EXHIBIT 1
SFBC International, Inc.
2,328,000 Shares
Common Stock
($0.001 Par Value)
FORM OF UNDERWRITING AGREEMENT
_________ __, 2003
FORM OF UNDERWRITING AGREEMENT
[___], 2003
UBS Securities LLC
▇▇▇▇▇▇▇▇ & Company, Inc.
As Representatives
of the Several Underwriters
c/o UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SFBC International, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell, and the persons named in Schedule A annexed hereto as selling
stockholders (the "Selling Stockholders") propose to sell, to the underwriters
named in Schedule B annexed hereto (the "Underwriters"), for whom you are acting
as representatives, an aggregate of 2,328,000 shares (the "Firm Shares") of
Common Stock, $0.001 par value (the "Common Stock"), of the Company, of which
2,000,000 shares are to be issued and sold by the Company and an aggregate of
328,000 shares are to be sold by the Selling Stockholders in the respective
amounts set forth under the caption "Firm Shares" in Schedule A annexed hereto.
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 349,200 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus which is
referred to below. ▇▇▇▇ ▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇, each of whom is a Selling Stockholder, are sometimes referred to herein
individually as a "Principal Selling Stockholder" and collectively as the
"Principal Selling Stockholders," and the other Selling Stockholders are
sometimes referred to herein individually as an "Other Selling Stockholder" and
collectively as the "Other Selling Stockholders."
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively,
the "Act"), with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (File No. 333-109098) including a prospectus,
relating to the Shares, which incorporates by reference documents which the
Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the "Exchange Act"). The Company has furnished to you,
for use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses and the documents incorporated by reference therein (each thereof,
including the documents incorporated therein by reference, being herein called a
"Preliminary Prospectus") relating to the Shares. Except where the context
otherwise requires, the registration statement, as amended when it becomes
effective, including all documents filed as a part thereof or incorporated by
reference therein, and including any information contained in a prospectus
subsequently filed with the Commission pursuant to Rule 424(b) under the Act and
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430(A) under the Act and also including any registration
statement filed pursuant to Rule 462(b) under the Act, is herein called the
"Registration Statement," and the prospectus, including all documents
incorporated therein by reference, in the form filed by the Company with the
Commission pursuant to Rule 424(b) under the Act on or before the second
business day after the date hereof (or such
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earlier time as may be required under the Act) or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the time it became effective, is herein called the "Prospectus." Any reference
herein to the terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange Act
after the effective date of the Registration Statement, or the Prospectus, as
the case may be, deemed to be incorporated therein by reference. As used herein,
"business day" shall mean a day on which the New York Stock Exchange is open for
trading. For purposes of the representations and warranties contained herein,
the terms "Preliminary Prospectus" and "Prospectus" shall be deemed to include
the preliminary Canadian supplement and the final Canadian supplement,
respectively, used or to be used in connection with the marketing and sale of
the Shares in certain provinces of Canada.
The Underwriters agree that they will not offer or sell the Shares in
Canada or to any purchaser in Canada except in accordance with Canadian
Securities Laws (as defined below) and in particular will only offer and sell
the Shares by or through dealers registered under Canadian Securities Laws or in
transactions exempt from such registration requirements to "accredited
investors" as defined in Ontario Rule 45-501 in Ontario, or governments,
departments or agencies referred to in Section 43 of the Quebec Securities Act
or "sophisticated purchasers" as defined in sections 44 and 45 of the Quebec
Securities Act in Quebec.
The Company, the Selling Stockholders and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Company and each
of the Selling Stockholders, severally and not jointly, agrees to issue and sell
to the respective Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and each Selling Stockholder the
respective number of Firm Shares (subject to such adjustment as you may
determine to avoid fractional shares) which bears the same proportion to the
number of Firm Shares to be sold by the Company or by such Selling Stockholders,
as the case may be, as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule B attached hereto, subject to adjustment in
accordance with Section 9 hereof, bears to the total number of Firm Shares, in
each case at a purchase price of $______ per Share. The Company and each Selling
Stockholder is advised by you that the Underwriters intend (i) to make a public
offering of their respective portions of the Firm Shares in the United States as
soon after the effective date of the Registration Statement as in your judgment
is advisable, (ii) to offer the Firm Shares in certain foreign jurisdictions,
including the Provinces of Ontario and Quebec, on a private placement basis
pursuant to exemptions from the prospectus requirements of such jurisdictions
and (iii) initially to offer the Firm Shares upon the terms set forth in the
Prospectus. You may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them,
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company and
the Selling Stockholders listed on Schedule A hereto for the Firm Shares. This
option may be exercised by UBS Securities LLC ("UBS") on behalf of the several
Underwriters at any time and from time to time on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised, and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "additional time
of purchase"); provided, however, that the additional time of
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purchase shall not be earlier than the time of purchase (as defined below) nor
earlier than the second business day after the date on which the option shall
have been exercised nor later than the tenth business day after the date on
which the option shall have been exercised. The number of Additional Shares to
be sold to each Underwriter shall be the number which bears the same proportion
to the aggregate number of Additional Shares being purchased as the number of
Firm Shares set forth opposite the name of such Underwriter on Schedule B hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional shares), subject to
adjustment in accordance with Section 9 hereof.
Pursuant to powers of attorney, which shall be satisfactory to counsel for
the Underwriters, granted by each Selling Stockholder, ▇▇▇▇ ▇▇▇▇▇▇▇, M.D. and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will act as representatives of the Selling Stockholders. The
foregoing representatives (the "Representatives of the Selling Stockholders")
are authorized, on behalf of each Selling Stockholder, to execute any documents
necessary or desirable in connection with the sale of the Shares to be sold
hereunder by each Selling Stockholder, to make delivery of the certificates of
such Shares, to receive the proceeds of the sale of such Shares, to give
receipts for such proceeds, to pay therefrom the expenses, if any, to be borne
by each Selling Stockholder in connection with the sale and public offering of
the Shares, to distribute the balance of such proceeds to each Selling
Stockholder in proportion to the number of Shares sold by each Selling
Stockholder, to receive notices on behalf of each Selling Stockholder and to
take such other action as may be necessary or desirable in connection with the
transactions contemplated by this Agreement.
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made to the Company and each of the Selling Stockholders by Federal
Funds wire transfer, against delivery of the certificates for the Firm Shares to
you through the facilities of The Depository Trust Company (DTC) for the
respective accounts of the Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York City time, on _______________, 2003 (unless another
date, time or place shall be agreed to in writing by you and the Company and the
Representatives of the Selling Stockholders or unless postponed in accordance
with the provisions of Section 9 hereof). The time at which such payment and
delivery are to be made is hereinafter sometimes called "the time of purchase."
Electronic transfer of the Firm Shares shall be made to you at the time of
purchase in such names and in such denominations as you shall specify.
Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as the
payment for the Firm Shares. Electronic transfer of the Additional Shares shall
be made to you at the additional time of purchase in such names and in such
denominations as you shall specify.
Deliveries of the documents described in Section 7 hereof with respect to
the purchase of the Shares shall be made at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 9:00 A.M., New York
City time, on the date of the closing of the purchase of the Firm Shares or the
Additional Shares, as the case may be.
3. 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 been declared effective by the
Commission under the Act; no stop order of the Commission preventing or
suspending the use of any Preliminary Prospectus or the effectiveness of
the Registration Statement has been issued and no proceedings for such
purpose have been instituted or, to the Company's knowledge, are
contemplated by the Commission; each Preliminary Prospectus, at the time
of filing thereof, complied in all material respects to the requirements
of the Act and the last Preliminary Prospectus distributed in
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connection with the offering of the Shares did not, as of its date, and
does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; the Registration Statement complied when it became
effective, complies as of the time of execution of this Agreement and will
comply at the time of purchase and any additional time of purchase in all
material respects with the requirements of the Act and the Prospectus will
comply, as of its date and at the time of purchase and any additional
times of purchase, in all material respects with the requirements of the
Act and 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 have been and
will be so described or filed; the conditions to the use of Form S-3 have
been satisfied; the Registration Statement did not when it became
effective, does not as of the time of execution of this Agreement and will
not at the time of purchase and any additional time of purchase contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and the Prospectus will not, as of its date and at the time
of purchase and any additional time of purchase, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the Company makes no warranty or representation with respect
to any statement contained in the Preliminary Prospectus, the Registration
Statement or the Prospectus in reliance upon and in conformity with
information concerning an Underwriter and furnished in writing by or on
behalf of such Underwriter through you to the Company expressly for use in
the Preliminary Prospectus, the Registration Statement or the Prospectus;
the documents incorporated by reference in the Preliminary Prospectus, the
Registration Statement and the Prospectus, at the time they became
effective or were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
and the Company has not distributed and will not distribute any offering
material in connection with the offering or sale of the Shares other than
the Registration Statement, the Preliminary Prospectus and the Prospectus;
(b) as of the date of this Agreement, the Company has an authorized
and outstanding capitalization as set forth under the heading "Pro forma"
in the section of the Registration Statement and the Prospectus entitled
"Capitalization" and, as of the time of purchase and the additional time
of purchase, as the case may be, the Company shall have an authorized and
outstanding capitalization as set forth under the heading "Pro forma as
adjusted" in the section of the Registration Statement and the Prospectus
entitled "Capitalization"; all of the issued and outstanding shares of
capital stock, including the Common Stock, of the Company have been duly
authorized and validly issued and are fully paid and non-assessable, have
been issued in compliance with all federal and state securities laws and
were not issued in violation of any preemptive right, resale right, right
of first refusal or similar right;
(c) 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, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated herein;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct
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of its business requires such qualification, except where the failure to
be so qualified and in good standing would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
financial condition, results of operation or prospects of the Company and
the Subsidiaries (as hereinafter defined) taken as a whole or on the
ability of the Company and the Selling Stockholders to consummate the
transactions contemplated by this Agreement (a "Material Adverse Effect");
(e) the Company has no subsidiaries (as defined in the Exchange Act)
other than those listed on Schedule C annexed hereto (collectively, the
"Subsidiaries"); the Company, directly or indirectly, owns 100% of the
outstanding common stock of the Subsidiaries; other than the capital stock
of the Subsidiaries, the Company does not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity; complete and correct copies of the
certificates and articles of incorporation and the by-laws and similar
organizational documents of the Company and the Subsidiaries and all
amendments thereto have been delivered to you, and except as set forth in
the exhibits to the Registration Statement no changes therein will be made
subsequent to the date hereof and prior to the time of purchase or, if
later, the additional time of purchase; each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus; each Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect; all of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and (except as otherwise described in this
Section 3(e)) are owned by the Company subject to no security interest,
other encumbrance or adverse claims; and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding;
(f) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and free of
statutory and contractual preemptive rights, resale rights, rights of
first refusal and similar rights;
(g) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus and the certificates for the
Shares are in due and proper form and the holders of the Shares will not
be subject to personal liability by reason of being such holders;
(h) this Agreement has been duly authorized, executed and delivered
by the Company;
(i) neither the Company nor any of the Subsidiaries is in breach or
violation of or in default under (nor has any event occurred which with
notice, lapse of time or both would result in any breach of, constitute a
default under or give the holder of any indebtedness (or a person acting
on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (A) its
respective certificates or articles of incorporation or by-laws or similar
organizational documents or (B) any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other
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agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their properties may be bound or
affected, except in the case of clause (B) for such breaches, violations
or defaults as would not, individually or in the aggregate, have a
Material Adverse Effect, and the execution, delivery and performance of
this Agreement, the issuance and sale of the Shares and the consummation
of the transactions contemplated hereby will not conflict with, result in
any breach or violation of or constitute a default under (nor constitute
any event which with notice, lapse of time or both would result in any
breach of or constitute a default under) the (X) certificates or articles
of incorporation or by-laws or similar organizational documents of the
Company or any of the Subsidiaries, or (Y) any indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of indebtedness,
or any license, lease, contract or other agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound or affected, or (Z) any
federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the Subsidiaries,
except in the case of clauses (Y) for such conflicts, breaches, violations
or defaults as would not, individually or in the aggregate, have a
Material Adverse Effect;
(j) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares or the consummation by the
Company of the transactions contemplated hereby other than registration of
the Shares under the Act, which has been or will be effected, and any
necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters or under the rules and regulations of the NASD (provided that
no qualification is necessary for the proposed sale of Shares on a private
placement basis in the Provinces of Ontario and Quebec by or through
dealers registered under applicable securities legislation in such
provinces to "accredited investors," as defined in Ontario Rule 45-501, in
Ontario or governments, departments or agencies referred to in Section 43
of the Quebec Securities Act or "sophisticated purchasers," as defined in
Sections 44 and 45 of the Quebec Securities Act, in Quebec) and other than
the filing of certain reports in prescribed form as required under the
Canadian securities laws, the filing of a copy of any offering memorandum
used in connection with the sale of Shares in Ontario and Quebec and the
payment of applicable fees by the Company in connection with any sale of
Shares in the Provinces of Ontario and Quebec;
(k) except as set forth in the Registration Statement and the
Prospectus, (i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it any shares of Common Stock or
shares of any other capital stock or other equity interests of the
Company, (ii) no person has any preemptive rights, resale rights, rights
of first refusal or other rights to purchase any shares of Common Stock or
shares of any other capital stock or other equity interests of the
Company, and (iii) no person has the right to act as an underwriter or as
a financial advisor to the Company in connection with the offer and sale
of the Shares, in the case of each of the foregoing clauses (i), (ii) and
(iii), whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby
or otherwise; except as described in the Registration Statement and
Prospectus and except for the right of American Fronteer Financial
Corporation, whose rights have been complied with, no person has the
right, contractual or otherwise, to cause the Company to register under
the Act any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, or to include any such shares or
interests in the Registration Statement or the offering contemplated
thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby
or otherwise;
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(l) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any federal, state, local or foreign law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, in order to conduct its
respective business, except where the absence of such license,
authorization, consent, approval or filing would not, individually or in
the aggregate, have a Material Adverse Effect; neither the Company nor any
of the Subsidiaries is in violation of, or in default under, or has
received notice of any proceedings relating to revocation or modification
of, any such license, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or any of the Subsidiaries, except
where such violation, default, revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect;
(m) all legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
(n) except as described in the Registration Statement and
Prospectus, there are no actions, suits, claims, investigations or
proceedings pending or threatened or, to the Company's knowledge,
contemplated to which the Company or any of the Subsidiaries or any of
their respective directors or officers is a party or of which any of their
respective properties is subject at law or in equity, before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency, except any such action, suit, claim,
investigation or proceeding which would not result in a judgment, decree
or order having, individually or in the aggregate, a Material Adverse
Effect or preventing consummation of the transactions contemplated hereby;
(o) each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., whose
reports on the consolidated financial statements of the Company and the
Subsidiaries are filed with the Commission as part of the Registration
Statement and the Prospectus, are independent public accountants as
required by the Act, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose report on the
consolidated financial statements of Clinical Pharmacology of Florida,
Inc. and Clinical Pharmacology International, Inc. (collectively, "CPA")
is filed with the Commission as part of the Registration Statement and the
Prospectus, are independent public accountants with respect to those
entities as required by the Act;
(p) the audited financial statements of the Company included in the
Registration Statement and the Prospectus, together with the related notes
and schedules, present fairly the consolidated financial position of the
Company and the Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and the
Subsidiaries for the periods specified and have been prepared in
compliance with the requirements of the Act and in conformity with
generally accepted accounting principles applied on a consistent basis
during the periods involved; the audited financial statements of CPA
included in the Registration Statement and the Prospectus, together with
the related notes and schedules, present fairly the consolidated financial
position of CPA as of the dates indicated and the consolidated results of
operations and cash flows of CPA for the periods specified and have been
prepared in compliance with the requirements of the Act and in conformity
with generally accepted accounting principles applied on a consistent
basis during the periods involved; all pro forma financial statements and
data included in the Registration Statement and the Prospectus comply with
the requirements of Regulation S-X of the Act and the assumptions used in
the preparation of such pro forma
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financial statements and data are reasonable, the pro forma adjustments
used therein are appropriate to give effect to the transactions or
circumstances described therein and the pro forma adjustments have been
properly applied to the historical amounts in the compilation of those
statements and data; the other financial and statistical data set forth in
the Registration Statement and the Prospectus are accurately presented and
prepared on a basis consistent with the financial statements and books and
records of the Company; there are no financial statements (historical or
pro forma) that are required to be included in the Registration Statement
and the Prospectus that are not included as required; and the Company and
the Subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement and the Prospectus;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the Company
and the Subsidiaries taken as a whole, (ii) any transaction which is
material to the Company and the Subsidiaries taken as a whole, (iii) any
obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or the Subsidiaries, which is
material to the Company and the Subsidiaries taken as a whole, (iv) any
change in the capital stock or outstanding indebtedness of the Company or
the Subsidiaries, except for the issuance of an immaterial number of
shares of common stock upon the exercise of stock options disclosed as
outstanding in the Prospectus, or (v) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company;
(r) the Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement"), in the form set forth as Exhibit A
hereto, of each of the Selling Stockholders and each of its directors and
officers;
(s) neither the Company nor any of the Subsidiaries is or, after
giving effect to the offering and sale of the Shares, will be an
"investment company" or an entity "controlled" by an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(t) the Company and each of the Subsidiaries has good and marketable
title to all property (real and personal) described the Registration
Statement and in the Prospectus as being owned by each of them, free and
clear of all liens, claims, security interests or other encumbrances,
except as are described in the Registration Statement and Prospectus or
except as would not, individually or in the aggregate, have a Material
Adverse Effect; all the property described in the Registration Statement
and the Prospectus as being held under lease by the Company or a
Subsidiary is held thereby under valid, subsisting and enforceable leases;
(u) neither the Company nor any of the Subsidiaries is engaged in
any unfair labor practice; except for matters which would not,
individually or in the aggregate, have a Material Adverse Effect, (i)
there is (A) no unfair labor practice complaint pending or, to the
Company's knowledge, threatened against the Company or any of the
Subsidiaries before the National Labor Relations Board or any similar
body, and no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending or threatened, (B) no strike,
labor dispute, slowdown or stoppage pending or, to the Company's
knowledge, threatened against the Company or any of the Subsidiaries and
(C) no union representation dispute currently existing concerning the
employees of the Company or any of the Subsidiaries, and (ii) to the
Company's knowledge, (A) no union organizing activities are currently
taking place concerning the employees of the
9
Company or any of the Subsidiaries and (B) there has been no violation of
any federal, state, local or foreign law relating to discrimination in the
hiring, promotion or pay of employees, any applicable wage or hour laws or
any provision of the Employee Retirement Income Security Act of 1974
("ERISA") or the rules and regulations promulgated thereunder, or any
similar law, concerning the employees of the Company or any of the
Subsidiaries;
(v) the Company and the Subsidiaries and their respective
properties, assets and operations are in compliance with, and hold all
permits, authorizations and approvals required under, Environmental Laws
(as defined below), except to the extent that failure to so comply or to
hold such permits, authorizations or approvals would not, individually or
in the aggregate, have a Material Adverse Effect; there are no past,
present or, to the Company's knowledge, reasonably anticipated future
events, conditions, circumstances, activities, practices, actions,
omissions or plans that could reasonably be expected to give rise to any
material costs or liabilities to the Company or the Subsidiaries under, or
to interfere with or prevent compliance by the Company or the Subsidiaries
with, Environmental Laws; except as would not, individually or in the
aggregate, have a Material Adverse Effect, neither the Company nor any of
the Subsidiaries (i) is the subject of any investigation, (ii) has
received any notice or claim, (iii) is a party to or affected by any
pending or threatened action, suit or proceeding, (iv) is bound by any
judgment, decree or order or (v) has entered into any agreement, in each
case relating to any alleged violation of any Environmental Law or any
actual or alleged release or threatened release or cleanup at any location
of any Hazardous Materials (as defined below) (as used herein,
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, decree, judgment, injunction,
permit, license, authorization or other binding requirement, or common
law, relating to health, safety or the protection, cleanup or restoration
of the environment or natural resources, including those relating to the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of
Hazardous Materials, and "Hazardous Materials" means any material
(including, without limitation, pollutants, contaminants, hazardous or
toxic substances or wastes) that is regulated by or may give rise to
liability under any Environmental Law);
(w) in the ordinary course of its business, the Company and each of
the Subsidiaries conducts a periodic review of the effect of the
Environmental Laws on its business, operations and properties, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance
with the Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to third parties);
(x) all tax returns required to be filed by the Company and each of
the Subsidiaries have been filed, and all taxes and other assessments of a
similar nature (whether imposed directly or through withholding) including
any interest, additions to tax or penalties applicable thereto due or
claimed to be due from such entities have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided;
(y) the Company and each of the Subsidiaries maintains insurance
covering its properties, operations, personnel and businesses as the
Company deems adequate and as previously disclosed to the Underwriters;
such insurance insures against such losses and risks to an extent which is
adequate in accordance with customary industry practice to protect the
Company and the Subsidiaries and their businesses; all such insurance is
fully in force on the date hereof and will be fully in force at the time
of purchase and any additional time of purchase;
10
(z) neither the Company nor any of the Subsidiaries has sustained
since the date of the last audited financial statements included in the
Registration Statement and the Prospectus any loss or interference with
its respective business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree;
(aa) except as would not, individually or in the aggregate, have a
Material Adverse Effect, the Company has not sent or received any
communication regarding termination of, or intent not to renew, any of the
contracts or agreements referred to or described in, or filed as an
exhibit to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Company or, to the Company's
knowledge, any other party to any such contract or agreement;
(bb) the Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(cc) the Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company's Chief Executive
Officer and its Chief Financial Officer by others within those entities,
and such disclosure controls and procedures are effective to perform the
functions for which they were established; the Company's auditors and the
Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record, process,
summarize, and report financial data; and (ii) any fraud, whether or not
material, that involves management or other employees who have a role in
the Company's internal controls; any material weaknesses in internal
controls have been identified for the Company's auditors; and since the
date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or
in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies
and material weaknesses;
(dd) the Company has provided you true, correct, and complete copies
of all documentation pertaining to any extension of credit in the form of
a personal loan made, directly or indirectly, by the Company to any
director or executive officer of the Company, or to any family member or
affiliate of any director or executive officer of the Company; and since
July 30, 2002, the Company has not, directly or indirectly, including
through any subsidiary: (i) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or for
any director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the Company;
or (ii) made any material modification, including any renewal thereof, to
any term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002;
11
(ee) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data from such
sources to the extent required;
(ff) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or the
Subsidiaries has made any payment of funds of the Company or the
Subsidiaries or received or retained any funds in violation of any law,
rule or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Registration Statement or the
Prospectus;
(gg) neither the Company nor any of the Subsidiaries nor any of
their respective directors, officers, affiliates or controlling persons
has taken, directly or indirectly, any action designed, or which has
constituted or might reasonably be expected to cause or result in, under
the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares;
(hh) to the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's
officers, directors or 5% or greater securityholders, or any of the
Selling Stockholders, except as set forth in the Registration Statement
and the Prospectus;
(ii) the Company is not a "reporting issuer," as defined under the
Canadian Securities laws, or the equivalent in any jurisdiction in Canada;
(jj) no securities commission, stock exchange or similar regulatory
authority in the United States or Canada has issued any order preventing
or suspending trading of any securities of the Company and no such
proceeding is, to the knowledge of the Company, pending, contemplated or
threatened; and
(kk) at the date hereof, after giving effect to the issue of the
Shares, residents of Canada do not own, directly or indirectly, more than
10 percent of the outstanding shares of common stock of the Company and do
not represent in number more than 10 percent of the total number of
owners, directly or indirectly, of the outstanding shares of common stock
of the Company.
In addition, any certificate signed by any officer of the Company or any
of the Subsidiaries and delivered to the Underwriters or counsel for the
Underwriters in connection with the offering of the Shares shall be deemed to be
a representation and warranty by the Company or Subsidiary, as the case may be,
as to matters covered thereby, to each Underwriter.
4. Representations and Warranties of the Selling Stockholders.
(a) Each Selling Stockholder, severally and not jointly, represents
and warrants to each Underwriter that:
(i) such Selling Stockholder now is the lawful owner of the number
of Shares, or stock options exercisable for the number of Shares, to be
sold by such Selling Stockholder pursuant to this Agreement and, at the
time of delivery of such Shares (whether the time of purchase or
additional time of purchase, as the case may be) will be, the lawful owner
of the number of Shares to be sold by such Selling Stockholder pursuant to
this Agreement; such
12
Selling Stockholder now has valid and marketable title to such Shares or
stock options exercisable for such Shares and, at the time of delivery
thereof, will have valid and marketable title to such Shares, and upon
delivery of and payment for such Shares (whether at the time of purchase
or the additional time of purchase, as the case may be), the Underwriters
will acquire valid and marketable title to such Shares free and clear of
any claim, lien, encumbrance, security interest, community property right,
restriction on transfer or other defect in title;
(ii) such Selling Stockholder has and at the time of delivery of
such Shares (whether the time of purchase or additional time of purchase,
as the case may be) will have, full legal right, power and capacity, and
any approval required by law (other than those imposed by the Act and the
securities or blue sky laws of certain jurisdictions), to sell, assign,
transfer and deliver such Shares in the manner provided in this Agreement;
(iii) this Agreement and the Custody Agreement between [_________],
as custodian, and such Selling Stockholder (each such agreement, a
"Custody Agreement" and, collectively, the "Custody Agreements") have been
duly executed and delivered by such Selling Stockholder and each is a
legal, valid and binding agreement of such Selling Stockholder enforceable
in accordance with its terms;
(iv) when the Registration Statement becomes effective and at all
times subsequent thereto through the latest of the time of purchase,
additional time of purchase or the termination of the offering of the
Shares, the Registration Statement and Prospectus, and any supplements or
amendments thereto as relate to such Selling Stockholder will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(v) such Selling Stockholder has duly and irrevocably authorized the
Representatives of the Selling Stockholders, on behalf of such Selling
Stockholder, to execute and deliver this Agreement and any other document
necessary or desirable in connection with the transactions contemplated
thereby and to deliver the Shares to be sold by such Selling Stockholder
and receive payment therefor pursuant hereto;
(vi) the sale of such Selling Stockholder's Shares pursuant to this
Agreement is not prompted by any information concerning the Company which
is not set forth in the Prospectus;
(vii) such Selling Stockholder has not taken any action designed, or
which has constituted or might reasonably be expected to cause or result
in, under the Exchange Act or otherwise, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares;
(viii) there are no affiliations or associations between any member
of the NASD and such Selling Stockholder, except as set forth in the
Registration Statement and the Prospectus;
(ix) other than as permitted by the Act, such Selling Stockholder
has not distributed, nor will such Selling Stockholder distribute, any
prospectus or other offering material in connection with the offering and
sale of the Shares;
(x) at the time of purchase, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares
13
to be sold by such Selling Stockholder to the several Underwriters
hereunder will have been fully paid or provided for by such Selling
Stockholder and all laws imposing such taxes will have been fully complied
with; and
(xi) the execution, delivery and performance of this Agreement, the
sale of the Shares and the consummation of the transactions contemplated
hereby will not conflict with, result in any breach or violation of or
constitute a default under (nor constitute any event which with notice,
lapse of time or both would result in any breach of or constitute a
default under) (A) any contract or other agreement or instrument to which
the Selling Stockholder is a party or by which the Selling Stockholder or
any of the Selling Stockholder's properties may be bound or affected, or
(B) any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Selling Stockholder.
In addition, any certificate signed by such Selling Stockholder and
delivered to the Underwriters or counsel for the Underwriters in connection with
the offering of the Shares shall be deemed to be a representation and warranty
by such Selling Stockholder, as to matters covered thereby, to each Underwriter.
(b) Each Principal Selling Stockholder, severally and not jointly,
represents and warrants to each Underwriter that each Preliminary
Prospectus, at the time of filing thereof, and the last Preliminary
Prospectus distributed in connection with the offering of the Shares did
not, as of its date, and does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and the
Registration Statement did not when it became effective, does not and will
not, at the time of purchase and any additional time of purchase, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and the Prospectus will not, as of its date and at the time
of purchase and any additional time of purchase, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that such Selling Stockholder makes no warranty or representation
with respect to any statement contained in the Preliminary Prospectus, the
Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning an Underwriter and furnished in
writing by or on behalf of such Underwriter through you to the Company
expressly for use in the Preliminary Prospectus, the Registration
Statement or the Prospectus.
(c) Each Other Selling Stockholder, severally and not jointly,
represents and warrants to each Underwriter that, to such Other Selling
Stockholder's knowledge, each Preliminary Prospectus, at the time of
filing thereof, and the last Preliminary Prospectus distributed in
connection with the offering of the Shares did not, as of its date, and
does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and to such Other Selling Stockholder's knowledge,
the Registration Statement did not when it became effective, does not and
will not, at the time of purchase and any additional time of purchase,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and the Prospectus will not, as of its date and at
the time of purchase and any additional time of purchase, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that such
14
Selling Stockholder makes no warranty or representation with respect
to any statement contained in the Preliminary Prospectus, the
Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning an Underwriter and furnished
in writing by or on behalf of such Underwriter through you to the
Company expressly for use in the Preliminary Prospectus, the
Registration Statement or the Prospectus.
5. Certain Covenants.
(a) The Company hereby agrees:
(i) to make all necessary filings in connection with the sale
of Shares in the Provinces of Ontario and Quebec and to furnish such
information as may be required and otherwise to cooperate in
qualifying the Shares for offering and sale under the securities or
blue sky laws of such states or other jurisdictions as you may
designate and to maintain such qualifications in effect so long as
you may request for the distribution of the Shares; provided that
the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws
of any such jurisdiction (except service of process with respect to
the offering and sale of the Shares); and to promptly advise you of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(ii) to make available to the Underwriters in New York City,
as soon as practicable after the Registration Statement becomes
effective, and thereafter from time to time to furnish to the
Underwriters, as many copies of the Prospectus (or of the Prospectus
as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriters may request for the
purposes contemplated by the Act; in case any Underwriter is
required to deliver a prospectus after the nine-month period
referred to in Section 10(a)(3) of the Act in connection with the
sale of the Shares, the Company will prepare, at its expense,
promptly upon request such amendment or amendments to the
Registration Statement and the Prospectus as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the
Act;
(iii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or any
post-effective amendment thereto to be declared effective before the
offering of the Shares may commence, the Company will endeavor to
cause the Registration Statement or such post-effective amendment to
become effective as soon as possible and the Company will advise you
promptly and, if requested by you, will confirm such advice in
writing, (i) when the Registration Statement and any such
post-effective amendment thereto has become effective, and (ii) if
Rule 430A under the Act is used, when the Prospectus is filed with
the Commission pursuant to Rule 424(b) under the Act (which the
Company agrees to file in a timely manner under such Rule);
(iv) to advise you promptly, confirming such advice in
writing, of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information with respect thereto, or of notice of
institution of proceedings for, or the entry of a stop order,
suspending the effectiveness of the Registration Statement and, if
the Commission should enter a stop order suspending the
effectiveness of the Registration Statement, to use its best efforts
to obtain the lifting or removal of such order as soon as possible;
to advise you promptly of any proposal to amend or supplement the
Registration Statement or the Prospectus, including by filing any
documents that would be incorporated therein by reference, and to
provide you and Underwriters' counsel copies of any such documents
15
for review and comment a reasonable amount of time prior to any
proposed filing and to file no such amendment or supplement to which
you shall object in writing;
(v) subject to Section 5(a)(iv) hereof, to file promptly all
reports and any definitive proxy or information statement required
to be filed by the Company with the Commission in order to comply
with the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; to provide you
with a copy of such reports and statements and other documents to be
filed by the Company pursuant to Section 13, 14 or 15(d) of the
Exchange Act during such period a reasonable amount of time prior to
any proposed filing, and to promptly notify you of such filing;
(vi) if necessary or appropriate, to file a registration
statement pursuant to Rule 462(b) under the Act;
(vii) to advise the Underwriters promptly of the happening of
any event within the time during which a prospectus relating to the
Shares is required to be delivered under the Act which could require
the making of any change in the Prospectus then being used so that
the Prospectus would not include an untrue statement of material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they are made, not misleading, and, during such time, subject to
Section 5(a)(iv) hereof, to prepare and furnish, at the Company's
expense, to the Underwriters promptly such amendments or supplements
to such Prospectus as may be necessary to reflect any such change;
(viii) to make generally available to its security holders,
and to deliver to you, an earnings statement of the Company (which
will satisfy the provisions of Section 11(a) of the Act) covering a
period of twelve months beginning after the effective date of the
Registration Statement (as defined in Rule 158(c) of the Act) as
soon as is reasonably practicable after the termination of such
twelve-month period but not later than March 1, 2005;
(ix) to furnish to its shareholders as soon as practicable
after the end of each fiscal year an annual report (including a
consolidated balance sheet and statements of income, shareholders'
equity and cash flow of the Company and the Subsidiaries for such
fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public
accountants);
(x) to furnish to you 3 copies of the Registration Statement,
as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto and documents incorporated
by reference therein) and sufficient copies of the foregoing (other
than exhibits) for distribution of a copy to each of the other
Underwriters;
(xi) to furnish to you promptly and, upon request, to each of
the other Underwriters for a period of three years from the date of
this Agreement (i) copies of any reports or other communications
which the Company shall send to its stockholders or shall from time
to time publish or publicly disseminate, (ii) copies of all annual,
quarterly and current reports filed with the Commission on Forms
10-K, 10-KSB, 10-Q, 10-QSB and 8-K, or such other similar forms as
may be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which any
class of securities of the Company is listed, and (iv) such other
information as you may reasonably request regarding the Company or
the Subsidiaries;
16
(xii) to furnish to you as early as practicable prior to the time of
purchase and any additional time of purchase, as the case may be, but not later
than two business days prior thereto, a copy of the latest available unaudited
interim and monthly consolidated financial statements, if any, of the Company
and the Subsidiaries which have been read by the Company's independent certified
public accountants, as stated in their letter to be furnished pursuant to
Section 7(e) hereof;
(xiii) to apply the net proceeds from the sale of the Shares in the manner
set forth under the caption "Use of proceeds" in the Prospectus;
(xiv) not to issue, sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or
agree to dispose of, directly or indirectly, any Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock or warrants or
other rights to purchase Common Stock or any other securities of the Company
that are substantially similar to Common Stock, or file or cause to be declared
effective a registration statement under the Act relating to the offer and sale
of any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or other rights to purchase Common Stock or any
other securities of the Company that are substantially similar to Common Stock
for a period of 180 days after the date hereof (the "Lock-Up Period"), without
the prior written consent of UBS, except for (i) the registration of the Shares
and the sales to the Underwriters pursuant to this Agreement, (ii) issuances of
Common Stock upon the exercise of options or warrants disclosed as outstanding
in the Registration Statement and the Prospectus and (iii) the issuance of
employee or director stock options not exercisable during the Lock-Up Period
pursuant to stock option plans described in the Registration Statement and the
Prospectus;
(xv) to use its reasonable best efforts to cause the Common Stock to be
listed for quotation on the National Association of Securities Dealers Automated
Quotation National Market System ("NASDAQ");
(xvi) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common Stock;
(xvii) the Company shall at all times prior to the completion of the
offering and sale of the Shares allow, or take such actions as are necessary to
facilitate, the Underwriters and their representatives to conduct all due
diligence on the Company and the Shares which the Underwriters may reasonably
require; and
(xviii) the Company will fulfill, or cause to be fulfilled, all legal
requirements to permit the offering, creation, issuance, sale and distribution
of the Shares including, without limitation, compliance with the applicable
securities laws of the Provinces of Ontario and Quebec and the respective
regulations and rules made thereunder together with all applicable published
policy statements, blanket orders and rulings of the Canadian securities
commissions and all discretionary orders or rulings, if any, of the Canadian
securities commissions made in connection with the transactions contemplated
hereunder (the "Canadian Securities Laws") to enable the Shares to be offered
for sale and sold to purchasers who are "accredited investors," as defined in
Ontario Rule 45-501, in the Province of Ontario or governments, departments or
agencies referred to in Section 43 of the Quebec Securities Act or
"sophisticated purchasers," as defined in sections 44 and 45 of the Quebec
Securities Act, in the Province of Quebec.
17
(b) The Company hereby agrees to pay all costs, expenses, fees and
taxes (other than any fees and disbursements of counsel for the
Underwriters, except as set forth under Section 6 hereof or (iii) or (iv)
below) in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
any amendments or supplements thereto, and the printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including costs
of mailing and shipment), (ii) the registration, issuance, sale and
delivery of the Shares by the Company and the Selling Stockholders,
including any stock or transfer taxes and stamp or similar duties payable
upon the sale, issuance or delivery of the Shares to the Underwriters,
(iii) the producing, word processing and/or printing of this Agreement,
any Agreement Among Underwriters, any dealer agreements, any Statements of
Information, any Custody Agreement, any Powers of Attorney and any closing
documents (including any compilations thereof) and the reproduction and/or
printing and furnishing of copies of each thereof to the Underwriters and
to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state and foreign
laws and the determination of their eligibility for investment under state
and foreign laws as aforesaid (including the reasonable legal fees and
filing fees and other disbursements of counsel to the Underwriters) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any listing of
the Shares on any securities exchange or qualification of the Shares for
quotation on NASDAQ and any registration thereof under the Exchange Act,
(vi) the filing for review of the public offering of the Shares by the
National Association of Securities Dealers, Inc. (the "NASD"), including
the reasonable legal fees and filing fees and other disbursements of
counsel to the Underwriters, (vii) the fees and disbursements of any
transfer agent or registrar for the Shares, (viii) the costs and expenses
of the Company relating to presentations or meetings undertaken in
connection with the marketing of the offering and sale of the Shares to
prospective investors and the Underwriters' sales forces, 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, travel, lodging and other
expenses incurred by the officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road show,
and (ix) the performance of the Company's and the Selling Stockholders'
other obligations hereunder.
6. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the fifth paragraph of Section 9 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company and
the Selling Stockholders jointly and severally agree that they shall, in
addition to paying the amounts described in Section 5(b) hereof, reimburse the
Underwriters for all of their out-of-pocket expenses incurred by them in
connection with the transactions contemplated by this Agreement, including the
reasonable fees and disbursements of their counsel.
7. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders on the date
hereof, at the time of purchase and, if applicable, at the additional time of
purchase, the performance by the Company and each of the Selling Stockholders of
its obligations hereunder and to the following additional conditions precedent:
(a) The Company and Selling Stockholders shall furnish to you at the
time of purchase and, if applicable, at the additional time of purchase,
an opinion of Steel ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for the Company,
addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may be, with reproduced copies
for each of the other Underwriters substantially in the form attached
hereto as Exhibit B.
18
(b) The Company and Selling Stockholders shall furnish to you at the
time of purchase and, if applicable, at the additional time of purchase,
an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.A., counsel for the Company, addressed to
the Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters substantially in the form attached hereto as Exhibit C.
(c) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Osler,
▇▇▇▇▇▇ & Harcourt, L.L.P., Canadian counsel for the Company, addressed to
the Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters substantially in the form attached hereto as Exhibit D.
(d) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Sidley
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, regulatory counsel for the Company, addressed to
the Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters substantially in the form attached hereto as Exhibit E.
(e) You shall have received from each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co. letters dated, respectively, the date of this
Agreement, the time of purchase and, if applicable, the additional time of
purchase, and addressed to the Underwriters (with reproduced copies for
each of the Underwriters) in the forms heretofore approved by UBS.
(f) You shall have received at the time of purchase and, if
applicable, at the additional time of purchase, the favorable opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, in form
and substance reasonably satisfactory to you.
(g) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus, including documents deemed to be incorporated
by reference therein, shall have been filed to which you object in
writing.
(h) The Registration Statement shall become effective not later than
5:30 P.M. New York City time on the date of this Agreement and, if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M.,
New York City time, on or prior to the second full business day after the
date of this Agreement.
(i) Prior to the time of purchase, and, if applicable, the
additional time of purchase, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto shall not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and (iii) the Prospectus and all amendments or
supplements thereto shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(j) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, no
material adverse change or any development involving a prospective
material adverse change in the business, properties, management,
19
financial condition or results of operations of the Company and the
Subsidiaries taken as a whole shall occur or become known.
(k) The Company will, at the time of purchase and, if applicable, at
the additional time of purchase, deliver to you a certificate of its Chief
Executive Officer and its Chief Financial Officer to the form attached as
Exhibit F hereto.
(l) You shall have received signed Lock-up Agreements referred to in
Section 3(r) hereof.
(m) The Selling Stockholders will at the time of purchase and the
additional time of purchase, as the case may be, deliver to you a
certificate of the Representatives of the Selling Stockholders to the
effect that the representations and the warranties of the Selling
Stockholders as set forth in this Agreement are true and correct as of
each such date.
(n) The Company and the Selling Stockholders shall have furnished to
you such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement and the
Prospectus as of the time of purchase and, if applicable, the additional
time of purchase, as you may reasonably request.
(o) The Shares shall have been approved for quotation on NASDAQ,
subject only to notice of issuance at or prior to the time of purchase or
the additional time of purchase, as the case may be.
(p) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, each of the Selling Stockholders shall have delivered to the
Underwriters prior to or at the time of purchase and, if applicable, at
the additional time of purchase a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
8. Effective Date of Agreement; Termination. This Agreement shall become
effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of UBS or any group of Underwriters
(which may include UBS) which has agreed to purchase in the aggregate at least
50% of the Firm Shares, if (x) since the time of execution of this Agreement or
the earlier respective dates as of which information is given in the
Registration Statement and the Prospectus, there has been any material adverse
change or any development involving a prospective material adverse change in the
business, properties, management, financial condition or results of operation of
the Company and the Subsidiaries taken as a whole, which would, in UBS' judgment
or in the judgment of such group of Underwriters, make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus, or (y) there shall have occurred: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ; (ii) a suspension or material
limitation in trading in the Company's securities on the NASDAQ; (iii) a general
moratorium on commercial banking activities declared by either federal or New
York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) an
outbreak or escalation of
20
hostilities or acts of terrorism involving the United States or a declaration by
the United States of a national emergency or war; or (v) any other calamity or
crisis or any change in financial, political or economic conditions in the
United States or elsewhere, if the effect of any such event specified in clause
(iv) or (v) in UBS' judgment or in the judgment of such group of Underwriters
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus, or (z) there shall have occurred any
downgrading, or any notice or announcement shall have been given or made of (i)
any intended or potential downgrading or (ii) any watch, review or possible
change that does not indicate an affirmation or improvement, in the rating
accorded any securities of or guaranteed by the Company or any Subsidiary by any
"nationally recognized statistical rating organization," as that term is defined
in Rule 436(g)(2) under the Act.
If UBS or any group of Underwriters elects to terminate this Agreement
as provided in this Section 8, the Company, the Representatives of the Selling
Stockholders and each other Underwriter shall be notified promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company or the
Selling Stockholders, as the case may be, shall be unable to comply with any of
the terms of this Agreement, the Company or the Selling Stockholders, as the
case may be, shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 5(b), 6 and 10 hereof), and the
Underwriters shall be under no obligation or liability to the Company and the
Selling Stockholders under this Agreement (except to the extent provided in
Section 10 hereof) or to one another hereunder.
9. Increase in Underwriters' Commitments. Subject to Sections 7 and 8
hereof, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for a
failure of a condition set forth in Section 7 hereof or a reason sufficient to
justify the termination of this Agreement under the provisions of Section 8
hereof) and if the number of Firm Shares which all Underwriters so defaulting
shall have agreed but failed to take up and pay for does not exceed 10% of the
total number of Firm Shares, the non-defaulting Underwriters shall take up and
pay for (in addition to the aggregate number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriters in
such amount or amounts as you may designate with the consent of each Underwriter
so designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule B.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company and each of the Selling Stockholders agrees with the
non-defaulting Underwriters that it will not sell any Firm Shares hereunder
unless all of the Firm Shares are purchased by the Underwriters (or by
substituted Underwriters selected by you with the approval of the Company or
selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and the
Prospectus and other documents may be effected.
21
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 9 with like effect as if
such substituted Underwriter had originally been named in Schedule B.
If the aggregate number of Firm Shares which the defaulting Underwriter
or Underwriters agreed to purchase exceeds 10% of the total number of Firm
Shares which all Underwriters agreed to purchase hereunder, and if neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
five business day period stated above for the purchase of all the Firm Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall terminate without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who
controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the successors and assigns of all of
the foregoing persons, from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, any such Underwriter or any such person may incur
under the Act, the Exchange Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus (the term Prospectus for the purpose of this
Section 10 being deemed to include any Preliminary Prospectus, the
Prospectus and the Prospectus as amended or supplemented by the Company),
or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or such Prospectus or necessary to make the statements made
therein not misleading, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity
with information concerning such Underwriter furnished in writing by or on
behalf of such Underwriter through you to the Company expressly for use in
such Registration Statement or such Prospectus or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such
information not misleading, (ii) any untrue statement or alleged untrue
statement made by the Company in Section 3 hereof or the failure by the
Company to perform when and as required any agreement or covenant
contained herein, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or
on behalf of the Company including, without limitation, slides, videos,
films or tape recordings used in connection with the marketing of the
Shares; provided, that with respect to any untrue statement or omission of
a material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 10(a) shall not inure to the benefit
of any Underwriter from whom the person asserting any such loss, claim,
damage or liability purchased the securities concerned, to the extent that
any such loss, claim, damage or liability of such Underwriter occurs under
the circumstance where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (w) the
Company had previously furnished copies of the Prospectus to the
Underwriters in sufficient quantities and in a timely manner so as to
permit delivery of the Prospectus to such person, (x) delivery of the
Prospectus
22
was required by the Act to be made to such person, (y) the untrue
statement or omission of a material fact contained in the Preliminary
Prospectus was corrected in the Prospectus and (z) there was not sent or
given to such person, at or prior to the written confirmation of the sale
of such securities to such person, a copy of the Prospectus.
(b) Each Selling Stockholder agrees to indemnify, defend and hold
harmless each Underwriter, its partners, directors and officers, and any
person who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and the successors and assigns
of all of the foregoing persons, from and against any loss, damage,
expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or any
such person may incur under the Act, the Exchange Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim
arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or
in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or in a Prospectus (the term Prospectus for the
purpose of this Section 10 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented
by the Company), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or such Prospectus or necessary to make the
statements made therein not misleading, (provided, however, that with
respect to each Other Selling Stockholder, the indemnity agreement
contained in this Section 10(b)(i) shall be limited to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance on and in conformity with information
furnished to the Company by such Other Selling Stockholder expressly for
use in the Registration Statement or Prospectus); or (ii) any untrue
statement or alleged untrue statement made by such Selling Stockholder in
Section 4 hereof or the failure by such Selling Stockholder to perform
when and as required any agreement or covenant contained herein;
provided, however, that the indemnity agreement contained in Section
10(b)(i) hereof shall not inure to the benefit of any Underwriter insofar
as any such loss, damage, expense, liability or claim arises out of or is
based upon (A) any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information concerning
such Underwriter furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use in such Registration
Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with
such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading;
provided, further, that with respect to any untrue statement or omission
of a material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 10(a) shall not inure to the benefit
of any Underwriter from whom the person asserting any such loss, claim,
damage or liability purchased the securities concerned, to the extent
that any such loss, claim, damage or liability of such Underwriter occurs
under the circumstance where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (w) the
Company had previously furnished copies of the Prospectus to the
Underwriters in sufficient quantities and in a timely manner so as to
permit delivery of the Prospectus to such person, (x) delivery of the
Prospectus was required by the Act to be made to such person, (y) the
untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus and (z) there was
not sent or given to such person, at or prior to the written confirmation
of the sale of such securities to such person, a copy of the Prospectus.
No Selling Stockholder shall be liable under this Section 10(b) in an
amount in excess of the net proceeds received by such Selling Stockholder
from the sale of Shares by such Selling Stockholder pursuant to this
Agreement.
23
(c) If any action, suit or proceeding (each, a "Proceeding") is
brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Company or any Selling Stockholder
pursuant to Section 10(a) or (b) hereof, such Underwriter or such person
shall promptly notify the Company and the Representatives of the Selling
Stockholders in writing of the institution of such Proceeding and the
Company or such Selling Stockholder, as the case may be, shall assume the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and
expenses; provided, however, that the omission to so notify the Company or
the Representative of the Selling Stockholders shall not relieve the
Company or such Selling Stockholder from any liability which the Company
or such Selling Stockholder may have to any Underwriter or any such person
or otherwise, unless materially prejudiced by such delay and then only to
the extent of the prejudice. Such Underwriter or such person shall have
the right to employ its or their own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of such
Underwriter or of such person unless the employment of such counsel shall
have been authorized in writing by the Company or such Selling Stockholder
in connection with the defense of such Proceeding or the Company or such
Selling Stockholder shall not have, within a reasonable period of time in
light of the circumstances, employed counsel to have charge of the defense
of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them
which are different from, additional to or in conflict with those
available to the Company or such Selling Stockholder (in which case the
Company or such Selling Stockholder shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties),
in any of which events such fees and expenses shall be borne by the
Company or such Selling Stockholder and paid as incurred (it being
understood, however, that the Company or such Selling Stockholder shall
not be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties
who are parties to such Proceeding). The Company or such Selling
Stockholder shall not be liable for any settlement of any Proceeding
effected without its written consent but if settled with the written
consent of the Company or such Selling Stockholder, the Company or such
Selling Stockholder agrees to indemnify and hold harmless any Underwriter
and any such person from and against any loss or liability by reason of
such settlement. 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 sentence of this paragraph, then the indemnifying party 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 60 business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement and (iii) such indemnified party shall have
given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior
written consent of the indemnified party, which such consent shall not be
unreasonably withheld, effect any settlement of any pending or threatened
Proceeding in respect of which any indemnified party is or could have been
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 and does not include an admission of fault, culpability
or a failure to act, by or on behalf of such indemnified party.
(d) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, each Selling Stockholder
and any person who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss,
damage,
24
expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company, any Selling
Stockholder or any such person may incur under the Act, the Exchange Act,
the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity
with information concerning such Underwriter furnished in writing by or on
behalf of such Underwriter through you to the Company expressly for use in
the Registration Statement or in a Prospectus or any amendment or
supplement to either thereof or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with
such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading.
(e) If any Proceeding is brought against the Company, any Selling
Stockholder or any such person in respect of which indemnity may be sought
against any Underwriter pursuant to Section 10(d) hereof, the Company, any
Selling Stockholder or such person shall promptly notify such Underwriter
in writing of the institution of such Proceeding and such Underwriter
shall assume the defense of such Proceeding, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of
all fees and expenses; provided, however, that the omission to so notify
such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company, any Selling Stockholder or
any such person or otherwise, unless materially prejudiced by such delay
and then only to the extent of the prejudice. The Company, any Selling
Stockholder or such person shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company, any Selling Stockholder or such person unless
the employment of such counsel shall have been authorized in writing by
such Underwriter in connection with the defense of such Proceeding or such
Underwriter shall not have, within a reasonable period of time in light of
the circumstances, employed counsel to defend such Proceeding or such
indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or
additional to or in conflict with those available to such Underwriter (in
which case such Underwriter shall not have the right to direct the defense
of such Proceeding on behalf of the indemnified party or parties, but such
Underwriter may employ counsel and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne
by such Underwriter and paid as incurred (it being understood, however,
that such Underwriter shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding).
No Underwriter shall be liable for any settlement of any such Proceeding
effected without the written consent of such Underwriter but if settled
with the written consent of such Underwriter, such Underwriter agrees to
indemnify and hold harmless the Company, any Selling Stockholder and any
such person from and against any loss or liability by reason of such
settlement. 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 sentence of this paragraph, then the indemnifying party 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 60 business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of
such settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of
the indemnified party, which such consent shall not be unreasonably
withheld, effect any settlement of any pending or threatened Proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been
25
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.
(f) If the indemnification provided for in this Section 10 is
unavailable to an indemnified party under subsections (a), (b) or (d) of
this Section 10 or insufficient to hold an indemnified party harmless in
respect of any losses, damages, expenses, liabilities or claims referred
to therein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, damages, expenses, liabilities or claims (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company
and the Selling Stockholders on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and the Selling Stockholders on the one hand and of the Underwriters on
the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any
other relevant equitable considerations. The relative benefits received by
the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company and the Selling Stockholders and the total underwriting discounts
and commissions received by the Underwriters, bear to the aggregate public
offering price of the Shares. The relative fault of the Company and the
Selling Stockholders on the one hand and of the Underwriters on the other
shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or
omission or alleged omission relates to information supplied by the
Company and/or the Selling Stockholders or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
party in connection with investigating, preparing to defend or defending
any Proceeding.
(g) The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 10 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 subsection (f) above. Notwithstanding the
provisions of this Section 10, 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 such Underwriter and distributed to the
public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such
untrue statement or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute pursuant to this Section 10
are several in proportion to their respective underwriting commitments and
not joint.
(h) The indemnity and contribution agreements contained in this
Section 10 and the covenants, warranties and representations of the
Company and the Selling Stockholders contained in this Agreement shall
remain in full force and effect regardless of any investigation made by or
on behalf of any Underwriter, its partners, directors or officers or any
person (including each partner, officer or director of such person) who
controls any Underwriter within the meaning of
26
Section 15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors or officers, any Selling Stockholder
or any person who controls the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of the Shares.
The Company, each of the Selling Stockholders and each Underwriter agree
promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company or the Selling Stockholders,
against any of the Company's or Selling Stockholder's officers or
directors, as the case may be, in connection with the issuance and sale of
the Shares, or in connection with the Registration Statement or the
Prospectus.
11. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page of the Prospectus and the statements set
forth in the fifth, seventh, eighth and ninth paragraphs under the caption
"Underwriting" in the Prospectus constitute the only information furnished by or
on behalf of the Underwriters as such information is referred to in Sections 3
and 10 hereof.
12. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Securities LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, Attention:
Syndicate Department; if to the Company, shall be sufficient in all respects if
delivered or sent to the Company at the offices of the Company at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; and if to the Selling
Stockholders, shall be sufficient in all respects if delivered or sent to the
Representatives of the Selling Stockholders at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
13. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company and each of the Selling Stockholders hereby consents to
personal jurisdiction, service and venue in any court in which any Claim arising
out of or in any way relating to this Agreement is brought by any third party
against UBS or any indemnified party. Each of UBS, the Selling Stockholders and
the Company (on its behalf and, to the extent permitted by applicable law, on
behalf of its stockholders and affiliates) waives all right to trial by jury in
any action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company
and each of the Selling Stockholders agrees that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company and may be enforced in any other courts to the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
15. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Selling Stockholders and
the Company and to the extent provided in Section 10 hereof the controlling
persons, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
27
16. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
17. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, each of the Selling Stockholders and the Company and their
successors and assigns and any successor or assign of any substantial portion of
the Company's, each the Selling Stockholder's and any of the Underwriters'
respective businesses and/or assets.
18. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG,
is not a bank and is separate from any affiliated bank, including any U.S.
branch or agency of UBS AG. Because UBS is a separately incorporated entity, it
is solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by UBS are not deposits, are not insured
by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or
agency, and are not otherwise an obligation or responsibility of a branch or
agency.
28
If the foregoing correctly sets forth the understanding among the
Company, the Selling Stockholders and the Underwriters, please so indicate in
the space provided below for the purpose, whereupon this agreement and your
acceptance shall constitute a binding agreement among the Company and the
Underwriters, severally.
Very truly yours,
SFBC International, Inc.
By:
-------------------------------------
Name:
Title:
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE A ATTACHED HERETO
By:
-------------------------------------
Attorney-in-Fact: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Accepted and agreed to as of the
date first above written:
UBS SECURITIES LLC
▇▇▇▇▇▇▇▇ & COMPANY, INC.
As Representatives of the
Several Underwriters
By: UBS SECURITIES LLC
By:
--------------------------
Title:
By:
--------------------------
Title:
By: ▇▇▇▇▇▇▇▇ & COMPANY, INC.
By:
--------------------------
Title:
29
SCHEDULE A
Number of
Selling Stockholders Firm Shares
-------------------- -----------
▇▇▇▇ ▇▇▇▇▇▇▇, M.D. 150,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 75,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,000
▇▇▇▇▇ ▇▇▇▇▇ 9,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,500
▇▇▇▇ ▇▇▇▇▇ 11,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 30,000
-------
Total 328,000
=======
1
SCHEDULE B
Number of
Underwriter Firm Shares
----------- -----------
UBS SECURITIES LLC
▇▇▇▇▇▇▇▇ & COMPANY, INC.
HD ▇▇▇▇▇ & CO., INC.
JESUP & ▇▇▇▇▇▇ SECURITIES CORPORATION
---------
Total............................................... 2,328,000
=========
1
SCHEDULE C
Jurisdiction of
Subsidiary Incorporation
---------- -------------
South Florida Kinetics, Inc. Florida
SFBC New Drug Services, Inc. Florida
SFBC Analytical Laboratories, Inc. Florida
SFBC Ft. ▇▇▇▇▇, Inc. Florida
SFBC Canada, Inc. Canada
Anapharm Inc. Quebec
SynFine Research Inc. Ontario
Daedal Management and Investment Inc. Ontario
Danapharm Clinical Research Inc. Ontario
Clinical Pharmacology Florida
International, Inc.
1
EXHIBIT A
SFBC International, Inc.
Common Stock
($0.001 Par Value)
[DATE]
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in
connection with the proposed Underwriting Agreement (the "Underwriting
Agreement") to be entered into by SFBC International, Inc. (the "Company") and
you, as Representatives of the several Underwriters named therein, with respect
to the public offering (the "Offering") of Common Stock, par value $0.001 per
share, of the Company (the "Common Stock").
In order to induce you to enter into the Underwriting Agreement, the
undersigned agrees that for a period from the date hereof until the end of 180
days after the date of the final prospectus relating to the Offering the
undersigned will not, without the prior written consent of UBS, (i) sell, offer
to sell, contract or agree to sell, hypothecate, pledge, grant any option to
purchase or otherwise dispose of or agree to dispose of, directly or indirectly,
or file (or participate in the filing of) a registration statement with the
Securities and Exchange Commission (the "Commission") in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
promulgated thereunder with respect to, any Common Stock of the Company or any
securities convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock, (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 Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock, whether any such transaction is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise, or
(iii) publicly announce an intention to effect any transaction specified in
clause (i) or (ii). The foregoing sentence shall not apply to (a) the
registration of or sale to the Underwriters of any Common Stock pursuant to the
Offering and the Underwriting Agreement, (b) bona fide gifts, provided the
recipient thereof agrees in writing with the Underwriters to be bound by the
terms of this Lock-Up Letter Agreement and confirm that he, she or it has been
in compliance with the terms of this Lock-Up Letter Agreement since the date
hereof or (c) dispositions to any trust for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, provided that
such trust agrees in writing with the Underwriters to be bound by the terms of
this Lock-Up Letter Agreement and confirms that it has been in compliance with
the terms of this Lock-Up Letter Agreement since the date hereof.
In addition, the undersigned hereby waives any rights the
undersigned may have to require registration of Common Stock in connection with
the filing of a registration statement relating to the Offering. The undersigned
further agrees that, for a period from the date hereof until the end of 180 days
after the date of the final prospectus relating to the Offering, the undersigned
will not, without the
A-1
prior written consent of UBS, make any demand for, or exercise any right with
respect to, the registration of Common Stock of the Company or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants or
other rights to purchase Common Stock.
If (i) the Company notifies you in writing that it does not intend
to proceed with the Offering, (ii) the registration statement filed with the
Securities and Exchange Commission with respect to the Offering is withdrawn or
(iii) for any reason the Underwriting Agreement shall be terminated prior to the
time of purchase (as defined in the Underwriting Agreement), this Lock-Up Letter
Agreement shall be terminated and the undersigned shall be released from its
obligations hereunder.
Yours very truly,
-----------------------------------
Name:
A-2
EXHIBIT B
OPINION OF STEEL ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP PURSUANT TO SECTION 7(A)
B-1
EXHIBIT C
OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.A. PURSUANT TO SECTION 7(B)
C-1
EXHIBIT D
OPINION OF OSLER, ▇▇▇▇▇▇ & HARCOURT, L.L.P. PURSUANT TO SECTION 7(C)
D-1
EXHIBIT E
OPINION OF SIDLEY ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ LLP PURSUANT TO SECTION 7(D)
E-1
EXHIBIT F
FORM OF
OFFICERS' CERTIFICATE
The undersigned, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, being the Chief Executive Officer, and
▇▇▇▇▇ ▇▇▇▇▇, being the Chief Financial Officer, of SFBC International, Inc., a
Delaware corporation (the "Company"), on behalf of the Company, does hereby
certify pursuant to Section 7(k) of that certain Underwriting Agreement dated
[__], 2003 (the "Underwriting Agreement") among the Company, UBS Securities LLC,
on behalf of the several Underwriters named therein, and the Selling
Stockholders named therein, that as of [__], 2003:
(i) No stop order with respect to the effectiveness of either of the
Registration Statements has been issued under the Act and no proceedings have
been initiated under Section 8(d) or 8(e) of the Act for that purpose;
(ii) The Registration Statements and all amendments thereto, or
modifications thereof, and the Prospectus and all amendments and supplements
thereto, or modifications thereof, do not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they are made) not misleading;
(iii) The representations and warranties of the Company as set forth in
the Underwriting Agreement are true and correct as of the date hereof or, if
such representations and warranties speak as of a specific date, as of such
date;
(iv) The Company has performed such of its obligations under the
Underwriting Agreement as are to be performed at or before the date hereof; and
(v) Between the time of execution of the Underwriting Agreement and the
date hereof, (A) no Material Adverse Effect, or any development involving a
prospective Material Adverse Effect, shall occur or become known and (B) no
transaction which is material and adverse to the Company has been entered into
by the Company or any of the Subsidiaries.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Underwriting Agreement.
F-1