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EXHIBIT 1.1
SHARES
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KPMG CONSULTING, INC.
COMMON STOCK, $.01 PAR VALUE
UNDERWRITING AGREEMENT
, 2001
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, 2001
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
KPMG Consulting, Inc., a Delaware corporation (the "COMPANY"), and KPMG
LLP for itself and on behalf of Arlas Limited ("KPMG IRELAND"), a registered
Delaware limited liability partnership, propose to sell to the several
Underwriters named in Schedule I hereto (the "UNDERWRITERS") an aggregate of
shares of common stock, $.01 par value, of the Company (the
"FIRM SHARES"), of which shares are to be issued and sold by the
Company and shares are to be sold by KPMG LLP for itself and on behalf
of KPMG Ireland.
KPMG LLP, on behalf of certain of its partners (the "SELLING PARTNERS"),
and the Company also propose to issue and sell to the several Underwriters not
more than an aggregate of additional shares of the Company's common
stock, $.01 par value (the "ADDITIONAL SHARES"), if and to the extent that the
Representatives shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of common
stock, $.01 par value, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK."
References to the "SELLING STOCKHOLDER" refer to KPMG LLP, on behalf of itself,
on behalf of KPMG Ireland and on behalf of the Selling Partners. References to
"KPMG LLP" refer only to KPMG LLP on its own behalf. The Company and the Selling
Stockholder are hereinafter sometimes collectively referred to as the "SELLERS."
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The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement (file No. 333-36328) relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares are hereinafter referred to as the "PROSPECTUS."
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") has agreed to reserve
a portion of the Shares to be purchased by it under this Agreement for sale to
the Company's directors, officers and employees and certain employees and
retired partners of KPMG LLP (collectively, "PARTICIPANTS"), as set forth in the
Prospectus under the heading "Underwriters" (the "DIRECTED SHARE PROGRAM"). The
Shares to be sold by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates pursuant to the Directed
Share Program are referred to hereinafter as the "DIRECTED SHARES." Any Directed
Shares not orally confirmed for purchase by any Participants by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the
knowledge of the Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain 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, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances
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under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus
(i) based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use
therein or (ii) based upon information relating to the Selling Stockholder
furnished to the Company in writing by the Selling Stockholder expressly
for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(d) Each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X) of the Company has been duly organized, is validly
existing and in good standing under the laws of the jurisdiction of its
organization, has the power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole; all of the
equity interests of each Significant Subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable
and, except as described in the Prospectus, are owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained in
the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Stockholder) outstanding prior to the issuance of the
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Shares to be sold by the Company have been duly authorized and are validly
issued, fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any statutory preemptive or
similar rights.
(i) The shares of Common Stock to be issued to Cisco Systems Inc.
("CISCO") and KPMG LLP in connection with the conversion of the Company's
Series A Preferred Stock (as described in the Prospectus) have been duly
authorized and, when issued to Cisco and KPMG LLP will be validly issued,
fully paid and non-assessable, and the issuance of such shares of Common
Stock to Cisco and KPMG LLP will not be subject to any statutory
preemptive or similar rights.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any Significant Subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(l) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any of
its Significant Subsidiaries is a party or to which any of the properties
of the Company or any of its Significant Subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus
and are not so described or any statutes, regulations, contracts
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or other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied as to form
when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(n) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
(o) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
(p) Except as described in the Prospectus, the Company and its
Significant Subsidiaries own or possess, or can acquire on reasonable
terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed
by them in connection with the business now operated by them, and neither
the Company nor any of its Significant Subsidiaries has received any
notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse affect on the Company and its subsidiaries, taken as a
whole.
(q) The Company and each of its Significant Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged; neither the Company nor any of its Significant
Subsidiaries has been refused any material insurance coverage sought or
applied for; and neither the Company nor any of its Significant
Subsidiaries has any reason to believe that it will not be able to renew
its
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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 have a material adverse affect on the
Company and its subsidiaries, taken as a whole, except as described in the
Prospectus.
(r) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any amendments or supplements thereto will comply,
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share
Program.
(s) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered.
(t) The Company has not offered, or caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to offer,
Shares to any person pursuant to the Directed Share Program with the
intent to unlawfully influence (i) a customer or supplier of the Company
to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products and services.
(u) Each person or entity that received, or has the right to
receive, securities of the Company as part of the "separation" (as defined
in the Prospectus), other than KPMG LLP, has duly executed and delivered
to the Company a "MEMBER DISTRIBUTION AGREEMENT" (as described in the
Prospectus) appointing the Chairman of KPMG LLP or the Chief Executive
Officer of the Company, as applicable, as such person's or entity's
attorney-in-fact relating to the transactions contemplated hereby and by
the Registration Statement.
(v) Each of the partners of KPMG Ireland who received shares of
Common Stock has duly executed and delivered to the Company a [ ]
appointing the Chairman of KPMG LLP as such person's attorney-in-fact
relating to the transactions contemplated hereby and by the Registration
Statement.
(w) Each of the agreements described in the Prospectus under the
captions "Our Arrangements with Cisco" and "Our Arrangements with KPMG
LLP", executed prior to the Closing Date (as defined below), have
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been duly authorized, executed and delivered by the Company, and each of
the agreements to be entered into by and among the Company and KPMG LLP on
the Closing Date have been duly authorized by the Company and will be
executed and delivered by the Company prior to or on the Closing Date.
(x) In connection with the "separation," the Company received all
the assets and personnel necessary for the Company to conduct its
business, except as otherwise described in the Prospectus.
2. Representations and Warranties of KPMG LLP. KPMG LLP represents and
warrants to and agrees with each of the Underwriters that:
(a) Each of the agreements described in the Prospectus under the
caption "Our Arrangements with KPMG LLP", executed prior to the Closing
Date, have been duly authorized, executed and delivered by KPMG LLP, and
each of the agreements to be entered into by and among the Company and
KPMG LLP on the Closing Date have been duly authorized by KPMG LLP and
will be executed and delivered by KPMG LLP prior to or on the Closing
Date.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain 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, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
2 do not apply to statements or omissions in the Registration Statement or
the Prospectus (i) based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein or (ii) under the captions "Summary-KPMG
Consulting-Overview", "Risk Factors" (other than the section under the
caption "Risk Factors-Risks that Relate to our Relationship with KPMG LLP
and its Related Entities"), "Business" and "Management".
(c) This Agreement has been duly authorized, executed and delivered
by or on behalf of the Selling Stockholder.
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(d) The execution and delivery by the Selling Stockholder of, and
the performance by the Selling Stockholder of its obligations under, this
Agreement will not contravene any provision of applicable law, or any
partnership agreement or any agreement or other instrument binding upon
the Selling Stockholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Selling
Stockholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Selling Stockholder of its obligations under this
Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.
(e) The Selling Stockholder has, and on the Closing Date will have,
valid title to the Shares to be sold by the Selling Stockholder pursuant
to this Agreement and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement and to sell,
transfer and deliver the Shares to be sold by the Selling Stockholder.
(f) Delivery of the Shares to be sold by the Selling Stockholder
pursuant to this Agreement will pass title to such Shares free and clear
of any security interests, claims, liens, equities and other encumbrances.
(g) All information furnished by or on behalf of the Selling
Stockholder for use in the Registration Statement and the Prospectus is,
and on the Closing Date will be, true, correct and complete, and does not,
and on the Closing Date will not, contain 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.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller the respective number of Firm
Shares set forth in Schedule I hereto opposite its name at $ a share (the
"PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, KPMG LLP on behalf of the
Selling Partners, and the Company agree to sell to the Underwriters the
Additional Shares, and the Underwriters shall have a one-time right to purchase,
severally and not jointly, up to Additional Shares at the Purchase
Price, with
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KPMG LLP on behalf of the Selling Partners selling Additional Shares
and the Company selling Additional Shares. If the Representatives,
on behalf of the Underwriters, elect to exercise such option, the
Representatives shall so notify the Company and KPMG LLP in writing not later
than 30 days after the date of this Agreement, which notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on
which such shares are to be purchased. Such date may be the same as the Closing
Date (as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 5 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If less
than Additional Shares are to be purchased, the Additional Shares to be sold by
KPMG on behalf of the Selling Partners shall be purchased first, on a pro rata
basis from all Selling Partners. If any Additional Shares are to be purchased,
each Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
the Representatives may determine) that bears the same proportion to the total
number of Additional Shares to be purchased as the number of Firm Shares set
forth in Schedule I hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to
be sold hereunder, (B) the issuance by the Company of shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing, (C) the acquisition by KPMG LLP of Series A Preferred Stock from Cisco
Systems, Inc. (as described in the Prospectus), (D) the conversion and
repurchase of the Company's Series A Preferred Stock (as described in the
Prospectus), (E) the granting of options to officers, directors, consultants or
employees, provided that these options are not generally exercisable prior to
the end of the lock-up period, (F) transactions by any person other than the
Company relating to shares of Common Stock or other securities acquired in open
market transactions after the completion of the offering of the Shares, (G) the
issuance by the Company of shares of Common
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Stock to the former owners of Softline Consulting & Integrators, Inc. (as
described in the Prospectus), provided that each recipient agrees to be bound by
this lock-up provision, (H) the sale or other transfer of any shares of Common
Stock to any associate (as defined in Rule 12b-2 under the Securities Exchange
Act of 1934), so long as such associate agrees to be bound by this lock-up
provision, (I) the issuance by the Company or transfer by KPMG LLP of any shares
of Common Stock in connection with the acquisition of a KPMG International
member firm or the consulting business of a KPMG International member firm,
provided that such former owner agrees to be bound by this lock-up provision,
and (J) the issuance by the Company of shares of Common Stock to KPMG LLP in
exchange for KPMG LLP's 0.5% membership interest in the Company's operating
subsidiary, provided that KPMG LLP agrees to be bound by this lock-up provision
with respect to these shares of Common Stock. In addition, KPMG LLP agrees that,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$ a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by
you at a price that represents a concession not in excess of $ a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of $ a share, to any
Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on , 2001, or at such other time on the same or such other
date, not later than , 2001, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"CLOSING DATE."
Payment for any Additional Shares shall be made to KPMG LLP, on behalf of
the Selling Partners, and to the Company, as applicable, in Federal or other
funds immediately available in New York City against delivery of such Additional
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
New York City time, on the date specified in the notice described in Section
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3 or at such other time on the same or on such other date, in any event not
later than , 2001, as shall be designated in writing by the
Representatives. The time and date of such payment are hereinafter referred to
as the "OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [ ] (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the Closing
Date and that the Company has complied in all material respects with all
of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
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The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Sidley & Austin, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
State of Delaware, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) each Significant Subsidiary of the Company that is a U.S.
company has been duly organized, is validly existing and in good
standing under the laws of the jurisdiction of its organization, has
the requisite power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole;
(iii) the authorized capital stock of the Company conforms as
to legal matters in all material respects to the description thereof
contained in the Prospectus;
(iv) the shares of Common Stock (including the Shares to be
sold by the Selling Stockholder) outstanding prior to the issuance
of the Shares to be sold by the Company have been duly authorized
and are validly issued, fully paid and non-assessable;
(v) all of the issued equity interests of each Significant
Subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and, except as disclosed
in the Prospectus, are owned directly by the Company, free and clear
of all liens, encumbrances, equities or claims;
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(vi) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject
to any statutory preemptive or, to our knowledge, similar rights;
(vii) the shares of Common Stock to be issued to Cisco and
KPMG LLP in connection with the conversion of the Company's Series A
Preferred Stock (as described in the Prospectus) have been duly
authorized and, when issued to Cisco and KPMG LLP will be validly
issued, fully paid and non- assessable, and the issuance of such
shares of Common Stock will not be subject to any statutory
preemptive or, to our knowledge, similar rights;
(viii) this Agreement has been duly authorized, executed and
delivered by the Company;
(ix) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not violate any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that
is an exhibit to the Registration Statement, or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any Significant Subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency that in such counsel's experience is normally
applicable to transactions of the type contemplated by this
Agreement is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares;
(x) the statements (A) in the Prospectus under the captions
"Management - 2000 Long-Term Incentive Plan," "Management - 2000
Employee Stock Purchase Plan," "Our Arrangements with KPMG LLP,"
"Our Arrangements with Cisco," "Description of Capital Stock,"
"Material U.S. Federal Income Tax Considerations For Non-U.S.
Holders" and "Underwriters" and (B) in the Registration Statement in
Items 14 and 15, in each case insofar as such statements constitute
summaries of the legal
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matters or documents referred to therein, present in all material
respects the information called for with respect to such legal
matters and documents and summarize in all material respects the
matters referred to therein;
(xi) Each of the agreements described in the Prospectus under
the captions "Our Arrangements with KPMG LLP" and "Our Arrangements
with Cisco" to be entered into by and among the Company and KPMG LLP
on the Closing Date have been duly authorized, executed and
delivered by the Company and KPMG LLP.
(xii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its Significant Subsidiaries is a party or to
which any of the properties of the Company or any of its Significant
Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
of any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(xiii) the Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended; and
(xiv) nothing has come to such counsel's attention that causes
such counsel to believe that (A) the Registration Statement and
Prospectus (except for financial statements and schedules and other
financial and statistical data included therein as to which such
counsel need not express any belief) do not comply as to form in all
material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder or (B) (x) the
Registration Statement and the prospectus included therein (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any
belief) at the time the Registration Statement became effective
contained any 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; (y) the Prospectus
(except as stated) as of its date and as of the Closing Date
contained or
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contains any 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.
(d) The Underwriters shall have received on the Closing Date an
opinion of [to come] Canadian counsel for the Company, dated the Closing
Date, covering the matters referred to in 6(c)(ii) and 6(c)(xii) with
respect to the Company's Canadian Significant Subsidiaries.
(e) The Underwriters shall have received on the Closing Date an
opinion of Sidley & Austin, counsel for the Selling Stockholder, dated the
Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder;
(ii) the execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations
under, this Agreement will not contravene any provision of
applicable law, or any applicable partnership agreement or, to the
best of such counsel's knowledge, any agreement or other instrument
binding upon the Selling Stockholder or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Selling Stockholder, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Selling Stockholder of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with offer and sale of the Shares;
(iii) The Selling Stockholder has valid title to the Shares to
be sold by the Selling Stockholder and the legal right and power,
and all authorization and approval required by law, to enter into
this Agreement and to sell, transfer and deliver the Shares to be
sold by the Selling Stockholder; and
(iv) delivery of the Shares to be sold by the Selling
Stockholder pursuant to this Agreement will pass title to such
Shares free and clear of any security interests, claims, liens,
equities and other encumbrances.
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(f) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 6(c)(vi),
6(c)(viii), 6(c)(x) (but only as to the statements in the Prospectus under
"Underwriters") and 6(c)(xiv) above.
With respect to Section 6(c)(xiv) above, Sidley & Austin and ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇ may state that their belief is based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
The opinions described in Sections 6(c), 6(d) and 6(e) above shall
be rendered to the Underwriters at the request of the Company or the
Selling Stockholder, as the case may be, and shall so state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriters, from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and the Company's executive officers,
directors, key employees and managing directors, the Selling Partners,
KPMG Ireland and Cisco, relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the
Closing Date.
(i) The Underwriters shall have received on the Closing Date (A) a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect that the agreements between the Company and
KPMG LLP entered into in connection with the "separation," and as amended
in connection with the offering of the Shares (all as described in the
Prospectus), have been duly executed by the Company and are in full force
and effect as of the Closing Date and the Company has complied with all
agreements and satisfied all of the conditions to be performed or
satisfied thereunder as of the Closing Date, and (B) a certificate, dated
the
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Closing Date and signed by an executive officer of KPMG LLP, to the effect
that the agreements between the Company and KPMG LLP entered into in
connection with the "separation," and as amended in connection with the
offering of the Shares (all as described in the Prospectus), have been
duly executed by KPMG LLP and are in full force and effect as of the
Closing Date and KPMG LLP has complied with all agreements and satisfied
all of the conditions to be performed or satisfied thereunder as of the
Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to the Representatives on the Option
Closing Date of such documents as the Representatives may reasonably request
with respect to the good standing of the Company, the due authorization and
issuance of the Additional Shares and other matters related to the issuance of
the Additional Shares.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 7(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
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when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or consent to service of
process in any jurisdiction where it has not already so qualified or
consented.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 2002 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, not to
release any option holder from the restrictions on the transfer of shares
of Common Stock purchased upon the exercise of options contained in the
Stock Option Agreement for Employees in the form delivered to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ as of the date hereof prior to the termination of the 180-day
lock- up period.
(g) To comply in all material respects with all applicable
securities and other applicable laws, rules and regulations in each
jurisdiction in which the Directed Shares are offered in connection with
the Directed Share Program.
(h) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if
any, operated by such Underwriter for the purpose of facilitating the
on-line offering of the Shares (the "LICENSE"); provided, however, that
the License shall be used solely for the purpose described above, is
granted without any fee and may not be assigned or transferred.
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8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company and KPMG
LLP agree to pay or cause to be paid all expenses incident to the performance of
their obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company's counsel, the Company's accountants and counsel for
KPMG LLP in connection with the registration and delivery of the Shares under
the Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky Memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of the
Shares for offer and sale under state securities laws as provided in Section
7(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky Memorandum, (iv) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all fees and expenses in connection
with the preparation and filing of the registration statement on Form 8-A
relating to the Common Stock and all costs and expenses incident to listing the
Shares on the Nasdaq National Market, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and fifty percent of the cost of any aircraft chartered in
connection with the road show, (ix) all reasonable fees and disbursements of
counsel incurred by the Underwriters in connection with the Directed Share
Program and stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Directed Share Program, and
(x) all other costs and expenses incident to the performance of the obligations
of the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this Section,
Section 9 entitled "Indemnity and Contribution," and the last paragraph of
Section 12 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any
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of the Shares by them and any advertising expenses connected with any offers
they may make.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) The Company and KPMG LLP agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to (i) any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein or (ii) the
Selling Stockholder furnished to the Company in writing by the Selling
Stockholder expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if it shall be established that a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements 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 or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 7(a)
hereof.
Notwithstanding the foregoing, and subject to Section 9(b), the parties
hereto agree that KPMG LLP shall only be liable for amounts payable under this
Section 9(a) in the event that (i) the Company is bankrupt or insolvent or (ii)
an indemnified party (as defined below) shall have obtained a judicial judgment,
order or decree (in each case which has not been appealed) for amounts payable
to such indemnified party under this Section 9(a) (including reimbursement of
legal
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fees or other expenses) and such indemnified party shall have made a demand upon
the Company for payment of such amounts following such judgment, order or
decree, which demand remains unsatisfied for 60 days or more. Furthermore, the
parties hereto agree that they will look solely to the assets of KPMG LLP to
satisfy any amounts payable by KPMG LLP under this Section 9(a) and not to the
assets of KPMG LLP's partners individually.
(b) The Selling Stockholder agrees to indemnify and hold harmless the
Company, its directors, the officers of the Company who sign the Registration
Statement, each Underwriter and each person, if any, who controls the company or
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Selling Stockholder furnished to the Company in writing by or on behalf of such
Selling Stockholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Stockholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or the Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
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(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Selling Stockholder and all persons, if any, who control
the Selling Stockholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. In the
case of any such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling Stockholder and
such control persons of the Selling Stockholder, such firm shall be designated
in writing by KPMG LLP. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement
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of any proceeding effected without its written consent if (i) such settlement is
entered into more than 90 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a), 9(b)
or 9(c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(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 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand 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 Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
The parties hereto agree that KPMG LLP shall only be liable for amounts
payable under this Section 9(e) in the event that (i) the Company is bankrupt or
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insolvent or (ii) an indemnified party (as defined below) shall have obtained a
judicial judgment, order or decree (in each case which has not been appealed)
for amounts payable to such indemnified party under this Section 9(e) (including
reimbursement of legal fees or other expenses) and such indemnified party shall
have made a demand upon the Company for payment of such amounts following such
judgment, order or decree, which demand remains unsatisfied for 60 days or more.
Furthermore, the parties hereto agree that they will look solely to the assets
of KPMG LLP to satisfy any amounts payable by KPMG LLP under this Section 9(e)
and not to the assets of KPMG LLP's partners individually.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 9
and the representations, warranties and other statements of the Company, KPMG
LLP and the Selling Stockholder contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter, the Selling Stockholder or any person
controlling the Selling Stockholder, or the Company, its officers or directors
or any person controlling the Company and (iii) acceptance of and payment for
any of the Shares.
10. Directed Share Program Indemnification. (a) The Company agrees
to indemnify and hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates and each
person, if any, who controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its affiliates within the meaning
of either
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Section 15 of the Securities Act or Section 20 of the Exchange Act ("▇▇▇▇▇▇
▇▇▇▇▇▇▇ ENTITIES"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) (i) caused by any untrue statement or alleged untrue statement
of a material fact contained in any material prepared by or with the consent of
the Company for distribution to Participants in connection with the Directed
Share Program, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) caused by the failure of any Participant to pay for
and accept delivery of Directed Shares that the Participant has agreed to
purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities.
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in respect of which
indemnity may be sought pursuant to Section 10(a), the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity
seeking indemnity shall promptly notify the Company in writing and the Company,
upon request of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, shall retain counsel reasonably
satisfactory to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity to represent the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity
and any others the Company may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity unless (i) the Company shall have agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not, in respect of the legal expenses of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entities in connection with any proceeding or related proceedings the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities. Any such
firm for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities shall be designated in writing by ▇▇▇▇▇▇
▇▇▇▇▇▇▇. The Company shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Company agrees to indemnify the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time a
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have requested the Company to reimburse it for fees
and expenses of counsel as contemplated by the second and third sentences of
this paragraph, the Company
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agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 90
days after receipt by the Company of the aforesaid request and (ii) the Company
shall not have reimbursed the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in accordance with such
request prior to the date of such settlement. The Company shall not, without the
prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, effect any settlement of any pending or
threatened proceeding in respect of which any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity is a party
and indemnity could have been sought hereunder by such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity,
unless such settlement includes an unconditional release of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entities from all liability on claims that are the subject matter of such
proceeding.
(c) To the extent the indemnification provided for in Section 10(a) is
unavailable to a ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company, in lieu of
indemnifying the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity thereunder, shall contribute to the
amount paid or payable by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 10(c)(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 10(c)(i) above but also the
relative fault of the Company on the one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities
on the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand in connection with
the offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities for the Directed Shares, bear to the
aggregate Public Offering Price of the Shares. If the loss, claim, damage or
liability is caused by an untrue or alleged untrue statement of a material fact,
the relative fault of the Company on the one hand and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entities on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement or the omission or
alleged omission relates to information supplied by the Company or by the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(d) The Company and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities agree that it would not
be just or equitable if contribution pursuant to this Section 10 were determined
by pro rata allocation (even if the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities were treated as one
entity for such purpose) or by any other method of allocation that does not take
account
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of the equitable considerations referred to in Section 10(c). The amount paid or
payable by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10, no ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall be required to
contribute any amount in excess of the amount by which the total price at which
the Directed Shares distributed to the public were offered to the public exceeds
the amount of any damages that such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. The remedies provided for in this Section 10 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity at law or in equity.
(e) The indemnity and contribution provisions contained in this Section
10 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Directed Shares.
11. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 11(a)(i) through 11(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
12. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it
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has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
KPMG LLP for the purchase of such Firm Shares are not made within 36 hours after
such default, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter, the Company or KPMG LLP. In any such case either
you or the relevant Sellers shall have the right to postpone the Closing Date,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company, KPMG LLP or
the Selling Stockholder to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company, KPMG LLP or the
Selling Stockholder shall be unable to perform its obligations under this
Agreement, the Company and KPMG LLP will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
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13. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
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Very truly yours,
KPMG CONSULTING, INC.
By:
-----------------------------
Name:
Title:
KPMG LLP, on behalf of itself,
KPMG Ireland and the
Selling Partners
By:
-----------------------------
Name:
Title:
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Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
INCORPORATED
▇▇▇▇▇▇▇, SACHS & CO.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I
hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:
-------------------------------------------
Name:
Title:
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33
SCHEDULE I
UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
---------------------------------------- ---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
------------------------------
Total Firm Shares......................... ==============================
34
EXHIBIT A
[FORM OF LOCK-UP LETTER]
, 2001
-----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇.▇. ▇▇▇▇▇▇ Securities Ltd.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with KPMG Consulting, Inc., a Delaware corporation
(the "COMPANY"), and KPMG LLP, providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"UNDERWRITERS") of shares (the "SHARES") of the common stock, $.01 par value, of
the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement, (b) the issuance by
the Company of shares of
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Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing, (c) the acquisition by KPMG LLP of Series A Preferred Stock
from Cisco Systems, Inc. (as described in the Prospectus), (d) the conversion
and repurchase of the Company's Series A Preferred Stock (as described in the
Prospectus), (e) the granting of options by the Company to its officers,
directors, consultants or employees, provided that these options are not
generally exercisable prior to the end of the lock-up period, (f) transactions
by any person other than the Company relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
Public Offering, (g) the issuance by the Company of shares of Common Stock to
the former owners of Softline Consulting & Integrators, Inc. (as described in
the Prospectus), provided that each recipient agrees to be bound by this lock-up
provision, (h) the sale or other transfer of any shares of Common Stock to any
associate (as defined in Rule 12b-2 under the Securities Exchange Act of 1934),
so long as such associate agrees to be bound by this lock-up provision, (i) the
issuance by the Company or transfer by KPMG LLP of any shares of Common Stock in
connection with the acquisition of a KPMG International member firm or the
consulting business of a KPMG International member firm, provided that such
former owner agrees to be bound by this lock-up provision, and (j) the issuance
by the Company of shares of Common Stock to KPMG LLP in exchange for KPMG LLP's
0.5% membership interest in the Company's operating subsidiary, provided that
KPMG LLP agrees to be bound by this lock-up provision with respect to these
shares of Common Stock.
In addition, the undersigned agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, (i) gifts and transfers by will or
intestacy or (ii) transfers to (A) the undersigned's members, partners,
affiliates or immediate family or (B) a trust, the beneficiaries of which are
the undersigned and/or members of the undersigned's immediate family, shall not
be prohibited by this agreement; provided that (x) the donee or transferee
agrees in writing to be bound by the foregoing in the same manner as it applies
to the undersigned and (y) if the donor or transferor is a reporting person
subject to Section 16(a) of the Securities Exchange Act of 1934 (the "EXCHANGE
ACT"), any gifts or transfers made in accordance with this paragraph shall not
require such person to, and such person shall not voluntarily, file a report of
such transaction on Form 4 under the Exchange Act. "IMMEDIATE FAMILY" shall mean
spouse, lineal descendants,
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father, mother, brother or sister of the transferor and father, mother, brother
or sister of the transferor's spouse.
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37
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation among the Company, KPMG LLP and the Underwriters. If the Public
Offering has not occurred by April 30, 2001, this agreement shall be null and
void.
Very truly yours,
5