constitute a default under, the certificate of
incorporation or by-laws of the Selling Stockholder.
In addition, such counsel shall state that in the course of the preparation
of the Registration Statement and the Prospectus, such counsel has considered
the information set forth therein in light of the matters required to be set
forth therein and that such counsel has participated in conferences with
officers and representatives of the Selling Stockholder and the Company,
including the Company's independent public accountants, and representatives of
and counsel for the Underwriters, during the course of which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel shall not have independently checked the accuracy or
completeness of, or otherwise verified, and accordingly are not passing upon,
and shall not assume responsibility for, the accuracy,
20
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, and, except as set forth in paragraphs (v) and
(viii) above, and has relied as to factual aspects of materiality, to the extent
it may reasonably do so in the discharge of its professional responsibility,
upon the judgment of officers and representatives of the Company and the Selling
Stockholder; however, as a result of such consideration and participation,
nothing has come to the attention of such counsel which causes such counsel to
believe that the Registration Statement, as of the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein, or necessary to
make the statements therein not misleading or that the Prospectus, as of its
date or the date of such opinion, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (except in each case such counsel need express no
comment with respect to the financial statements and schedule and other
financial and statistical data included in the Registration Statement or the
Prospectus or statements made in the exhibits to the Registration Statement).
In rendering such opinion, such counsel may (A) state that such opinion is
limited to the laws of the States of Illinois and New York, the Federal laws of
the United States and the Delaware General Corporation Law, and (B) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company, the Selling Stockholder and public officials.
(c) The Company and the Selling Stockholder shall have furnished to the
Representatives the opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Law and
Assistant General Counsel of the Selling Stockholder, dated the Closing Date, to
the effect that:
(i) the Company is duly qualified or licensed to do business as a
foreign corporation by, and is in good standing in, each jurisdiction in
which its ownership, leasing, licensing or use of property and assets or
the conduct of its business makes such qualification necessary, except in
those jurisdictions where the failure, individually or in the aggregate, to
be so licensed or qualified or in good standing would not have a material
adverse effect on the Company;
21
(ii) to the knowledge of such counsel, neither the execution,
delivery and performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby will
conflict with or result in any breach of, or constitute a default under (or
constitute any event which with notice, lapse of time, or both, would
constitute a breach of or default under), any provision of any indenture,
mortgage, deed or trust, credit agreement or other material agreement or
instrument to which the Company is a party or by which the Company or its
properties may be bound or affected, or, to the knowledge of such counsel,
under any federal, state, local or foreign law, rule, regulation, judgment,
order or decree applicable to the Company, except for any conflict, breach
or default that would not have a material adverse effect on the Company or
the Offering;
(iii) except as described in the Prospectus, to the knowledge of such
counsel, there are no proceedings or other actions, suits or investigations
pending before any court or before or by any public, regulatory or
government agency or body, or, to the knowledge of such counsel, threatened
against the Company or any of its properties, of a character that are
required to be described in the Registration Statement and the Prospectus
but are not so described or which, if determined adversely to the Company,
could have a material adverse effect on the Company;
(iv) this Agreement has been duly authorized, executed and delivered
by the Selling Stockholder, and the Selling Stockholder has the corporate
power and authority to sell, transfer and deliver in the manner provided in
this Agreement the Securities being sold by it hereunder;
(v) to the knowledge of such counsel, none of the execution, delivery
and performance of this Agreement by the Selling Stockholder, the sale of
the Securities being sold by the Selling Stockholder nor the consummation
of any other of the transactions contemplated in this Agreement by the
Selling Stockholder or the fulfillment of the terms hereof by the Selling
Stockholder will conflict with, result in a breach of, or constitute a
default under, the terms of any indenture or other material agreement or
instrument to which the Selling Stockholder is a party or bound, or, to the
knowledge of such counsel, any order or regulation applicable to the
Selling Stockholder of any court, regulatory body,
22
administrative agent, governmental body or arbitrator having jurisdiction
over the Selling Stockholder.
In addition, such counsel shall state that in the course of the preparation
of the Registration Statement and the Prospectus, such counsel has considered
the information set forth therein in light of the matters required to be set
forth therein and that such counsel has participated in conferences with
officers and representatives of the Selling Stockholder and the Company,
including the Company's independent public accountants, and representatives of
and counsel for the Underwriters, during the course of which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel shall not have independently checked the accuracy or
completeness of, or otherwise verified, and accordingly is not passing upon, and
shall not assume responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus, and
has relied as to factual aspects of materiality, to the extent she may
reasonably do so in the discharge of her professional responsibility, upon the
judgment of officers and representatives of the Company and the Selling
Stockholder; however, as a result of such consideration and participation,
nothing has come to the attention of such counsel which causes such counsel to
believe that the Registration Statement, as of the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein, or necessary to
make the statements therein not misleading or that the Prospectus, as of its
date or the date of such opinion, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (except in each case such counsel need express no
comment with respect to the financial statements and schedule and other
financial and statistical data included in the Registration Statement or the
Prospectus or statements made in the exhibits to the Registration Statement).
In rendering such opinion, such counsel may (A) state that such opinion is
limited to the laws of the States of Illinois, the Federal laws of the United
States and the Delaware General Corporation Law, and (B) as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible officers
of the Company and the Selling Stockholder and public officials.
23
(d) The Representatives shall have received from Winston & ▇▇▇▇▇▇, counsel
for the Underwriters, such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Securities, the Registration Statement,
the Prospectus and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a certificate
of the Company, signed on behalf of the Company by the chief executive officer
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) subsequent to the date of the most recent financial statements
included in the Registration Statement and the Prospectus (exclusive of any
supplement thereto), and except as set forth or contemplated in the
Prospectus (exclusive of any supplement thereto), (A) the Company has not
incurred any material liabilities or obligations, direct or contingent, nor
entered into any material transactions not in the ordinary course of
business, and (B) there has not been any material adverse change in the
condition (financial or otherwise), earnings, business or operations of the
Company, or any change in the capital stock or material increase in the
long-term debt or advances due to related party of the Company.
(f) The Selling Stockholder shall have furnished to the Representatives a
certificate of the Selling Stockholder, signed on behalf of the Selling
Stockholder by an executive
24
officer of the Selling Stockholder dated the Closing Date, to the effect that
the signer of such certificate has carefully examined the Registration
Statement, the Prospectus, any supplement to the Prospectus and this Agreement
and that the representations and warranties of the Selling Stockholder in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date;
(g) At the Execution Time and at the Closing Date, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
shall have furnished to the Representatives a letter or letters, dated
respectively as of the date of this Agreement and as of the Closing Date, in
form and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and financial
statement schedule included in the Registration Statement and the
Prospectus and reported on by them comply in form in all material respects
with the applicable accounting requirements of the Act and the related
published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company; their limited review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited interim financial information
for the six-month period ended June 30, 1996, and as at June 30, 1996;
carrying out certain specified procedures (but not an audit in accordance
with generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth in
such letter; a reading of the minutes of the meetings of the stockholders
and directors of the Company; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters of the
Company, as to transactions and events subsequent to December 31, 1995,
nothing came to their attention which caused them to believe that:
(1) the unaudited financial statements included in the
Registration Statement and the Prospectus do not comply in form in all
material respects with applicable accounting requirements of the Act
and with the published rules and regulations of the Commission with
respect to
25
registration statements on Form S-1; and said unaudited financial
statements are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration
Statement and the Prospectus; and
(2) with respect to the period subsequent to June 30, 1996,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the long-term debt
or advances to related parties of the Company or preferred or common
stock of the Company or decreases in the shareholder's investment in
the Company as compared with the amounts shown on the June 30, 1996
consolidated balance sheet included in the Registration Statement and
the Prospectus, or for the period from July 1, 1996 to such specified
date there were any decreases, as compared with the corresponding
period in the preceding year, in revenues or earnings (loss) from
operations or in total or per share amounts of net income (loss)(for
both primary earnings and fully diluted earnings) of the Company,
except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives;
(iii) on the basis of reading the unaudited pro forma financial
statement data included in the Registration Statement and the Prospectus,
carrying out specified procedures, inquiries of certain officials of the
Company who have responsibility for financial and accounting matters, and
proving the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the pro forma financial statement
data, nothing came to their attention which caused them to believe that the
pro forma financial statement data does not comply in form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X under the Act or that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of such
statements; and
26
(iv) they have performed certain other specified procedures as a
result of which they determined that certain information specified by the
Representatives of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information derived from
the general accounting records of the Company) set forth in the
Registration Statement and the Prospectus agrees with the accounting
records of the Company, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (g) include any supplements
thereto at the date of the letter.
(h) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been (i) any
change or decrease specified in the letter or letters referred to in paragraph
(g) of this Section 6 or (ii) any change, or any development involving a
prospective change, in or affecting the business or properties of the Company
the effect of which, in any case referred to in clause (i) or (ii) above, is, in
the judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or delivery of
the Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto).
(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter from each executive officer and director of the Company
addressed to the Representatives, in which each such person agrees not to offer,
sell or contract to sell, or otherwise dispose of, directly or indirectly, or
announce an offering of, any shares of Common Stock beneficially owned by such
person or any securities convertible into, or exercisable or exchangeable for,
shares of Common Stock for a period of 180 days following the Execution Time
without the prior written consent of Salomon Brothers Inc, on behalf of the
Underwriters, other than shares of Common Stock disposed of as bona fide gifts.
(j) Prior to the Closing Date, the Company and the Selling Stockholder
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
27
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and its counsel, this Agreement and all
obligation of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
7. Expenses; Reimbursement of Underwriters' Expenses.
-------------------------------------------------
(a) The Company and the Selling Stockholder covenant and agree with
one another and with the several Underwriters that the Company will be
liable for the payment of and will pay or cause to be paid the following:
(i) the fees, disbursements and expenses of the Company's counsel and
accountants and the Selling Stockholder's counsel in connection with the
registration of the Securities under the Act and the sale of the Securities
and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost
of printing, producing or distributing this Agreement, the Blue Sky
Memorandum and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in
connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(a)(v) hereof,
including the fees and disbursements of counsel for the Underwriters in
connection with such qualification; (iv) all expenses in connection with
authorizing the Securities for trading on the Nasdaq National Market; (v)
the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities, including the fees and disbursements of counsel for the
Underwriters in connection therewith; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or
registrar; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise
specifically provided for in this Section.
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters
set forth in Section 6 hereof is not
28
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company or
the Selling Stockholder to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the
Underwriters, the Company and the Selling Stockholder, jointly and
severally, agree to reimburse the Underwriters severally upon demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
8. Indemnification and Contribution.
--------------------------------
(a) The Company and the Selling Stockholder, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person who
controls any Underwriter within the meaning of the Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Securities as originally filed or in
any amendment thereof, or in any Preliminary Prospectus or the Prospectus,
or in any amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that (i) neither the
Company nor the Selling Stockholder will be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for
inclusion therein, and (ii) such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of
29
the Prospectus (or the Prospectus as supplemented) at or prior to the
confirmation of the sale of such Securities to such person in any case
where such delivery is required by the Act and the untrue statement or
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as supplemented) included in
the Registration Statement at the time it was declared effective by the
Commission and it is finally judicially determined that such delivery was
required to be made under the Act and was not so made. This indemnity
agreement will be in addition to any liability which the Company and the
Selling Stockholder may otherwise have.
Without limiting the full extent of the Company's agreement to
indemnify each Underwriter, as herein provided, the Selling Stockholder
shall be liable under the indemnity agreements contained in paragraph (a)
of this Section 8 only for an amount not exceeding the sum of (i) the
proceeds received by the Selling Stockholder from the sale of Shares
hereunder and (ii) the aggregate amount of proceeds paid or payable by the
Company to the Selling Stockholder, or any affiliate thereof, as
contemplated in the Prospectus.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of the Act and the Selling Stockholder, to the same extent as the
foregoing indemnity from the Company and the Selling Stockholder to each
Underwriter, but only with reference to written information relating to
such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
preparation of the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company and the Selling Stockholder
acknowledge that the statements set forth in the last paragraph of the
cover page and under the heading "Underwriting" in the Prospectus and in
any Preliminary Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in the
Registration Statement, and any amendment thereto, or the Prospectus or in
any Preliminary Prospectus, and you, as the Representatives, confirm that
such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is
30
to be made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemni fying party will be entitled to appoint counsel satisfactory to
such indemnified party to represent the indemnified party in such action;
provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to defend such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently in
curred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses
of more than one separate counsel (plus any local counsel) approved by the
Representatives in the case of paragraph (a) of this Section 8,
representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Selling Stockholder,
jointly and severally, and the Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including
31
legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company, the Selling Stockholder and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholder on the one
hand and by the Underwriters on the other from the offering of the
Securities; provided, however, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating to
the offering of the Securities) be responsible for any amount in excess of
the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company
and the Selling Stockholder, jointly and severally, and the Underwriters
shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Selling Stockholder on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such Losses
as well as any other relevant equitable considerations. Benefits received
by the Company and the Selling Stockholder shall be deemed to be equal to
the total net proceeds from the Offering (before deducting expenses), and
benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discount, in each case as set forth on the cover page of
the Prospectus. Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to information provided by
the Company, the Selling Stockholder or the Underwriters. The Company, the
Selling Stockholder and the Underwriters agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), 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. For
purposes of this Section 8, each person who controls an Underwriter within
the meaning of either the Act or the Exchange Act and each director,
officer, employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the Company
or the Selling Shareholder within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to
32
contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholder or the Company. In the event of a default by any Underwriter
as set forth in this Section 9, the Closing Date shall be postponed for such
period, not exceeding seven days, as the Representatives shall determine in
order that the required changes in the Registration Statement and the Prospectus
or in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company, the Selling Stockholder and any nondefaulting Underwriter
for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
and the Selling Stockholder prior to delivery of and payment for the Securities,
if prior to such time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or trading in securities generally on the New York
Stock Exchange or the Nasdaq National Market shall have been suspended or
limited or minimum prices shall have been established on either of such Exchange
or Market, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Representatives,
impracticable to market the Securities.
33
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of the Selling Stockholder and of the 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 Selling Stockholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, (a) if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, care of Salomon Brothers
Inc, at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇,
with a copy to ▇▇▇▇▇▇▇▇▇▇ Securities, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇, ▇.▇. ▇▇▇▇▇▇ Securities, Inc., ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇,
Esq., Winston & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax (312)
▇▇▇-▇▇▇▇; or (b) if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at Donnelley Enterprise Solutions Incorporated,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Fax (312) 419-
7668, attention: President, or if sent to the Selling Stockholder, will be
mailed, delivered or telegraphed and confirmed to it at ▇. ▇. ▇▇▇▇▇▇▇▇▇ & Sons
Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇,
attention: General Counsel, with a copy in each instance to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Sidley & Austin, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax (312)
▇▇▇-▇▇▇▇.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
[signature page follows]
34
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholder and the several Underwriters.
Very truly yours,
DONNELLEY ENTERPRISE SOLUTIONS
INCORPORATED
By:_____________________________
[TITLE]
▇. ▇. ▇▇▇▇▇▇▇▇▇ & SONS COMPANY
By:____________________________
[TITLE]
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
▇▇▇▇▇▇▇▇▇▇ Securities
▇.▇. ▇▇▇▇▇▇ Securities Inc.
By: Salomon Brothers Inc
By:______________________________
Vice President
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
35
SCHEDULE I
Number of Shares of
Underwritten Securities
Underwriters To Be Purchased
------------ -----------------------
Salomon Brothers Inc . . . . . . . .
▇▇▇▇▇▇▇▇▇▇ Securities . . . . . . .
▇.▇. ▇▇▇▇▇▇ Securities Inc. . . . .
---------
Total . . . . . . . . . . . . . . .
=========