EXHIBIT 1.1
Draft Dated 2/20/98
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DOCUCORP INTERNATIONAL, INC.
6,820,000 Shares of Common Stock
($.01 Par Value Per Share)
Standby Underwriting Agreement
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February 24, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Docucorp International, Inc., a Delaware corporation (the "Company"),
Safeguard Scientifics (Delaware), Inc., a Delaware corporation ("Safeguard
(DE)"), Safeguard Scientifics, Inc., a Pennsylvania corporation ("Safeguard
(PA)" and, together with Safeguard (DE), "Safeguard") and Xerox Corporation
("Xerox"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), Technology Leaders II ("▇▇ ▇▇") and
Technology Leaders II Offshore CV ("Offshore") and certain other stockholders of
the Company identified on Schedule D hereto (together with Safeguard, the
"Selling Stockholders") hereby confirm their respective agreements with you with
respect to:
(i) the proposed distribution by the Company to the Safeguard
Shareholders of up to an aggregate of 6,500,000 rights (the "Rights") (which
represent 3,680,000 shares of the Company's common stock, $.01 par value per
share (the "Common Stock"), to be sold by the Company upon the exercise of
3,680,000 of such Rights and an aggregate of 2,820,000 shares of Common Stock
being sold by the Selling Stockholders upon exercise of 2,820,000 Rights in the
respective amounts set forth on Schedule D hereto), with (A) each Right
entitling the holder thereof to purchase at any time prior to the Expiration
Date, at a subscription price of $5.00 per share, one share of Common Stock of
the Company, and (B) Rights being distributed on the basis of one Right
for each five shares of Safeguard Stock held (with the holder of a number of
shares of Safeguard Stock not evenly divisible by five entitled to receive the
next higher whole number of Rights);
(ii) the proposed sale of all Unsubscribed Shares by the Company and
the Selling Stockholders, acting severally and not jointly, with:
(A) the Other Purchasers Standby Shares being deemed to be
Company Unsubscribed Shares to be sold pursuant to the Other
Purchasers Standby Purchase Agreements; and
(B) all Excess Unsubscribed Shares to be sold to and purchased by
the Underwriters, severally and not jointly, in accordance with the
terms and conditions of this Agreement; and
(iii) the proposed sale by the Company to the Other Purchasers of the
Undistributed Shares; and
(iv) the grant by the Selling Stockholders to the Underwriters of an
option described in Section 3(b) hereof to purchase additional shares of Common
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Stock for the purpose of covering over-allotments, if any.
The parties acknowledge that concurrently with the Offering of the
Rights, the Company intends to offer and sell to the Direct Purchasers the
Direct Shares for purchase at a subscription price of $5.00 per share. The
parties also acknowledge that, except as set forth in Section 7, the Direct
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Shares shall not be deemed to be Shares for purposes of this Agreement and are
not otherwise a part of this Agreement.
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1. Certain Definitions. The following terms shall, when used in this
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agreement, have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Adverse Claim" means the term as used in Section 8-302 of the Delaware
Uniform Commercial Code.
"Application" means the application described in Section 9(a)(i)(B) hereof.
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"Associated Person Lock-Ups" means the agreements, acceptable in form and
substance to the Underwriters, pursuant to which each of the Company's officers,
directors and principal stockholders listed in Schedule A attached hereto has
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agreed not to, without the prior written consent of the Underwriters, transfer,
sell, offer for sale, contract to sell or otherwise dispose of any shares of
Common Stock or any securities exercisable or exchangeable for or convertible
into shares of Common Stock or with respect to which such person has the power
of disposition during a period commencing on the date the Registration Statement
is declared effective by the Commission and ending 180 days following the
Expiration Date, except as otherwise permitted in the Associated Person Lock-
Ups.
"Bona Fide Purchaser" means the term as defined in Section 8-302 of the
Delaware Uniform Commercial Code.
"Closing" means 10:00 a.m., New York City time on the seventh business day
after the Expiration Date (or the first business day thereafter), or at such
other time on the same or such other date, not later than June 30, 1998, as
shall be agreed to by the Company, the Selling Stockholders and the
Underwriters.
"Closing Date" means the time and date of payment for and delivery of the
Excess Unsubscribed Shares.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the shares of Common Stock, $.01 par value per share,
of the Company.
"Company Unsubscribed Shares" means the shares of Common Stock which had
been offered by the Company pursuant to the Rights but which were not acquired
through the exercise of Rights on or prior to the Expiration Date (after taking
into account the agreement of the Company and the Selling Stockholders that the
560,000 shares of Common Stock that are expected to be sold
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to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ upon exercise of the ▇▇▇▇▇▇ Rights shall be deemed to be
sold by the Company).
"Controlling Person" means a person who controls the Underwriters, the
Company or the Selling Stockholders within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act.
"Direct Purchasers" means the certain persons selected by the Company to
whom the Direct Shares are being offered.
"Direct Shares" means the 320,000 shares of Common Stock offered to the
Direct Purchasers.
"Disagreement" means the term as used in Item 304 of Regulation S-K of the
Rules and Regulations.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means the escrow agent named in the Rights Agent Agreement.
"Excess Unsubscribed Shares" means all of the Unsubscribed Shares other
than the Other Purchasers Standby Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the subscription price of $5.00 per share.
"Expiration Date" means 5:00 p.m., New York City time, on March 31, 1998 or
such later date as may be agreed upon by the Underwriters and the Company.
"Intellectual Property" means all patents, trademarks, service marks, trade
names, copyrights, inventions, trade secrets, proprietary techniques, including,
without limitation, all software service codes, processes and substances,
technology and know-how necessary to conduct (or used to conduct) the business
now operated or proposed to be operated by the Company as described in the
Prospectus.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Material Adverse Effect" means a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs, financial
position, value, operations, properties, results of operation or business of the
Company and its Subsidiaries taken as a whole.
"▇▇▇▇▇▇ Group" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and/or his assignees.
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"▇▇▇▇▇▇ Lock-Up" means the agreement of the ▇▇▇▇▇▇ Group not to, without
the prior written consent of the Underwriters, transfer, sell, offer for sale,
contract to sell or otherwise dispose of any shares of Common Stock acquired by
the ▇▇▇▇▇▇ Group upon exercise of the ▇▇▇▇▇▇ Rights or any securities
exercisable or exchangeable for or convertible into Common Stock (including the
▇▇▇▇▇▇ Rights) owned on the date hereof or acquired through the rights offering
or with respect to which the ▇▇▇▇▇▇ Group has the power of disposition during a
period commencing on the date the Registration Statement is declared effective
and ending 180 days after the Expiration Date; provided, however, that the
▇▇▇▇▇▇ Group may transfer, sell, offer for sale, contract to sell or otherwise
dispose of up to 280,000 shares of Common Stock without the prior written
consent of the Underwriters.
"▇▇▇▇▇▇ Rights" means all Rights granted to the ▇▇▇▇▇▇ Group as a
shareholder of Safeguard (PA).
"NASD" means the National Association of Securities Dealers, Inc.
"Offering" means the public offering of the Excess Unsubscribed Shares as
set forth in the Prospectus; provided that the Offering shall also include the
Other Purchasers Standby Shares purchased by the Underwriters, if any.
"Option Closing Date" means the time of delivery of any of the Option
Shares."
"Option Shares" means any and all shares of Common Stock to be purchased by
the Underwriters pursuant to the option described in Section 3(b) of this
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Agreement.
"Other Purchasers" means certain persons selected by the Company.
"Other Purchasers Standby Purchase Agreement" means the agreements between
the Company and the Other Purchasers to be entered into after the date hereof
and obligating the Other Purchasers to purchase from the Company up to 300,000
Other Purchasers Standby Shares on the Closing Date at a price of $5.00 per
share.
"Other Purchasers Standby Shares" means that number of Unsubscribed Shares
purchased by the Other Purchasers pursuant to the Other Purchasers Standby
Purchase Agreement.
"Other Selling Stockholders" means the Selling Stockholders, excluding
Safeguard, ▇▇ ▇▇ and Offshore.
"Preliminary Prospectus" means each prospectus subject to completion filed
with the Registration Statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration Statement
or any amendment thereto at the time of the Registration Statement was or is
declared effective).
"Price Waterhouse" means Price Waterhouse, LLP.
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"Prospectus" means the prospectus first filed with the Commission pursuant
to Rule 424(b) under the Act, or, if no prospectus is required to be filed
pursuant to said Rule 424(b), the prospectus included in the Registration
Statement. For purposes of Sections 2 and 8(d)(v) hereof, all references to the
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"Prospectus" are deemed to include, in the alternative, the most recent
Preliminary Prospectus if the Prospectus is not in existence.
"Provided Information" means the statements made in the third paragraph
preceding the stabilization legend on the inside of the front cover page, the
stabilization legend on the inside of the front cover page and the third and
sixth paragraph under the heading "UNDERWRITING" in the Prospectus (and the same
paragraphs and stabilization legend in any Preliminary Prospectus).
"Registration Statement" means the registration statement described in
Section 2(a)(i) hereof.
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"Reportable Event" means the term as used in Item 304 of Regulation S-K of
the Rules and Regulations.
"Rights Agent" means ChaseMellon Shareholder Services, L.L.C.
"Rights Agent Agreement" means the agreement in the form previously
approved by the Underwriters, dated the date hereof, by and among the Company,
the Escrow Agent and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
"Rules and Regulations" means the rules and regulations adopted by the
Commission under either the Act or the Exchange Act.
"Safeguard Shareholders" means the holders of record of Safeguard (PA)
Stock as of February 23, 1998.
"Safeguard Stockholders" means Safeguard, ▇▇ ▇▇ and Offshore.
"Safeguard Stock" means the common shares, $.10 par value per share, of
Safeguard (PA).
"Selling Stockholders Unsubscribed Shares" means the shares of Common Stock
which had been offered by the Selling Stockholders pursuant to the Rights but
which were not acquired through exercise of the Rights on or prior to the
Expiration Date (after taking into account the agreement of the Company and the
Selling Stockholders that the 560,000 shares of Common Stock that are expected
to be sold to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ upon exercise of the ▇▇▇▇▇▇ Rights shall be
deemed to be sold by the Company).
"Shares" means the Option Shares, the Excess Unsubscribed Shares to be
purchased by the Underwriters and the Other Purchasers Standby Shares purchased
by the Underwriters, if any, pursuant to Section 3.
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"Significant Subsidiary" means the term as defined in Rule 405 of the Rules
and Regulations.
"Subsidiary" means the term as defined in Rule 405 of the Rules and
Regulations and includes all of the entities set forth in Schedule B hereto.
"Transfer Agent and Registrar" means the transfer agent and registrar
described in Section 6(a)(ix) hereof.
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"Underwriters" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated and Prudential Securities
Incorporated.
"Underwriters' Counsel" means Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP.
"Undistributed Shares" means 6,500,000 shares of Common Stock less those
shares of Common Stock that had been offered by the Company and the Selling
Stockholders pursuant to the Rights if Rights to purchase fewer than 6,500,000
shares of Common Stock are granted to holders of the Safeguard Stock.
"Unsubscribed Shares" means the Selling Stockholders Unsubscribed Shares,
the Company Unsubscribed Shares and the Undistributed Shares.
2. Representations and Warranties of the Company and the Selling
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Stockholders.
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(a) The Company represents and warrants to, and agrees with, the
Underwriters as follows:
(i) The Company has filed with the Commission a registration
statement on Form S-1 (No. 333-44427), including a prospectus subject to
completion, for the registration of the Rights, the shares of Common Stock
subject to the Rights, the Direct Shares and the Option Shares under the
Act, and have filed with the Commission one or more amendments thereto.
After the execution of this Agreement, the Company will file with the
Commission either (A) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act
as of the time of effectiveness of this Agreement, a prospectus in the form
most recently included in an amendment to such registration statement (or,
if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule 430A
under the Act or permitted by Rule 424(b) under the Act and as have been
provided to and approved by the Underwriters prior to the execution of this
Agreement, or (B) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the
Act as of the time of effectiveness of this Agreement, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Underwriters prior to
the execution of this Agreement;
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(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or any part thereof and,
to the best knowledge of the Company, no proceedings for a stop order have
been instituted or are pending or threatened. When any Preliminary
Prospectus was filed with the Commission, it contained all statements
required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the Rules and
Regulations except to the extent that such Preliminary Prospectus did not
contain any such required statements, or did not so comply, in a manner
corrected in the Prospectus. When the Registration Statement or any
amendment thereto was (or is) declared effective, it (A) contained (or will
contain) all statements required to be stated therein in accordance with,
and complied in all material respects (or will comply in all material
respects) with the requirements of, the Act and the Rules and Regulations
and (B) did not or will not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein
not misleading. When the Prospectus or any amendment or supplement thereto
is filed pursuant to Rule 424(b) (or, if the Prospectus or such amendment
or supplement is not required to be so filed, when the Registration
Statement or the amendment thereto containing such amendment or supplement
to the Prospectus was or is declared effective) and on the Closing Date and
any Option Closing Date, the Prospectus, as amended or supplemented at any
such time, (A) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the Rules and
Regulations and (B) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (ii)
do not apply to the Provided Information;
(iii) The Company and each of the Subsidiaries are corporations
duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to
transact business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or leasing of any
properties or the character or conduct of their respective operations
requires such qualification, except where failures to be so qualified,
individually or in the aggregate, would not result in a Material Adverse
Effect. Other than the Subsidiaries listed on Schedule B hereto, the
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Company does not own any stock of or other equity in, or otherwise control
directly or indirectly, any corporation, firm, partnership, trust, joint
venture or other business entity;
(iv) The Company and each of the Subsidiaries have all requisite
power and authority (corporate and other), and have obtained and currently
maintains in full force and effect and are operating in compliance with any
and all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials
and bodies (including those having jurisdiction over environmental or
similar matters) necessary or required to own or lease their respective
properties and conduct their respective business as described in the
Registration Statement, the Prospectus and any
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amendment or supplement thereto, except where the failure to so maintain or
operate would not result in a Material Adverse Effect. The Company and each
of the Subsidiaries are and have been doing business in compliance with all
such authorizations, approvals, orders, licenses, certificates, franchises
and permits and all federal, state, local and foreign laws, rules and
regulations (including without limitation those relating to employment
matters and the payment of taxes) except as disclosed in the Prospectus and
except where failures to be in compliance, individually or in the
aggregate, would not result in a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries has received any notice or notices of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise or permit
that if the subject of unfavorable decisions, rulings or findings, would,
individually or in the aggregate, result in a Material Adverse Effect;
(v) The Company has duly executed and delivered the Rights Agent
Agreement. The shares of Common Stock to be sold by the Company and the
Selling Stockholders hereunder and upon the exercise of the Rights are
subject to the rights and interests of the Underwriters and the Rights
Agent hereunder and under the Rights Agent Agreement. Except to the extent
otherwise provided therein, the arrangements for custody or reservation and
delivery of the certificates for such shares, made by the Company hereunder
and under the Rights Agent Agreement, are irrevocable, and are not subject
to termination by any acts of the Company, the Selling Stockholders or by
operation of law;
(vi) The Company has all requisite power and authority (corporate
and other) to enter into this Agreement, the Other Purchasers Standby
Purchase Agreements and the Rights Agent Agreement, and to consummate the
transactions provided for herein and therein; and this Agreement, the Other
Purchasers Standby Purchase Agreements and the Rights Agent Agreement have
each been duly authorized by the Company. Each of this Agreement and the
Rights Agent Agreement have been and the Other Purchasers Standby Purchase
Agreements will be prior to the Closing Date duly executed and delivered by
the Company. Each of this Agreement and the Rights Agent Agreement
constitutes and the Other Purchasers Standby Purchase Agreements will
constitute prior to the Closing Date, assuming due authorization, execution
and delivery by the other parties to such agreements, the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with their respective terms, subject to the effect of general
principles of equity (including standards of materiality, good faith, fair
dealing and reasonableness) whether applied by a court of law or equity,
and except as rights to indemnity and contribution hereunder may be limited
by applicable law, statutory duties or public policy. The Company's
execution and delivery of this Agreement, the Other Purchasers Standby
Purchase Agreements and the Rights Agent Agreement, its performance of its
obligations hereunder and thereunder, the consummation of the transactions
contemplated hereby and thereby by it, and its conduct of its business as
described in the Registration Statement, the Prospectus and any amendment
or supplement thereto, will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or result in the
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creation or imposition of any material liens, charges, claims,
encumbrances, pledges, security interests, defects or other like
restrictions or material equities of any kind whatsoever upon, any right,
property or assets (tangible or intangible) of the Company or any of the
Subsidiaries pursuant to the terms of (A) the charter or bylaws, each as
amended to date, of the Company or any of the Subsidiaries, (B) any lease,
license, permit, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement
(including any related to indebtedness) or any other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries is or by which any of them may
be bound or to which any of their respective properties or assets (tangible
or intangible) is or may be subject, except to the extent that any such
conflict, breach, violation or default, individually or in the aggregate,
does not and would not result in a Material Adverse Effect and does not and
would not interfere with the Offering or (C) any statute, judgment, decree,
order, rule or regulation applicable to the Company or any of the
Subsidiaries or any of their respective activities or properties adopted or
issued by an arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including those having jurisdiction over
environmental or similar matters), domestic or foreign, having jurisdiction
over the Company or any of the Subsidiaries or of their respective
activities or properties (other than such as may be required under state
securities or "Blue Sky" laws and such as may be required by the by-laws
and rules of the NASD in connection with the purchase and distribution of
the Shares by the Underwriters);
(vii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required in
connection with the offer, issuance and sale of the shares of Common Stock
to be sold by the Company hereunder or upon exercise of the Rights, the
Company's performance of its obligations hereunder, or the consummation by
the Company of the other transactions contemplated hereby, except (A) such
as may be required under the state securities or "Blue Sky" laws of any
jurisdiction or as may be required by the by-laws and rules of the NASD in
connection with the purchase and distribution of the Shares by the
Underwriters, (B) any filing of the Prospectus pursuant to Rule 424(b) or
430A of the Rules and Regulations and, if the Registration Statement has
not been declared effective, an order of the Commission declaring the
Registration Statement effective under the Act, and (C) such other
approvals as have been obtained and remain in full force and effect;
(viii) The authorized, issued and outstanding capital stock of
the Company is set forth, and conforms to the description thereof
contained, in the Registration Statement, the Prospectus, and any amendment
or supplement thereto. All of the issued shares of capital stock of the
Company, including the shares to be sold by the Selling Stockholders, have
been duly authorized and validly issued, and are fully paid and
nonassessable; the holders thereof have no rights of rescission against the
Company with respect thereto and are not subject to personal liabilities
solely by reason of being such holders (except to the extent that as a
result of acquiring a substantial number of shares of
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Common Stock a holder may be subject to claims of personal liability as an
affiliate or control person of the Company, as to which no representation
is made hereby); and none of such shares have been issued in violation of
the preemptive rights of any security holders of the Company arising as a
matter of law or under or pursuant to the Company's Certificate of
Incorporation, as amended, the Company's By-Laws, as amended, or any
agreement or instrument to which the Company is a party or by which it is
bound. The shares of Common Stock offered by the Company and to be sold
upon the exercise of the Rights or pursuant to this Agreement and the Other
Purchasers Standby Purchase Agreements have been duly authorized and at the
Closing Date, after payment therefor in accordance herewith or in
accordance with the terms and conditions of the Rights (as the case may
be), will be validly issued, fully paid and nonassessable and not subject
to any Adverse Claim, with no personal liability attaching to the holder
solely as a result of the ownership thereof (except to the extent that as a
result of acquiring a substantial number of shares of Common Stock a holder
may be subject to claims of personal liability as an affiliate or control
person of the Company, as to which no representation is made hereby). Upon
the issuance and delivery pursuant to this Agreement and the Rights Agent
Agreement of the Shares to be sold by the Company, assuming that each of
the Underwriters is a Bona Fide Purchaser, the Underwriters will acquire
good and marketable title to the Shares free and clear of any liens,
charges, claims, preemptive rights, encumbrances, pledges, security
interests, defects or other like restrictions or like material equity of
any kind whatsoever. The shares of Common Stock offered by the Company and
to be sold upon the exercise of the Rights or pursuant to this Agreement or
the Other Purchasers Standby Purchase Agreements will conform to the
description thereof contained in the Prospectus. There are no preemptive or
other rights to subscribe for or to purchase nor any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the Company's
Certificate of Incorporation or By-Laws, each as amended to date, or
pursuant to any agreement among stockholders to which the Company is a
party, by which it is bound or of which it has knowledge, and the Shares to
be sold by the Company are not otherwise subject to any preemptive or other
similar rights of any security holder. The Company is not a party to or
bound by any instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other securities,
except for this Agreement and as described in the Prospectus. Except as
described in the Prospectus with respect to Common Stock that may be
registered by the Company in a registration statement on Form S-8, no
holder of any securities of the Company has the right to include any
securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company during a period
commencing on the date the Registration Statement is declared effective by
the Commission and ending 180 days following the Expiration Date or to
require the Company to file a registration statement under the Act during
such period. All of the (i) Rights and (ii) outstanding shares of Common
Stock and all of the shares of Common Stock to be issued by the Company as
contemplated herein have been approved for quotation upon notice of
issuance on the Nasdaq National Market of the Nasdaq Stock Market;
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(ix) The consolidated financial statements and schedules of the
Company included in the Registration Statement, the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
any amendment or supplement thereto fairly present the consolidated
financial position and results of operations of the Company as of the dates
and for the periods therein specified. Such financial statements and
schedules have been prepared in accordance with generally accepted
accounting principles as in effect in the United States and as consistently
applied throughout the periods involved and in accordance with the Rules
and Regulations. The selected consolidated financial data set forth under
the caption "SELECTED CONSOLIDATED FINANCIAL DATA" in the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present, on the basis stated therein, the information
included therein. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions
are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (C) access to
assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company's internal
accounting controls are designed to cause the Company to comply in all
material respects with the Foreign Corrupt Practices Act of 1977, as
amended. Price Waterhouse, whose reports are filed with the Commission as
a part of the Registration Statement, are independent auditors as required
by the Act and the Rules and Regulations. Since January 1, 1994, Price
Waterhouse has been the only public accountants engaged by the Company, and
the Company has not had any Disagreement with Price Waterhouse, and has not
experienced any Reportable Event since that date. Since January 1, 1994,
Coopers & ▇▇▇▇▇▇▇ has been the only public accountants engaged by FormMaker
Software, Inc. ("FormMaker"), and FormMaker has not had any Disagreement
with Coopers & ▇▇▇▇▇▇▇, and has not experienced any Reportable Event since
that date;
(x) The Company and each of the Subsidiaries have filed all
federal, state, local and foreign tax returns that are required to be filed
by them or have duly requested extensions thereof, except in any case in
which the failure so to file, individually or in the aggregate, would not
have a Material Adverse Effect. The Company and each of the Subsidiaries
have paid all taxes required to be paid by them and all other assessments,
fines or penalties, if any, levied against them, to the extent that any of
the foregoing are due and payable, except for (A) any such assessment, fine
or penalty that is currently being contested in good faith or (B) any case
in which the failure so to pay, individually or in the aggregate, would not
have a Material Adverse Effect;
(xi) No transfer tax, stamp duty or other similar tax is payable
by or on behalf of the Underwriters in connection with the issuance by the
Company, or the purchase by the Underwriters, of the Shares to be sold by
the Company;
-12-
(xii) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
stated in the Prospectus to be owned or leased by it, free and clear of all
liens, charges, claims, encumbrances, pledges, security interests, defects
or other like restrictions or like equities of any kind whatsoever, other
than (A) liens for taxes not yet due and payable, (B) liens as described or
referred to in the Prospectus, and (C) liens that are not material in
amount in relation to the business of the Company and which do not
interfere with the Offering;
(xiii) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
the Company and each of the Subsidiaries own or possess adequate licenses
or other rights, in each case free of fees, charges or royalties payable
after the date hereof, to use the Intellectual Property, except where the
lack thereof would not result in a Material Adverse Effect. Except as
disclosed in the Prospectus, neither the Company nor any of the
Subsidiaries has received any notice of infringement of or conflict with
(and does not know of any such infringement of or conflict with) rights or
claims of others with respect to the Intellectual Property, any of the
activities engaged in, or proposed to be engaged in, by the Company or any
challenge to the ownership or right of the Company with respect to the
Intellectual Property which could result in a Material Adverse Effect or
which could have a material adverse effect on the development, marketing or
sale of any of the Company's existing or contemplated products, services or
processes as described in the Prospectus. None of the products, services
or processes of the Company or any of the Subsidiaries referred to in such
Prospectus and relating to the business of the Company or any of the
Subsidiaries now operated or proposed to be operated by any of them as
described in such Prospectus infringes or conflicts with any right or
patent, or with any discovery, invention, product or process which is the
subject of any patent application known to the Company, in a manner which
would result in a Material Adverse Effect;
(xiv) The Company and each of the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the business in
which they are engaged, and the Company has no reason to believe that it or
any of the Subsidiaries will not be able to renew their respective existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue their
respective business at a cost that would not result in a Material Adverse
Effect;
(xv) Neither the Company nor any of the Subsidiaries is in breach
of, or in default under, any term, covenant or provision of any license,
permit, contract, indenture, mortgage, installment sale agreement, lease,
deed of trust, voting trust agreement, stockholders agreement, note, loan
or credit agreement, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to
which it is a party or by which it may be bound or to which any of its
property or assets (tangible or intangible) is subject or affected, except
as disclosed in the Registration Statement and
-13-
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and except as to defaults that (A) individually or
in the aggregate would not have a Material Adverse Effect and (B) would not
interfere with the Offering. Neither the Company nor any of the
Subsidiaries is in violation of any term or provision of its charter or
bylaws, each as amended to date;
(xvi) Other than as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there is not pending or, to the Company's knowledge, threatened against the
Company or any of the Subsidiaries or involving the properties or business
of the Company or any of the Subsidiaries (or, to the Company's knowledge,
any circumstance that may give rise to the same), any action, suit,
proceeding, investigation, litigation or governmental proceeding (including
those having jurisdiction over environmental or similar matters), domestic
or foreign, that (A) is required to be disclosed in the Registration
Statement and is not so disclosed, (B) questions the validity of the
capital stock of the Company or the validity or enforceability of this
Agreement, (C) questions the validity of any action taken or to be taken by
the Company pursuant to or in connection with this Agreement, or (D) could
materially adversely affect the present or prospective ability of the
Company to perform its obligations under this Agreement or result in a
Material Adverse Effect. Any such proceedings summarized in the Prospectus
are accurately summarized in all material respects;
(xvii) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus), and except as may otherwise be indicated or contemplated
herein or therein, neither the Company nor any of the Subsidiaries has (A)
issued any securities other than the Rights, the shares of Common Stock to
be sold by the Company upon the exercise of the Rights, the Shares to be
sold by the Company pursuant to this Agreement and shares of Common Stock
issuable upon the exercise of stock options disclosed in the Prospectus as
outstanding as of the date hereof, (B) incurred any liability or
obligation, direct or contingent, for borrowed money, (C) entered into any
transaction other than in the ordinary course of business, (D) declared or
paid any dividend or made any other distribution on or in respect of its
capital stock, or (E) entered into any transactions with any affiliate,
including, without limitation, the Selling Stockholders or their respective
affiliates;
(xviii) The Company and each of the Subsidiaries have
satisfactory employer-employee relationships with their respective
employees. No labor or other dispute with the employees of the Company or
any of the Subsidiaries exists, or, to the best knowledge of the Company,
is imminent;
(xix) Except as disclosed in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), each employee benefit plan, within the meaning of
Section 3(3) of ERISA that is maintained, administered or contributed to by
the Company or any of its affiliates for employees or
-14-
former employees of the Company and its affiliates has been maintained in
compliance with its terms and the requirements of any applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the
Code; no prohibited transaction, within the meaning of Section 406 of ERISA
or Section 4975 of the Code has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or administrative
exemption; and for each such plan which is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred,
whether or not waived, and the fair market value of the assets of each such
plan (excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions;
(xx) The minute books of the Company and each of the Subsidiaries
made available to Underwriters' Counsel, (A) contain minutes and consents
from all meetings and actions of the Company's stockholders, board of
directors, and the committees of such board since the respective dates of
organization of the Company and (B) reflect all transactions referred to in
such minutes accurately in all material respects;
(xxi) All agreements filed as exhibits to the Registration
Statement to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries may be bound or to which any
of their respective assets, properties or businesses may be subject have
been duly and validly authorized, executed and delivered by the Company or
such Subsidiary, as appropriate, and constitute the legal, valid and
binding agreements of the Company or such Subsidiary, as appropriate,
enforceable in accordance with their respective terms, subject in each case
to the effect of general principles of equity (including standards of
materiality, good faith, fair dealing and reasonableness) whether applied
by a court of law or equity and except as rights to indemnity and
contribution under this Agreement may be limited by applicable law,
statutory duties or public policy. The descriptions in the Registration
Statement, the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and any amendment or supplement
thereto, of agreements, whether written or oral, and of other documents are
accurate and fairly present the information required to be shown with
respect thereto by Form S-1 under the Act. There are no agreements, whether
written or oral, or other documents that are required by the Act or the
Rules and Regulations to be described in the Registration Statement or
filed as exhibits to the Registration Statement that are not described or
filed as required;
(xxii) Neither the Company nor any of its officers, directors,
or affiliates (within the meaning of the Rules and Regulations) has taken
or will take, directly or indirectly, any action designed to or that has
constituted or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock or the
Rights in violation of Regulation M under the Exchange Act;
-15-
(xxiii) There are no claims, payments, issuances, arrangements
or understandings for services in the nature of a finder's, advisory or
origination fee or otherwise, either with respect to the sale of the shares
of Common Stock to be sold by the Company upon exercise of the Rights, the
sale of the Shares hereunder or with respect to the proceeds received by
the Company from such sales. Other than as reflected in this Agreement,
there are no other arrangements, agreements, understandings, payments or
issuances with respect to the Company or, to the Company's knowledge, any
of its officers, directors, or affiliates that may constitute
"underwriter's compensation," as determined by the NASD;
(xxiv) The Company has delivered or caused to be delivered to
the Underwriters the Associated Person Lock-Ups;
(xxv) All of the Rights have been duly authorized, and, when
issued and distributed as set forth in the Prospectus, will be legally
issued and valid and binding obligations of the Company having the rights
summarized in the Prospectus; and none of such Rights will have been issued
in violation of the preemptive rights of any security holders of the
Company arising as a matter of law or under or pursuant to the Company's
Certificate of Incorporation, as amended, the Company's By-Laws, as
amended, or any agreement or instrument to which the Company is a party or
by which it is bound.
(xxvi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there has not been any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company otherwise than
as set forth or contemplated in the Prospectus;
(xxvii) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or Safeguard, on the
other hand, which is required by the Act to be described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) which is not so
described;
(xxviii) The Company is not and, after giving effect to the
Offering, will not be an "investment company" or entity "controlled" by an
"investment company," as such terms are defined in the Investment Company
Act;
(xxix) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida), relating to
doing business with the Government of Cuba or with any person or affiliate
located in Cuba;
-16-
(xxx) To the best of the Company's knowledge, no Unsubscribed
Shares or Direct Shares have been sold to any person listed in Section IM-
2110-1(b)(3)-(8) of the NASD's Conduct Rules; and
(xxxi) The Company has filed with the Commission all forms,
reports and other documents required to be filed by it under the Act or
the Exchange Act since January 1, 1997. Such forms, reports and other
documents, at the time filed, (a) did not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading and (b) complied in all material respects
with the applicable requirements of the Act or the Exchange Act, as
applicable.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the Underwriters as follows:
(i) The Selling Stockholder has delivered certificates in
negotiable form for the shares of Common Stock to be sold by him or it upon
the exercise of the Rights and pursuant to this Agreement to the Company to
be placed in custody for delivery pursuant to the terms of the Rights Agent
Agreement and this Agreement. The shares represented by the certificates
so held in custody for the Selling Stockholder are subject to the interests
hereunder of the Underwriters, the Company and the Rights Agent under the
Rights Agent Agreement. The arrangements for custody and delivery of such
certificates are, to the extent provided hereunder, irrevocable, and are
not subject to termination by any acts of the Selling Stockholder, or by
operation of law;
(ii) The Selling Stockholder has the capacity and legal right to
enter into this Agreement and to sell, transfer and deliver the Shares
proposed to be sold by him or it hereunder and the shares of Common Stock
to be sold by him or it upon the exercise of the Rights. This Agreement
has been executed and delivered by the Selling Stockholder and, assuming
due authorization, execution and delivery by the other respective parties
hereto, constitutes the legal, valid and binding obligation of the Selling
Stockholder enforceable against the Selling Stockholder in accordance with
its terms, subject to the effect of general principles of equity (including
standards of materiality, good faith, fair dealing and reasonableness)
whether applied by a court of law or equity, and except as rights of
indemnity and contribution hereunder may be limited by applicable law,
statutory duties or public policy;
(iii) The execution and delivery of this Agreement and the
performance by the Selling Stockholder of his or its obligations hereunder
will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under (A) any charter
documents, including articles or certificates of incorporation, partnership
agreements or by-laws, of the Selling Stockholder, as amended to date, (B)
any lease, permit, license, contract, indenture, mortgage, deed of trust,
voting trust agreement, shareholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the
-17-
Selling Stockholder is a party or by which he or it is or may be bound or
to which any of his or its properties or assets (tangible or intangible) is
or may be subject, or any indebtedness, except to the extent that any such
conflict, breach, violation or default, individually or in the aggregate,
does not and would not interfere with the Offering or (C) any statute,
judgment, decree, order, rule or regulation applicable to the Selling
Stockholder or any of his activities or properties adopted or issued by any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including those having jurisdiction over
environmental or similar matters), domestic or foreign, having jurisdiction
over the Selling Stockholder or any of his or its activities or properties.
No consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the consummation
by the Selling Stockholder of the transactions contemplated herein, except
(A) such as may be required under the state securities or "Blue Sky" laws
of any jurisdiction or as may be required by the by-laws of the NASD in
connection with the purchase and distribution of the Shares by the
Underwriters, (B) any filing of the Prospectus pursuant to Rule 424(b) or
430A of the Rules and Regulations and, if the Registration Statement has
not been declared effective, an order of the Commission declaring the
Registration Statement effective under the Act, and (C) such other
approvals as have been obtained and remain in full force and effect;
(iv) The Selling Stockholder has, and on the Closing Date will
have, good and marketable title to the Shares proposed to be sold by the
Selling Stockholder hereunder and the shares of Common Stock to be sold
upon the exercise of the Rights, and none of such shares will be subject to
any Adverse Claim. Upon delivery of and payment for the Shares to be sold
by the Selling Stockholder hereunder, assuming that each of the
Underwriters is a Bona Fide Purchaser, the Underwriters will acquire good
and marketable title thereto free and clear of any liens, charges, claims,
preemptive rights, encumbrances, pledges, security interests, voting
trusts, defects or other like restrictions or other like material equity of
any kind whatsoever;
(v) To the best knowledge of the Selling Stockholder, the
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or any part thereof and, to the best knowledge of
the Selling Stockholder, no proceedings for a stop order have been
instituted or are pending or threatened.
(vi) The Selling Stockholder has not (a) made or caused to be
effected any transaction, directly or indirectly, designed to or that has
constituted or that might reasonably be expected to cause or result in
stabilization of the price of the Common Stock or the Rights, (b) taken or
will take, directly or indirectly, any action designed to or that has
constituted or that might reasonably be expected to cause or result in
manipulation of the price of the Common Stock or the Rights in violation of
Regulation M under the Exchange Act, or (c) failed to comply with the Act
or the Rules and Regulations in order to effect the transactions
contemplated hereby.
-18-
(vii) No facts have come to the Selling Stockholder's attention
that cause such Selling Stockholder to believe that (y) the Registration
Statement, at the time it was declared effective by the Commission,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (z) the Prospectus, as of its date or
the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Safeguard represents and warrants to, and agrees with, the
Underwriters as follows:
(i) To the best knowledge of Safeguard, the Commission has
not issued any order preventing or suspending the use of any Preliminary
Prospectus or any part thereof and, to the best knowledge of Safeguard, no
proceedings for a stop order have been instituted or are pending or
threatened. When any Preliminary Prospectus was filed with the Commission,
it contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements of, the
Act and the Rules and Regulations except to the extent that such
Preliminary Prospectus did not contain any such required statements, or did
not so comply, in a manner corrected in the Prospectus. To the best
knowledge of Safeguard, when the Registration Statement (or any amendment
thereto) was (or is) declared effective, it (A) contained (or will contain)
all statements required to be stated therein in accordance with, and
complied in all material respects (or will comply in all material respects)
with the requirements of, the Act and the Rules and Regulations and (B) did
not or will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading. To the best knowledge of Safeguard, when the Prospectus or any
amendment or supplement thereto is filed pursuant to Rule 424(b) (or, if
the Prospectus or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectus was or is declared
effective) and on the Closing Date and any Option Closing Date, the
Prospectus, as amended or supplemented at any such time, (A) contained or
will contain all statements required to be stated therein in accordance
with, and complied or will comply in all material respects with the
requirements of, the Act and the Rules and Regulations and (B) did not or
will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (i) do not apply to the Provided
Information;
(ii) To the best knowledge of Safeguard, the descriptions in
the Registration Statement, the Prospectus and any amendment or supplement
thereto of
-19-
agreements, whether written or oral, and of other documents are
accurate and fairly present the information required to be shown with
respect thereto by Form S-1 under the Act. To the best knowledge of
Safeguard, there are no agreements, whether written or oral, or other
documents that are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to the
Registration Statement that are not described or filed as required;
(iii) Safeguard has not (a) made or caused to be effected any
transaction, directly or indirectly, designed to or that has constituted or
that might reasonably be expected to cause or result in stabilization of
the price of the Common Stock or the Rights, (b) taken or will take,
directly or indirectly, any action designed to or that has constituted or
that might reasonably be expected to cause or result in manipulation of the
price of the Common Stock or the Rights in violation of Regulation M under
the Exchange Act, or (c) failed to comply with the Act or the Rules and
Regulations in order to effect the transactions contemplated hereby; and
(iv) To the best of Safeguard's knowledge, no Unsubscribed
Shares or Direct Shares have been sold to any person listed in Section IM-
2110-1(b)(3)-(8) of the NASD's Conduct Rules.
3. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Company agrees to issue and the Company and the Selling Stockholders
agree, severally and not jointly, to sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase in the percentages
set forth in Schedule C hereto, all of the Excess Unsubscribed Shares at a price
of $5.00 per share.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained and upon not less than two business
days' notice from the Underwriters, for a period of 20 days after the Expiration
Date, Safeguard, Xerox and ▇▇▇▇▇▇▇▇ agree to sell to the Underwriters all or
part of up to 640,000 Option Shares at a purchase price of $5.00 per share for
the sole purpose of covering over-allotments that may be made in connection with
the offering and distribution of the shares of Common Stock. The Underwriters
may exercise their option to purchase all or any portion of the Option Shares
from the Company up to two times, provided that the aggregate number of Option
--------
Shares purchased by the Underwriters shall not exceed 640,000. Delivery of the
Option Shares shall be made concurrently with payment therefor. Option Shares
may be purchased by the Underwriters only for the purpose of covering over-
allotments that may be made in connection with the offering and distribution of
the shares of Common Stock. No Option Shares shall be delivered unless the
Excess Unsubscribed Shares (if any are purchased by the Underwriters) shall be
simultaneously delivered or shall theretofore have been delivered as herein
provided.
-20-
(c) Payment of the respective aggregate purchase prices of the Excess
Unsubscribed Shares purchased from the Company and the Selling Stockholders
shall be made by the Underwriters on the Closing Date by wire transfer payable
to or upon the order of the Company and the Selling Stockholders at the offices
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon by the
Underwriters and the Company, upon delivery of certificates (in form and
substance satisfactory to the Underwriters) representing the Excess Unsubscribed
Shares to the Underwriters. Delivery and payment for the Excess Unsubscribed
Shares shall be made at the Closing. In addition, in the event that any or all
of the Option Shares are purchased by the Underwriters, payment of the purchase
price for, and delivery of certificates for, such Option Shares shall be made at
the above mentioned office or at such other place as shall be agreed upon by the
Underwriters and the Company, on each Option Closing Date as specified in the
notice from the Underwriters to the Company. Certificates for the Excess
Unsubscribed Shares and the Option Shares, if any, shall be in definitive, fully
registered form, shall bear no restrictive legends and shall be in such
denominations and registered in such names as the Underwriters may request in
writing at least two business days prior to the Closing Date or the relevant
Option Closing Date, as the case may be. The certificates for the Excess
Unsubscribed Shares and the Option Shares, if any, shall be made available to
the Underwriters at such office or such other place as the Underwriters may
designate for inspection, checking and packaging not later than 9:30 a.m., New
York City time, on the last business day prior to the Closing Date or the
relevant Option Closing Date, as the case may be.
(d) Delivery of certificates representing the shares of Common Stock
to be sold pursuant to the exercise of the Rights, and the payment of the
subscription price therefor to the Company and the Selling Stockholders shall be
made at the Closing on the Closing Date pursuant to the Rights Agent Agreement,
irrespective of whether or not any Excess Unsubscribed Shares are to be
purchased by the Underwriters at such Closing.
4. Public Offering of the Excess Unsubscribed Shares.
-------------------------------------------------
As soon after the Registration Statement becomes effective as the
Underwriters deem advisable, the Underwriters shall make the Offering.
5. Registration of Common Stock in Certain States.
----------------------------------------------
(a) On the basis of the representations, warranties and covenants
herein contained, but subject to the terms and conditions herein set forth, the
Underwriters will act (or at their expense, will cause another broker-dealer
registered in such state to act) as the agent of the Company and the Selling
Stockholders to effect the offering of the Rights and the sale of the shares of
Common Stock upon exercise thereof or pursuant to the Other Purchasers Standby
Purchase Agreements in the States of Arizona, Florida, Nebraska, New Hampshire,
New Jersey, New York, North Dakota and Texas,
-21-
such states being those states in which applicable state law requires that a
registered broker-dealer effect the offering of the Rights or the shares of
Common Stock purchasable upon exercise thereof or pursuant to the Other
Purchasers Standby Purchase Agreements. The Underwriters may delegate their
obligations under the immediately preceding sentence through another registered
broker-dealer satisfactory to them in states where the Underwriters are not
registered as such. The Underwriters shall not be liable under this Section
-------
5(a), except for gross negligence, lack of good faith and for their obligations
----
expressly assumed hereunder.
(b) The Company will deliver to the Underwriters, on or before the
day the Registration Statement becomes effective, a "Blue Sky Memorandum"
(herein so called), prepared by ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP relating to the
securities or Blue Sky laws of any jurisdictions in which the transfer of the
Rights or the offer and sale of the Common Stock is required to be qualified or
registered, which will set forth the circumstances under which said transfer or
offers and sales may be made and advising that the appropriate action, if any,
will be taken in each of such jurisdictions so as to permit the transfer of the
Rights and the offer and sale of the Common Stock (whether upon or in connection
with the exercise of Rights, as part of the public offering of the Shares by the
Underwriters or pursuant to the Other Purchasers Standby Purchase Agreements) to
the persons resident in the jurisdictions indicated in such survey. Such Blue
Sky Memorandum may be based upon qualification of the Rights and the Common
Stock as necessary with appropriate persons in such jurisdictions and an
examination of the statutes and regulations, if any, of such jurisdictions as
reported in standard compilations and upon interpretive advice obtained from
representatives of certain securities commissions and such local counsel as may
be necessary. Such Blue Sky Memorandum will be furnished only for the
Underwriters' general information and guidance rather than as an opinion of
counsel with regard to the laws of the jurisdictions referred to therein.
6. Covenants of the Company and the Selling Stockholders.
-----------------------------------------------------
(a) The Company covenants and agrees with the Underwriters as
follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as promptly as
possible. Unless required by law, the Company will not file with the
Commission the prospectus or amendment referred to in the second sentence
of Section 2(a)(i) hereof, any amendment or supplement to such prospectus,
---------------
any amendment to the Registration Statement, or any document under the
Exchange Act before termination of the offering of the Shares by the
Underwriters of which the Underwriters shall not previously have been
advised and furnished with a copy, or to which the Underwriters shall have
reasonably objected by notice to the Company in writing after having been
provided a copy thereof, or which is not in compliance with the Act, the
Exchange Act or the Rules and Regulations. During the time when a
prospectus relating to the Shares is required to be delivered under the
Act, the Company will comply with all requirements imposed upon it by the
Act and the Rules and Regulations to the extent necessary to permit the
continuance of sales of or dealings in the Shares in accordance with the
provisions hereof and of the
-22-
Prospectus, as amended or supplemented. The Company will prepare and file
with the Commission, promptly upon the reasonable request by the
Underwriters or Underwriters' Counsel, any amendments to the Registration
Statement or amendments or supplements to the Prospectus that may be
necessary or advisable in connection with the distribution of the Shares by
the Underwriters, and will use its best efforts to cause the same to be
filed with the Commission as promptly as possible;
(ii) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Underwriters, with a confirmation in
writing, of (A) the time when the Registration Statement or any amendment
thereto has been filed or declared effective or the Prospectus or any
amendment or supplement thereto has been filed, (B) the issuance by the
Commission of any stop order, or of the initiation or threatening of any
proceeding, suspending the effectiveness of the Registration Statement or
any amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (C) the issuance by any state securities commission of any notice
of any proceedings for the suspension of the qualification of the Shares
for offering or sale in any jurisdiction or of the initiation, or the
threatening, of any proceeding for that purpose, (D) the receipt of any
comments from the Commission, and (E) any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information. The Company will use its
best efforts to prevent the issuance of any such order or the imposition of
any such suspension and, if any such order is issued or suspension is
imposed, to obtain the withdrawal thereof as promptly as possible;
(iii) If required, the Company will file the Prospectus and any
amendment or supplement thereto with the Commission in the manner and
within the time period required by Rule 424(b) and Rule 430A(a)(3) of the
Rules and Regulations;
(iv) The Company will arrange for the qualification of the
shares of Common Stock for offering and sale under the securities or "Blue
Sky" laws of such jurisdictions in which recipients of Rights and the Other
Purchasers are resident and such jurisdictions as the Underwriters may
reasonably designate and will continue such qualifications in effect for as
long as may be necessary to complete the distribution of the shares of
Common Stock, provided, however, that in connection therewith the Company
-------- -------
shall not be required to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction;
(v) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act, any event occurs as a result of
which, in the opinion of the Company or counsel for the Company, the
Prospectus, as then amended or supplemented, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it
is otherwise necessary
-23-
at any time to amend or supplement the Prospectus to comply with the Act or
the Rules and Regulations, the Company will promptly notify the
Underwriters thereof and, subject to Section 6(a)(i) hereof, prepare and
---------------
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance. If, at any
time when a prospectus relating to the Shares is required to be delivered
under the Act, any event occurs as a result of which, in the opinion of the
Underwriters or Underwriters' Counsel, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, the Underwriters will promptly notify
the Company thereof and the Company will, subject to Section 6(a)(i)
---------------
hereof, prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to
the Prospectus that corrects such statement or omission or effects such
compliance. The Company will furnish to the Underwriters and dealers (whose
names and addresses shall be furnished to the Company by the Underwriters)
to which Shares may have been sold on behalf of the Underwriters and to any
other dealers upon request, a reasonable number of copies of any amendment
or supplement prepared pursuant to this paragraph (v);
(vi) The Company will furnish to each of the Underwriters and
to Underwriters' Counsel, without charge, a signed copy of the registration
statement originally filed with respect to the Shares and each amendment
thereto. So long as the Underwriters or any dealer is required by the Act
or the Rules and Regulations to deliver a prospectus, the Company will also
furnish as many copies of each Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto as the Underwriters may reasonably
request.
(vii) As soon as practicable after the effective date of the
Registration Statement, the Company will make generally available to its
security holders, in the manner specified in Rule 158(b) of the Rules and
Regulations, and to the Underwriters an earnings statement that will be in
the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations;
(viii) For a period of five years following the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants) and will deliver to the Underwriters unaudited quarterly
reports of earnings (through delivery of the Company's quarterly reports
filed with the Commission on Form 10-Q or Form 10-QSB) and the following:
(A) concurrently with furnishing quarterly reports, if
any, to the stockholders, statements of income of the Company for each
quarter in the form furnished to the Company's stockholders;
-24-
(B) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company as at the end of the
preceding fiscal year, together with statements of operations,
stockholders equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the certificate thereon of independent
public accountants;
(C) as soon as they are available, copies of all
reports (financial or other) mailed to its stockholders;
(D) as soon as they are available, copies of all
reports (other than preliminary proxy materials) and financial
statements furnished to or filed with the Commission, the NASD or
Nasdaq which are available to the public;
(E) as soon as they are available every press release
and every material news item or article of interest to the financial
community in respect of the Company or its affairs that is released or
prepared by the Company; and
(F) any additional information of a public nature
concerning the Company that the Underwriters may reasonably request
from time to time;
(ix) The Company will maintain a Transfer Agent and Registrar
for the shares of Common Stock. Effective as of the Closing Date, the
Company will cause the Transfer Agent for the shares of Common Stock to
make appropriate "stop transfer" restrictions in its records relating to
the certificates representing all shares of Common Stock subject to
restrictions under the agreements described in Sections 2(a)(xxiv), 2(b)(i)
----------------------------
and 6(b)(i) hereof;
-----------
(x) During the period commencing on the date the Registration
Statement is declared effective by the Commission and ending 180 days after
the Expiration Date, the Company, will not, without the prior written
consent of the Underwriters, (A) directly or indirectly, transfer, sell,
offer for sale, contract for sale, grant any option for the sale of, or
otherwise dispose of (or announce any transfer, sale, offer for sale,
contract for sale, grant of any option for sale of, or other disposition
of) any shares of Common Stock, or other securities convertible into, or
exercisable or exchangeable for, shares of Common Stock (except as
contemplated by this Agreement) or (B) file any registration statement
relating to any such securities with the Commission or any other authority
except as contemplated herein, provided, however, that (1) the Company may
-------- -------
grant or issue securities pursuant to any employee stock option plan or
stock purchase plan or outstanding stock options described in the
Prospectus and, commencing after the Closing Date, may file a registration
statement on Form S-8 with respect to such plans and (2) the Company may
issue shares of Common Stock, or other securities convertible into, or
exercisable or exchangeable for shares of Common Stock, as consideration
for any acquisition by the Company so long as the party being issued such
securities signs an agreement, acceptable in form
-25-
and substance to the Underwriters, that such party will not transfer, sell,
offer for sale, contract to sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock owned by such party or with respect
to which such party has the power of disposition during a period commencing
on the date of issuance of such securities and ending 180 days following
the Expiration Date;
(xi) The Company will apply the net proceeds from the sale of
the Common Stock sold by it in the manner set forth under "USE OF PROCEEDS"
in the Prospectus. Except as described in the Prospectus, no portion of the
net proceeds will be used directly or indirectly to acquire any securities
issued by the Company;
(xii) The Company will furnish to the Underwriters as early as
practicable prior to each of the date hereof, the Closing Date and each
Option Closing Date, if any, but no later than two full business days prior
thereto, a copy of the latest available unaudited interim financial
statements of the Company (which in each case shall not be earlier than the
last day of the preceding month, unless such month-end shall be less than
three business days prior to the date such statements are to be delivered)
that have been read by the Company's independent public accountants, as
stated in their letter to be furnished pursuant to Section 8(j) hereof;
------------
(xiii) The Company will cause the Shares and the Rights to be
approved for quotation on the Nasdaq National Market and will use its
reasonable commercial efforts to maintain such approvals;
(xiv) The Company will file and cause to become effective prior
to the Closing Date a registration statement with respect to the Common
Stock pursuant to Section 12(g) of the Exchange Act and will use its best
efforts to maintain such registration;
(xv) The Company will apply the net proceeds from the sale of
the shares of Common Stock sold by it and conduct its operations in a
manner that will not subject it to registration as an investment company
under the Investment Company Act of 1940, as amended; and
(xvi) The Company will furnish, without charge, to the
Underwriters and Underwriters' Counsel within four months of the Closing
Date such number of closing binders as the Underwriters and Underwriters'
Counsel may reasonably request.
(b) Each Selling Stockholder covenants and agrees with the
Underwriters as follows:
(i) During the period commencing on the date the Registration
Statement is declared effective by the Commission and ending 180 days after
the Expiration Date, the Selling Stockholder will not, without the prior
written consent of the Underwriters,
-26-
directly or indirectly, transfer, sell, offer for sale, contract for sale,
grant any option for the sale of or otherwise dispose of any shares of
Common Stock or other securities convertible into, or exercisable or
exchangeable for, shares of Common Stock except as contemplated in this
Agreement;
(ii) The Selling Stockholder will pay all applicable state
transfer taxes, if any, involved in the transfer to the Underwriters of the
Shares to be purchased by the Underwriters from such Selling Stockholder;
and
(iii) The Company and the Selling Stockholders covenant and
agree with each other and covenant and agree with the Underwriters that the
Other Purchasers Standby Shares to be sold and the 560,000 shares of Common
Stock that are expected to be sold to the ▇▇▇▇▇▇ Group upon exercise of the
▇▇▇▇▇▇ Rights shall be deemed to be sold by the Company.
(c) Safeguard covenants and agrees with the Underwriters that during
the period commencing on the date the Registration Statement is declared
effective by the Commission and ending 180 days after the Expiration Date,
Safeguard will not, without the prior written consent of the Underwriters,
directly or indirectly, transfer, sell, offer for sale, contract for sale, grant
any option for the sale of or otherwise dispose of any shares of Common Stock or
other securities convertible into, or exercisable or exchangeable for, shares of
Common Stock except (A) as contemplated in this Agreement or (B) pursuant to
grants or sales of such shares to employees of Safeguard or its subsidiaries,
provided that such transferees agree to be bound by the restrictions contained
in this paragraph.
7. Payment of Expenses; Fees.
-------------------------
(a) As compensation to the Underwriters for their services in
connection with the transactions contemplated by this Agreement and their
commitment hereunder, the Company and the Selling Stockholders hereby agree,
jointly and severally, to pay to the Underwriters, by wire transfer, on the
seventh business day following the Expiration Date, an amount equal to the sum
of (i) 3% of the Exercise Price for each share of Common Stock subject to
Rights, (ii) 3% of the subscription price for each Direct Share and each
Undistributed Share sold to the Direct Purchasers, and (iii) an additional fee
of 4% of the Exercise Price for each share (other than the Option Shares)
purchased by the Underwriters pursuant to Section 3(a) of this Agreement or upon
------------
the exercise of Rights by the Underwriters if such Rights were purchased by the
Underwriters at a time when the Common Stock was trading (on a "when-issued"
basis) at a per share price of less than $6.00 or with the prior acknowledgement
of Safeguard that the Underwriters would be entitled to receive such
compensation pursuant to the exercise of such Rights. As compensation to the
Underwriters for their commitment hereunder, the Company hereby agrees to pay
the Underwriters, by wire transfer, on each Option Closing Date an amount equal
to 7% of the Exercise Price for each Option Share purchased on such date by the
Underwriters. As additional compensation to the Underwriters for their
commitment hereunder, the Company shall reimburse the Underwriters, by wire
transfer on the
-27-
sixth business day following the Expiration Date, for a non-accountable expense
allowance of (i) $200,000 if, on the Expiration Date, the closing price for the
--------
Common Stock was trading (on a "when-issued" basis) at a per share price of less
than $7.25, (ii) $100,000 if, on the Expiration Date, the closing price for the
----- --------
Common Stock was trading (on a "when-issued basis) at a per share price equal to
or greater than $7.25 but less than or equal to $8.25 or (iii) no expense
----- -----
allowance if, on the Expiration Date, the closing price for the Common Stock was
trading (on a "when-issued" basis) at a per share price greater than $8.25.
-----
(b) The Company hereby agrees to pay all expenses and fees incident to
the performance of the obligations by the Company and the Selling Stockholders
under this Agreement, including all expenses and fees of the Company and the
Selling Stockholders incurred in connection with or by (i) the engagement of
accountants, counsel for the Company and the Selling Stockholders, the Rights
Agent and the Transfer Agent and Registrar for the Common Stock, (ii)
preparation, duplication, printing, filing and distribution of the registration
statement originally filed with respect to the Shares and any amendments
thereto, any Preliminary Prospectus and the Prospectus and any amendments and
supplements thereto and related documents used in connection with the Offering,
including in each case the cost of all copies supplied to the Underwriters in
quantities as hereinabove stated, (iii) the printing, engraving, issuance and
delivery of certificates representing the Rights and the Shares, (iv) the
qualification of the Shares under state securities or "Blue Sky" laws, including
filing fees, costs of printing and mailing of a "Preliminary Blue Sky
Memorandum" and "Final Blue Sky Memorandum" and disbursements and fees of
Underwriters' Counsel in connection with the review of such materials (which
shall be paid at the Closing), (v) the approval of the Common Stock and Rights
for quotation on the Nasdaq National Market, (vi) the filing fees of the
Underwriters in connection with any filings required to be made with the NASD,
(vii) travel and out of pocket expenses of the Company in connection with
meetings with prospective investors in the Shares (other than such expenses as
shall have been specifically approved in writing by the Underwriters to be paid
for by the Underwriters), and (viii) any expenses incurred by the Company in
connection with a "road show" presentation to potential investors.
(c) If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 8, Sections 12(a)(ii), (a)(vii) or (a)(viii), or
--------- -----------------------------------------
Section 13, the Company agrees to reimburse and indemnify the Underwriters for
----------
all of their reasonable accountable out-of-pocket expenses, including the
reasonable fees and disbursements of Underwriters' Counsel and any of the state
securities, "Blue Sky" and NASD fees and expenses identified in Sections
--------
7(b)(iv) and 7(b)(vi) above, that shall have been incurred by them in connection
---------------------
with the proposed purchase and sale of the Shares.
8. Conditions of the Underwriters' Obligations.
-------------------------------------------
The obligations of the Underwriters to purchase and pay for the Shares
shall be subject, in their sole discretion, to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
herein as of the date hereof and as of the Closing Date, as if they had been
made on and as of the Closing Date, to the accuracy on and as of the Closing
Date of the
-28-
statements of the officers of the Company and the Selling Stockholders made in
certificates delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Stockholders on and as of the Closing Date of their
respective covenants and obligations hereunder, and to the following further
conditions:
(a) If the Registration Statement or any amendment thereto filed prior
to the Closing Date has not been declared effective as of the time of execution
hereof, the Registration Statement or such amendment shall have been declared
effective not later than the first full business day next following the date
hereof or such later date and time as shall have been consented to in writing by
the Underwriters. If required, the Prospectus shall have been timely filed with
the Commission in accordance with Rule 424(b) of the Rules and Regulations. If
required, any amendment or supplement to the Prospectus shall have been filed in
accordance with Rule 424(c) under the Act. No stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall have
been issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company, the Selling Stockholders or the Underwriters,
shall be contemplated by the Commission. The Company shall have complied, to
the reasonable satisfaction of the Underwriters and Underwriters' Counsel, with
any request of the Commission for additional information (to be included in the
Registration Statement, the Prospectus or otherwise).
(b) The Underwriters shall not have advised the Company or any of the
Selling Stockholders that, in the opinion of the Underwriters or Underwriters'
Counsel, (i) the Registration Statement, or any amendment thereto, includes an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading or (ii) the Prospectus, or any amendment or supplement
thereto, includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(c) The Underwriters shall have received from Underwriters' Counsel an
opinion dated the Closing Date, with respect to the issuance and sale of the
Shares, the Registration Statement, the Prospectus and such other related
matters as the Underwriters reasonably may request. Underwriters' Counsel shall
have received from the Company and the Selling Stockholders such papers and
information as they may request to enable them to review or pass upon such
matters or in order to evidence the accuracy, completeness or satisfaction of
any of the representations, warranties, or covenants of the Company or any of
the Selling Stockholders contained herein.
(d) The Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP,
counsel to the Company, an opinion, on or prior to the date Rights certificates
and Prospectuses are first mailed to Safeguard Shareholders and on the Closing
Date, dated the respective dates thereof and in form and substance satisfactory
to Underwriters' Counsel, to the effect that:
(i) The Company and each of the Subsidiaries are duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of
-29-
organization and are duly qualified to transact business as foreign
corporations and are in good standing in each jurisdiction in which the
Company has represented to such counsel that they own or lease property;
(ii) The Company and each of the Subsidiaries have all requisite
corporate power and authority necessary or required to own or lease their
respective properties and conduct its businesses as described in the
Registration Statement and the Prospectus;
(iii) The Company has all requisite power and authority
(corporate and other) to enter into this Agreement, the Rights Agent
Agreement and the Other Purchasers Standby Purchase Agreements and to
consummate the transactions provided for herein and therein; and this
Agreement, the Other Purchasers Standby Purchase Agreements and the Rights
Agent Agreement have each been duly authorized, executed and delivered by
the Company. Each of this Agreement, assuming due authorization, execution
and delivery by the Underwriters, and each of the Other Purchasers Standby
Purchase Agreements, and the Rights Agent Agreement, assuming due
authorization, execution and delivery by the parties thereto other than the
Company, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, arrangement or similar laws affecting
creditors' rights generally or by general principles of equity (including
standards of materiality, good faith, fair dealing and reasonableness)
whether applied by a court of law or equity, and except as rights to
indemnity and contribution hereunder may be limited by applicable law,
statutory duties or public policy (provided that as of the first date of
the opinion only, such opinion need not express any opinion set forth above
with respect to the Other Purchaser Standby Purchase Agreements that have
not theretofore been executed and delivered). The Company's execution and
delivery of this Agreement, the Other Purchasers Standby Purchase
Agreements and the Rights Agent Agreement, its performance of its
obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby do not and will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition
of any liens, charges, claims, encumbrances, pledges, security interests,
defects or other like restrictions or equities of any kind whatsoever upon,
any right, property or asset (tangible or intangible) of the Company or any
of the Subsidiaries pursuant to the terms of (A) the charter or bylaws,
each as amended through the date of the opinion, of the Company and each of
the Subsidiaries, (B) any material lease, permit, license, contract,
indenture, mortgage, deed of trust, voting trust agreement, stockholders
agreement, note, loan or credit agreement or any other agreement or
instrument known to such counsel to which the Company or any of the
Subsidiaries is a party or by which any of them is or may be bound or to
which any of their respective properties or assets (tangible or intangible)
is or may be subject, or any indebtedness, except that such counsel need
not express an opinion with respect to any violation based upon any
covenant of a financial or numerical nature or that requires arithmetic
computation and such
-30-
counsel has not otherwise known of or had reason to expect the occurrence
of such default, or (C) to the knowledge of Company counsel, any statute,
rule, regulation, judgment, decree or order applicable to the Company or
any of the Subsidiaries or any of their respective activities or properties
adopted or issued by an arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including those
having jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over the Company or any of the Subsidiaries or
any of their respective activities or properties (other than such as may be
required under state securities or "Blue Sky" laws and such as may be
required by the by-laws and rules of the NASD in connection with the
purchase and distribution of the Shares by the Underwriters);
(iv) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or, to such counsel's knowledge, any
court is required in connection with the issuance of the shares of Common
Stock to be sold by the Company, the Company's performance of its
obligations hereunder, the Offering, or the consummation by the Company of
the other transactions contemplated hereby, except such as may be required
under the state securities or "Blue Sky" laws of any jurisdiction or as may
be required by the by-laws and rules of the NASD in connection with the
purchase and distribution of the Shares by the Underwriters and except such
other approvals as have been obtained and remain in full force and effect.
Upon the effectiveness of the Registration Statement, the Common Stock will
be registered pursuant to Section 12(g) of the Exchange Act, and will be
included in the Nasdaq National Market;
(v) At the date or dates indicated in the Prospectus, the
authorized, issued and outstanding capital stock of the Company was as set
forth therein, and conformed as to legal matters, to the extent that it
constitutes matters of law or legal conclusions, to the description thereof
contained therein under the captions "CAPITALIZATION" and "DESCRIPTION OF
CAPITAL STOCK." All of the issued shares of Common Stock of the Company
(including the Shares sold by the Selling Stockholders) have been duly
authorized and validly issued, and are fully paid and non-assessable; the
holders thereof are not subject to personal liabilities solely by reason of
holding such shares; and none of such shares have been issued in violation
of the preemptive rights of any security holders of the Company known to
Company counsel. The shares of Common Stock issuable to Safeguard, ▇▇ ▇▇
and Offshore upon redemption of the Class B Common Stock of the Company
have been duly authorized and reserved for issuance, and upon issuance and
delivery against payment therefor will be validly issued, fully paid and
nonassessable. The Shares to be sold by the Company have been duly
authorized and, when paid for in accordance herewith, will be validly
issued, fully paid and non-assessable, and with no personal liability
resulting solely from the ownership thereof. Upon the issuance and
delivery pursuant to this Agreement of the Shares to be sold by the Company
to the Underwriters, assuming the Underwriters do not have knowledge of any
Adverse Claim, the Underwriters will acquire good and marketable title to
such Shares free and clear of any liens, charges, claims, encumbrances,
pledges, security interests, defects or other like restrictions or like
equities of any kind whatsoever.
-31-
Except as described in the Prospectus, there are no preemptive or other
rights to subscribe for or to purchase, nor any restriction upon the voting
or transfer of, any shares of Common Stock pursuant to the Company's
Certificate of Incorporation or By-Laws, each as amended to date, or
pursuant to any agreement among stockholders to which the Company is a
party or of which it has knowledge, and the Shares to be sold by the
Company are not subject to any preemptive or other similar rights of any
security holder. The Company is not a party to or bound by any instrument,
agreement or other arrangement known to such counsel providing for it to
issue any capital stock, rights, warrants, options or other securities,
except for this Agreement and as described in the Prospectus. Except as
described in the Prospectus, no holder of any securities of the Company or
of any options, warrants or other convertible or exchangeable securities of
the Company which are exercisable for or convertible or exchangeable for
securities of the Company has any right (which has not been waived) to
include any securities issued by the Company in the Registration Statement
or any registration statement to be filed by the Company within the period
commencing on the date the Registration Statement is declared effective by
the Commission and ending 180 days after the Expiration Date or to require
the Company to file a registration statement under the Act during such
period. Based on the form of specimen certificate provided to such counsel,
the certificates representing the Shares are in due and proper form;
(vi) The Registration Statement has become effective under the
Act. Any required filing of the Prospectus pursuant to Rule 424(b) and
430A(a)(3) of the Rules and Regulations has been made in accordance with
the time period required thereby. To such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been instituted or are
pending or threatened, by the Commission;
(vii) At the time the Registration Statement was declared
effective by the Commission, the Registration Statement and the Prospectus
and any amendment or supplement thereto (other than the financial
statements, and notes thereto, the financial schedules, and the other
financial and statistical data included in the Registration Statement or
the Prospectus or omitted therefrom, as to which such counsel need express
no opinion) complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations;
(viii) The statements contained in the Prospectus under the
captions "PROSPECTUS SUMMARY," "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCAL CONDITION AND RESULTS OF OPERATION," "BUSINESS,"
"MANAGEMENT" AND "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS," are
accurate, complete and fair insofar as they relate to contracts and
documents described therein. To such counsel's knowledge, there are no
contracts or other documents of a character required to be filed as
exhibits to the Registration Statement or required to be described in the
Registration Statement or the Prospectus that were not filed or disclosed
as required;
-32-
(ix) Except as disclosed in the Prospectus, to such counsel's
knowledge, there is not pending or threatened or contemplated against the
Company, or involving the properties or business of the Company, any
action, suit, proceeding, inquiry, investigation, litigation or
governmental proceeding (including those having jurisdiction over
environmental or similar matters), domestic or foreign, that (A) is
required to be disclosed in the Registration Statement and is not so
disclosed, (B) questions the validity of the capital stock of the Company
or the validity or enforceability of this Agreement, (C) questions the
validity of any action taken or to be taken by the Company pursuant to or
in connection with this Agreement, or (D) could materially adversely effect
the present or prospective ability of the Company to perform its
obligations under this Agreement or result in a Material Adverse Effect;
(x) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act, nor, by receipt of the proceeds from its sale by it
of the Shares pursuant to this Agreement, will the Company become or be
deemed to be an "investment company" under such Act;
(xi) No transfer taxes are required to be paid in connection
with the sale and delivery of the Common Stock by the Company to the
Underwriters hereunder;
(xii) The certificates evidencing the Rights to be distributed
to the Safeguard Shareholders and the shares of Common Stock to be
delivered hereunder are in due and proper form under Delaware law;
(xiii) All of the Rights have been duly authorized and validly
issued, and, when issued and distributed as set forth in the Prospectus,
will be legally issued and valid and binding obligations of the Company
having the rights summarized in the Prospectus; and none of such Rights
will have been issued in violation of the preemptive rights of any security
holders of the Company arising as a matter of law or under or pursuant to
the Company's Certificate of Incorporation, as amended, the Company's By-
Laws, as amended, or any agreement or instrument to which the Company is a
party or by which it is bound.
In addition, such opinion shall contain statements substantially
to the following effect:
In the course of the preparation by the Company and its
counsel of the Registration Statement and the Prospectus, such
counsel attended conferences with certain of the officers of, and
the independent public accountants for, the Company, at which the
Registration Statement and the Prospectus were discussed (some of
which were attended by representatives of the Underwriters).
Between the date of effectiveness of the Registration Statement
and the Closing Date, such counsel attended (if applicable)
-33-
additional conferences with certain of the officers of, and the
independent public accountants for, the Company, at which the
contents of the Registration Statement and the Prospectus were
discussed. Given the limitations inherent in the independent
verification of factual matters and the character of
determinations involved in the registration process, such counsel
is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (other
than as set forth in the first sentence of paragraph (v) and as
set forth in paragraph (viii) above). Subject to the foregoing
and on the basis of the information such counsel gained in the
performance of the services referred to above, including
information obtained from officers and other representatives of
the Company, no facts have come to such counsel's attention that
cause such counsel to believe (except that such counsel need not
express any opinion or belief with respect to the financial
statements, schedule and the notes thereto and other financial
and statistical data included therein) that (y) the Registration
Statement, at the time it was declared effective by the
Commission, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (z)
the Prospectus, as of its date or the Closing Date, contained or
contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
provided such counsel need not express any belief as to the
contents of the eighth paragraph under the heading "UNDERWRITING"
in the Prospectus.
In rendering such opinions, such counsel may rely as to matters
of fact, to the extent they deem proper, on the representations and warranties
of the Company and the Selling Stockholders contained in this Agreement and on
certificates and written statements of the Company or responsible officers of
the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that copies of any
--------
such statements or certificates shall be delivered to Underwriters' Counsel if
requested.
References to the Prospectus and the Registration Statement in this
Section shall include any amendment or supplement thereto at the date of such
opinion.
(e) The Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP,
counsel to the Other Selling Stockholders, and from company counsel with respect
to Xerox, an opinion, on or prior to the date Rights certificates and
Prospectuses are first mailed to Safeguard Shareholders and on the
-34-
Closing Date, dated the respective dates thereof and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) Each Other Selling Stockholder has the legal right and
power to enter into this Agreement and each Other Selling Stockholder has
the requisite capacity and legal right to sell, transfer and deliver
hereunder the Shares proposed to be sold hereunder. This Agreement has been
executed and delivered by each of the Other Selling Stockholders. This
Agreement, assuming due authorization, execution and delivery by the
Underwriters constitutes the legal, valid, and binding obligations of each
Other Selling Stockholder enforceable against each Other Selling
Stockholder in accordance with its terms, subject to the effect of general
principles of equity (including standards of materiality, good faith, fair
dealing and reasonableness) whether applied by a court of law or equity and
except as rights to indemnity and contribution hereunder or thereunder may
be limited by applicable law, statutory duties or public policy;
(ii) The execution and delivery of this Agreement, the
performance by each Other Selling Stockholder of its obligations hereunder
will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, or result in the
creation or imposition of any liens, charges, claims, encumbrances,
pledges, security interests, defects or other like restrictions or equities
of any kind whatsoever upon, any right, property or (tangible or
intangible) of each of the Other Selling Stockholders pursuant to the terms
of (A) any material lease, permit, license, contract, indenture, mortgage,
deed of trust, voting trust agreements, stockholders agreement, note, loan
or credit agreement (including any related to indebtedness) or any other
agreement or instrument known to such counsel to which any Other Selling
Stockholder is a party or by which he or it is or may be bound or to which
any of his or its respective properties or assets (tangible or intangible)
is or may be subject, or (B) any statute, judgment, decree, order, rule or
regulation, known to such counsel, applicable to any Other Selling
Stockholder or any of his or its respective activities or properties
adopted or issued by any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including those
having jurisdiction over environmental or similar matters), having
jurisdiction over any Other Selling Stockholder or any of his or its
respective activities or properties, in each case except where such breach,
violation or default would not (i) affect the enforceability of this
Agreement, or (ii) affect the Offering or the sale of the Common Stock
contemplated hereby. To such counsel's knowledge, no consent, approval,
authorization or order of, or filing with, any governmental agency or body
or any court is required for the consummation by any Other Selling
Stockholder of the transactions contemplated herein, except such as may be
required under the state securities or "Blue Sky" laws of any jurisdiction
or as may be required by the by-laws and rules of the NASD in connection
with the purchase and distribution of the Shares by the Underwriters and
except such other approvals as have been obtained and remain in full force
and effect;
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(iii) To such counsel's knowledge, each Other Selling
Stockholder has title to the Shares proposed to be sold by such Other
Selling Stockholder hereunder free of any adverse claims and upon delivery
of and payment for such Shares hereunder, assuming that each Underwriter
does not have any notice of an adverse claim, such Underwriter will be a
protected purchaser (as defined in Section 8-303 of the Uniform Commercial
Code as in effect in the State of Delaware).
In rendering such opinions, such counsel may rely as to matters
of fact, to the extent they deem proper, on the representations and warranties
of the Company and the Other Selling Stockholders contained in this Agreement
and on certificates and written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
--------
certificates shall be delivered to Underwriters' Counsel if requested.
References to the Prospectus and the Registration Statement in this
Section shall include any amendment or supplement thereto at the date of such
opinion.
(f) The Underwriters shall have received from ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, counsel to the Safeguard Stockholders, an opinion, on or prior to the date
Rights certificates and Prospectuses are first mailed to Safeguard Shareholders
and on the Closing Date, dated the respective dates thereof and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) Each Safeguard Stockholder has the legal right and power
to enter into this Agreement and each Safeguard Stockholder has the
requisite capacity and legal right to sell, transfer and deliver hereunder
the Shares proposed to be sold hereunder. This Agreement has been executed
and delivered by each of the Safeguard Stockholders. This Agreement,
assuming due authorization, execution and delivery by the Underwriters
constitutes the legal, valid, and binding obligations of each Safeguard
Stockholder enforceable against each Safeguard Stockholder in accordance
with its terms, subject to the effect of general principles of equity
(including standards of materiality, good faith, fair
-36-
dealing and reasonableness) whether applied by a court of law or equity and
except as rights to indemnity and contribution hereunder or thereunder may
be limited by applicable law, statutory duties or public policy;
(ii) To such counsel's knowledge, the execution and delivery of
this Agreement, the performance by each Safeguard Stockholder of its
obligations hereunder will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, or result in the creation or imposition of any liens, charges,
claims, encumbrances, pledges, security interests, defects or other like
restrictions or equities of any kind whatsoever upon, any right, property
or (tangible or intangible) of each of the Safeguard Stockholders pursuant
to the terms of (A) any material lease, permit, license, contract,
indenture, mortgage, deed of trust, voting trust agreements, stockholders
agreement, note, loan or credit agreement (including any related to
indebtedness) or any other agreement or instrument to which any Safeguard
Stockholder is a party or by which he or it is or may be bound or to which
any of his or its respective properties or assets (tangible or intangible)
is or may be subject, or (B) any statute, judgment, decree, order, rule or
regulation, known to such counsel, applicable to any Safeguard Stockholder
or any of his or its respective activities or properties adopted or issued
by any arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including those having jurisdiction over
environmental or similar matters), having jurisdiction over any Safeguard
Stockholder or any of his or its respective activities or properties, in
each case except where such breach, violation or default would not (i)
affect the enforceability of this Agreement, or (ii) affect the Offering or
the sale of the Common Stock contemplated hereby. To such counsel's
knowledge, no consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation by any Safeguard Stockholder of the transactions contemplated
herein, except such as may be required under the state securities or "Blue
Sky" laws of any jurisdiction or as may be required by the by-laws and
rules of the NASD in connection with the purchase and distribution of the
Shares by the Underwriters and except such other approvals as have been
obtained and remain in full force and effect;
(iii) To such counsel's knowledge, each Safeguard Stockholder
has title to the Shares proposed to be sold by such Safeguard Stockholder
hereunder free of any adverse claims and upon delivery of and payment for
such Shares hereunder, assuming that each Underwriter does not have any
notice of an adverse claim, such Underwriter will be a protected purchaser
(as defined in Section 8-303 of the Uniform Commercial Code as in effect in
the State of Delaware); and
(iv) The descriptions in the Registration Statement, the
Prospectus and any amendment or supplement thereto of agreements, whether
written or oral, and of other documents to which each Safeguard Stockholder
or any of its affiliates (other than the Company) is a party are accurate
and fairly present the information required to be shown with respect
thereto. To such counsel's knowledge, there are no agreements, whether
written
-37-
or oral, or other documents to which each Safeguard Stockholder or any of
its affiliates (other than the Company) is a party of a character that are
required by the Act or the Rules and Regulations to be described in the
Registration Statement or filed as exhibits to the Registration Statement
that are not described or filed as required.
In addition, such opinion shall contain statements substantially
to the following effect:
In the course of the preparation by the Company and its
counsel of the Registration Statement and the Prospectus, such
counsel attended conferences with certain of the officers of, and
the independent public accountants for, the Company, at which the
Registration Statement and the Prospectus were discussed (some of
which were attended by representatives of the Underwriters).
Given the limitations inherent in the independent verification of
factual matters and the character of determinations involved in
the registration process, such counsel is not passing upon and
does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration
Statement and the Prospectus. Subject to the foregoing and on
the basis of the information such counsel gained in the
performance of the services referred to above, including
information obtained from officers and other representatives of
the Company, no facts have come to such counsel's attention that
cause such counsel to believe (except that such counsel need not
express any opinion or belief with respect to the financial
statements, selected financial data schedule and the notes
thereto and other financial and statistical data included
therein) that (y) the Registration Statement, at the time it was
declared effective by the Commission, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (z) the Prospectus, as of its date or
the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, provided such counsel need not
express any belief as to the contents of the eighth paragraph
under the heading "UNDERWRITING" in the Prospectus.
In rendering such opinions, such counsel may rely as to matters
of fact, to the extent they deem proper, on the representations and warranties
of the Company and the Safeguard Stockholders contained in this Agreement and on
certificates and written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
--------
certificates shall be delivered to Underwriters' Counsel if requested.
-38-
The Underwriters are entitled to rely on the opinion of such firm,
filed as an exhibit to the Registration Statement, as to the matters discussed
in the Prospectus under the heading "FEDERAL INCOME TAX CONSEQUENCES" in the
Prospectus.
References to the Prospectus and Registration Statement in this
Section shall include any amendment or supplement thereto at the date of such
opinion.
(g) The Underwriters shall have received a certificate, dated the
Closing Date and in form and substance satisfactory to the Underwriters, of the
Company signed by each of the Chief Executive Officer and Chief Financial
Officer of the Company to the effect that each of such officers has carefully
examined the Registration Statement, the Prospectus and this Agreement and, to
his best knowledge, that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date,
and the Company has complied in all material respects with all agreements
and covenants and satisfied all conditions contained in this Agreement on
its part to be performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best of such officers'
knowledge, are contemplated or threatened by the Commission; and
(iii) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (A) there has
been no material adverse change, or development involving a prospective
material adverse change (including a change in management or control of the
Company), in the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company and the Subsidiaries, on
a consolidated basis, except in each case as described in or contemplated
by the Prospectus; (B) neither the Company nor any of the Subsidiaries has
entered into any transactions not in the ordinary course of business; (C)
neither the Company nor any of the Subsidiaries has incurred any material
liabilities or obligations, direct or contingent, other than as disclosed
in the Registration Statement and the Prospectus; (D) neither the Company
nor any of the Subsidiaries has sustained a loss material to the Company
and the Subsidiaries, on a consolidated basis, by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act,
whether or not such loss shall have been insured, or from any labor dispute
or from any legal or governmental proceeding; (E) no action, suit or
proceeding, at law or in equity, has been filed or, to the knowledge of
such officer, is threatened against the Company or any of the Subsidiaries
or affecting any of their respective properties or businesses before or by
any court or federal, state or foreign commission, board or other
administrative agency that (1) alleges that the conduct of such business as
currently conducted or as proposed to be conducted infringes on any
trademarks, service marks,
-39-
copyrights, service names, trade names, patents, patent applications or
trade secrets currently held by any third party and (2) has had as of the
date of such certificate or, if pending and if decided unfavorably, is
likely to have a Material Adverse Effect; and (F) there has not occurred
any other event required to be set forth in the Prospectus that has not
been so set forth.
Except as otherwise provided in clause (iii)(A) above, references to
the Prospectus and Registration Statement in this Section 8(g) shall include any
------------
amendment or supplement thereto at the date of such opinion.
(h) The Underwriters shall have received a certificate, dated the
Closing Date, of the Chairman and the Vice President and General Counsel of
Safeguard (PA) to the effect that such officers have carefully examined the
Registration Statement, the Prospectus and this Agreement and that the
representations and warranties of Safeguard in this Agreement are true and
correct on and as of the Closing Date, and that Safeguard has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.
(i) The Underwriters shall have received a certificate, dated the
Closing Date, from each Selling Stockholder to the effect that such Selling
Stockholder has carefully examined the Registration Statement, the Prospectus
and this Agreement and that the representations and warranties of the Selling
Stockholder in this Agreement are true and correct on and as of the Closing
Date, and that the Selling Stockholder has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Date.
(j) The Underwriters shall have received from Price Waterhouse a
letter dated, respectively, the date hereof and the Closing Date, in form and
substance satisfactory to the Underwriters and Underwriters' Counsel, with
respect to matters set forth below:
(i) confirming that they are and were independent public
accountants with respect to the Company or FormMaker, as applicable,
within the meaning of the Act and the Rules and Regulations;
(ii) stating that it is their opinion that the audited financial
statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Rules and Regulations;
(iii) stating that, on the basis of certain procedures which
included a reading of the latest available unaudited interim
consolidated financial statements of the Company (with an indication
of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of meetings and
actions of the stockholders and board of directors and the various
committees of the board of directors of the Company, inquiries of
officers and other employees of the
-40-
Company responsible for financial and accounting matters and other
specified procedures and inquiries, nothing came to their attention
that caused them to believe that (A) the unaudited consolidated
financial statements, if any, and schedules of the Company included in
the Registration Statement and the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Act and the Rules and Regulations or are not fairly presented
in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited consolidated
financial statements of the Company included in the Registration
Statement and the Prospectus, (B) at a specified date not more than
five days prior to the date of such letter, there was any change in
the capital stock or long-term debt of the Company, or any decrease in
the stockholders' equity, or net current assets of the Company, in
each case, as compared with amounts shown in the July 31, 1997
consolidated balance sheet included in the Registration Statement and
the Prospectus, except for changes set forth in such letter, and (C)
during the period from July 31, 1997 to such specified date, there was
any decrease in consolidated revenues, income before income taxes, or
net income, or any decrease in net income per common share of the
Company, in each case as compared with the corresponding period on a
pro forma basis beginning August 1, 1996, except for changes set forth
in such letter;
(iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements
and other financial information pertaining to the Company set forth in
the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the
general accounting records, including work sheets, of the Company with
the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be in
agreement; and
(v) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriters may reasonably
request.
In the event that the letter referred to above set forth any such
changes, decreases or increases, it shall be a further condition of the
obligations of the Underwriters that (A) such letter shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Underwriters deem such explanation unnecessary, and (B) such changes, decreases
or increases do not, in the sole judgment of the Underwriters, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the registration statement originally filed with
respect to the Shares, as amended as of the date hereof.
-41-
References to the Registration Statement and the Prospectus in this
Section 8(j) with respect to the letter referred to above shall include any
------------
amendment or supplement thereto at the date of such letter.
(k) The Associated Person Lock-Ups with respect to each person listed
on Schedule A annexed hereto and the ▇▇▇▇▇▇ Lock-Up shall be in full force and
effect.
(l) The outstanding shares of Common Stock and the shares of Common
Stock to be issued by the Company as contemplated by this Agreement shall have
been approved for quotation on the Nasdaq National Market (upon notice of
issuance in the case of the latter shares).
(m) No order suspending the sale of the Shares in any jurisdiction
designated by the Underwriters pursuant to Section 6(a)(iv) hereof shall be in
----------------
effect on the Closing Date and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company or the Underwriters, shall be
contemplated.
(n) On or prior to the date that Rights certificates are first mailed
to Safeguard Shareholders and on the Closing Date, dated the respective dates
thereof and in form and substance satisfactory to Underwriters' Counsel, the
Company shall furnish to the Underwriters such information, certificates and
documents as either of the Underwriters may reasonably request.
If any condition of the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date is not so fulfilled, the Underwriters
may terminate this Agreement or, if the Underwriters so elect, they may waive
any such conditions that have not been fulfilled or extend the time for their
fulfillment. In the event the Underwriters so elect to terminate this
Agreement, all Rights and the Other Purchasers Standby Purchase Agreements shall
become immediately null and void and the Company shall cause the Escrow Agent
under the Rights Agent Agreement to promptly return to the subscribers any
payments received by the Escrow Agent in respect of the exercise price relating
thereto. All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriters and
Underwriters' Counsel. The Company shall furnish to the Underwriters such
conformed copies of such opinions, certificates, letters and documents in such
quantities as the Underwriters and Underwriters' Counsel shall reasonably
request.
The obligations of the Underwriters to purchase and pay for any Option
Shares after having exercised an option set forth in Section 3(b) hereof shall
------------
be subject, in their discretion, to each of the foregoing conditions of this
Section 8 to purchase the Excess Unsubscribed Shares, with all references to the
---------
Excess Unsubscribed Shares and the Closing Date being deemed to refer to such
Option Shares and the related Option Closing Date, respectively.
-42-
9. Indemnification.
---------------
(a) The Company and the Selling Stockholders, jointly and severally,
agree to indemnify and hold harmless each of the Underwriters and each person,
if any, who is a Controlling Person with respect to either of the Underwriters
against any and all losses, claims, damages, expenses and liabilities, joint or
several (and actions in respect thereof), whatsoever (including any and all
reasonable expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, (i) to which the Underwriters or such Controlling Person may become
subject under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(A) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented) or (B) in any application or
other document or written communication (in this Section 9 collectively called
---------
"Application") executed by the Company or the Selling Stockholders or based upon
written information furnished by the Company or the Selling Stockholders in any
jurisdiction in order to qualify the Common Stock under the securities laws
thereof or filed with the Commission, any state securities commission or agency,
the Nasdaq National Market or any other securities exchange, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, unless such statement or omission was
made in reliance upon, and in strict conformity with, the Provided Information
or (ii) to which the Underwriters or such Controlling Person may become liable
to any party which relate to, or arise out of, the Underwriters' or such
Controlling Person's consummation of the transactions contemplated hereby or the
Underwriters' or such Controlling Person's role in connection herewith
(including without limitation as a result of any breach of any representation or
warranty made by the Company or the Selling Stockholders); provided, however,
that (i) neither the Company nor the Selling Stockholders shall be responsible
for any losses, claims, damages, expenses or liabilities that are finally
judicially determined to have resulted primarily from the gross negligence or
intentional or reckless misconduct of the Underwriters or such Controlling
Person; (ii) an Other Selling Stockholder shall be liable to the extent, and
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Other Selling Stockholder
specifically for use therein, except that each Other Selling Stockholder shall
be liable for its representations and warranties made in Section 2(b) hereto;
------------
and (iii) no Other Selling Stockholder shall be liable hereunder in an amount
which exceeds the net proceeds received by such Other Selling Stockholder from
the sale of such Other Selling Stockholder's Shares. The indemnity agreement
contained in this Section 9(a) with respect to any Preliminary Prospectus shall
------------
not inure to the benefit of the Underwriters and such Controlling Person with
respect to a person asserting any such losses, claims, damages, liabilities or
expenses who purchased the Shares if at or prior to the written confirmation of
the sale of such Shares a copy of the Prospectus (or the Prospectus
as amended or supplemented) was not sent or delivered to such person and the
untrue statement contained in, or omission of a material fact from, such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
-43-
as amended or supplemented). The indemnity agreements in this Section 9(a) shall
------------
be in addition to any liability that the Company or the Selling Stockholders may
have at common law or otherwise.
(b) The Underwriters agree to indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the Registration
Statement, the Selling Stockholders and each other Controlling Person, if any,
who controls the Company or the Selling Stockholders, to the same extent as the
foregoing indemnity from the Company and the Selling Stockholders to the
Underwriters but only with respect to statements made in, or omissions from, any
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any Application made in reliance
upon, and in strict conformity with, the Provided Information.
(c) Promptly after receipt by any indemnified party or parties under
this Section 9 of notice of the commencement of any action, suit or proceeding,
---------
such indemnified party shall, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 9, notify each party
---------
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party or parties shall not
relieve it from any liability that it may have under this Section 9 except to
---------
the extent that it has been prejudiced in any material respect by such failure
or from any liability that it may have otherwise). In case any such action is
brought against any indemnified party or parties, and it notifies the
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect, by written notice delivered to the indemnified party or parties
promptly after receiving the aforesaid notice from such indemnified party or
parties, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party or parties. Notwithstanding the foregoing, the
indemnified party or parties 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 indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action, (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to such indemnified party or
parties to have charge of the defense of such action within a reasonable time
after notice to the indemnifying party or parties of commencement of the action,
or (iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them that are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 9 to the contrary notwithstanding, an indemnifying
---------
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
-------- -------
unreasonably withheld.
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(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 9, but it is judicially determined (by the entry of a final
---------
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 9 provide for indemnification in such
---------
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
action in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Shares or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (A) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. In any case where either the
Company and/or the Selling Stockholders are the contributing parties and the
Underwriters are the indemnified parties, the relative benefits received by the
Company and/or the Selling Stockholders, on the one hand (treated collectively
as one person for this purpose), and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Shares and the shares of Common Stock sold upon exercise of the Rights (net
of underwriting discounts and other commissions paid to the Underwriters but
before deducting the other expenses incurred by the Company and the Selling
Stockholders in connection with the sale of the Shares) bear to the total
underwriting discounts and other commissions received by the Underwriters
hereunder, in each case as set forth in the table on the cover page of the
Prospectus. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to information
supplied by the Company and the Selling Stockholders (treated collectively, as
one person for this purpose) or by the Underwriters, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to above in this Section 9(d) shall be
------------
deemed to include any legal or other expense reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9(d) the Underwriters
------------
shall not be required to contribute any amount in excess of the underwriting
discount and other commissions applicable to the Shares purchased by the
Underwriters hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any, who
---------
controls the Company or any Selling Stockholder within the meaning of the Act,
each officer of the Company who has signed the Registration Statement, and each
director of the Company shall have the same rights to contribution as the
Company and the Selling Stockholders, subject in each case to this Section 9(d).
------------
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for
-45-
contribution may be made against another party or parties under this Section
-------
9(d), notify such party or parties from whom contribution may be sought, but the
----
omission so to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this Section 9(d), but only to the extent
------------
that such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
10. Representations and Agreements to Survive Delivery.
--------------------------------------------------
All representations, warranties, agreements and covenants contained in this
Agreement or contained in certificates of each of the officers of the Company or
of each Selling Stockholder submitted pursuant hereto, shall be deemed to be
representations, warranties, agreements and covenants at the Closing Date and
the Option Closing Date, as the case may be, and such representations,
warranties, agreements and covenants of the Underwriters, the Company and each
Selling Stockholder, and the indemnity agreements contained in Section 9 hereof,
---------
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriters, the Company and each
Selling Stockholder, or any Controlling Person, and shall survive termination of
this Agreement or the issuance and delivery of the Shares to the Underwriters,
provided that to the extent any such representations, warranties, agreements or
--------
covenants are expressly waived in writing by the Underwriters, the survival of
the same shall be as set forth in such waiver, or, if not so set forth, as
provided in this Section 10.
----------
11. Effective Date.
--------------
This Agreement shall become effective at 9:00 a.m., New York time, on
the next full business day following the date hereof or upon the commencement of
the Rights Offering, whichever is earlier; provided, however, that the
-------- -------
provisions of Sections 6, 7, 9, 10 and 12 of this Agreement shall at all times
---------------------------
be effective.
12. Termination.
-----------
(a) Subject to subsection (c) of this Section 12, the Underwriters
----------
shall have the right to terminate this Agreement (i) if any calamitous domestic
or international event or act or occurrence has disrupted the general securities
market in the United States; (ii) if trading in the Common Stock (on a when-
issued basis) shall have been suspended by the Commission or the Nasdaq National
Market; (iii) if trading on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market or in the over-the-counter market shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required on
the over-the-counter market by the NASD or by order of the Commission or any
other government authority having jurisdiction; (iv) if the United States shall
have become involved in a war or major hostilities which, in the Underwriters'
opinion, affects the general securities market in the United States; (v) if a
banking moratorium has been
-46-
declared by any New York, Massachusetts, Texas, Pennsylvania or federal
authority; (vi) if a moratorium in foreign exchange trading (with respect to a
foreign exchange on which the Company's securities are traded) has been
declared; (vii) if the Company shall have sustained a loss material to the
Company by fire, flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act, whether or not such loss shall have been
insured, or from any labor dispute or any legal or governmental proceeding;
(viii) if, in the reasonable judgment of the Underwriters, there shall have been
such material adverse change, or any development involving a prospective
material adverse change in the financial condition, net worth or results of
operations of the Company since July 31, 1997 or in the business prospects or
conditions of the Company since the date of this Prospectus, or that materially
and adversely impacts this Agreement; or (ix) on any date commencing on the date
hereof and ending on the Closing Date, if there shall be such material adverse
market conditions (whether occurring suddenly or gradually between the date
hereof and the Closing Date) affecting the markets generally as in the
Underwriters' reasonable judgment would make it inadvisable to proceed with the
offering, sale or delivery of the Shares.
(b) If the Underwriters elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 12, they
----------
shall so notify the Company on the same day as such election is made by
telephone or telegram, confirmed by letter.
(c) Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement
(including pursuant to Section 13 hereof), and whether or not this Agreement is
----------
otherwise carried out, the provisions of Section 7 and Section 9 shall not be in
--------- ---------
any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
13. Default by the Company or the Selling Stockholders.
--------------------------------------------------
If the Company or the Selling Stockholders shall fail to sell and deliver
to the Underwriters the Excess Unsubscribed Shares to be sold and delivered by
the Company or the Selling Stockholders at the Closing Date or the Option Shares
to be sold and delivered by the Company at any Option Closing Date under the
terms of this Agreement, then the Underwriters may at their option, by written
notice to the Company and Selling Stockholders either (a) terminate this
Agreement without any liability on the part of any non-defaulting party other
than pursuant to Section 12 or (b) purchase the Shares which the Company and the
Selling Stockholders have agreed to sell and deliver in accordance with the
terms hereof. In the event of a failure of the Selling Stockholders to sell and
deliver as referred to in this Section, either the Underwriters or the Company
shall have the right to postpone the Closing Date or the Option Closing Date, as
the case may be, for a period not exceeding seven business days in order that
the necessary changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangements, as may be effected. No action
taken pursuant to this Section shall relieve the Company or the Selling
Stockholders from liability in respect of such default.
-47-
14. Notices.
-------
All notices and communications hereunder may be mailed or transmitted by
any standard form of telecommunication and, except as herein otherwise
specifically provided, shall be in writing and shall be deemed to have been duly
given when delivered to a notice party hereto at the address specified herein or
at the address subsequently communicated in writing by the notice parties.
Notices to the Underwriters shall be directed to the Underwriters in care of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇;
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, and Prudential Securities Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to Drinker
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq. Notices to the Company shall be
directed to the address of the Company as set forth on the facing page to the
Registration Statement, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇
▇▇▇▇▇ Square, Philadelphia, Pennsylvania, Attention: N. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Notices to Safeguard shall be directed to Safeguard Scientifics, Inc., 800 The
Safeguard Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: N. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Esq. In each case a party may change its address for notice hereunder by a
written communication to the other parties.
15. Parties.
-------
This Agreement shall inure solely to the benefit of, and shall be binding
upon, the Underwriters, the Company and the Selling Stockholders and the
Controlling Persons, and their respective successors, legal representatives and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provisions herein contained. No purchaser of Shares from the
Underwriters shall be deemed to be a successor by reason merely of such
purchase.
16. Construction.
------------
This Agreement shall be governed by the laws of the State of New York
without giving effect to the choice of law or conflict of laws principles
thereof. The word "including" as used herein shall not be construed so as to
exclude any other thing not referred to or described.
17. Counterparts.
------------
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be
deemed to be one and the same instrument.
-48-
18. Entire Agreement.
----------------
This Agreement contains the entire agreement between the parties hereto in
connection with the subject matter hereof.
If the foregoing correctly sets forth the understanding among the
Underwriters, the Company and the Selling Stockholders, please so indicate in
the space provided below for that purpose, thereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
DOCUCORP INTERNATIONAL, INC.
By:
----------------------------------------------------
Name:
Title:
-49-
SAFEGUARD SCIENTIFICS, INC.
By:
----------------------------------------------------
Name:
Title:
SAFEGUARD SCIENTIFICS (DELAWARE), INC.
By:
----------------------------------------------------
Name:
Title:
-------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TECHNOLOGY LEADERS II, LP
By: Technology Leaders II Management LP, its
general partner
By: Technology Leaders Management, Inc., a
general partner
By:
----------------------------------------------------
Name:
Title:
TECHNOLOGY LEADERS II OFFSHORE C.V.
By: Technology Leaders II Management LP, a
general partner
By: Technology Leaders Management, Inc., a
general partner
By:
----------------------------------------------------
Name:
Title:
-50-
XEROX CORPORATION
By:
----------------------------------------------------
Name:
Title:
OTHER SELLING STOCKHOLDERS
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
pursuant to a Custody Agreement and Power of
Attorney granted February __, 1998
-------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Confirmed and accepted
as of the date first
above written:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED PRUDENTIAL SECURITIES
INCORPORATED
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
-51-
Schedule A
Associated Person Lock-Ups
Name
----
Safeguard Scientifics, Inc. Business Capital Corporation
Safeguard Scientifics (Delaware), Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Xerox Corporation ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Technology Leaders II, LP ▇▇▇▇ ▇▇▇▇▇▇
Technology Leaders II Offshore CV Charlie ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust Number
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III ▇▇▇▇▇ ▇▇▇▇▇▇ Trust
Hsi-▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ Venture Third Corp.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ McLaren ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Revocable Yogesh Karambaya
▇▇▇▇ Securities, Inc. ▇▇▇▇▇▇ ▇. House
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
J.E.R. Chifton, III ▇▇▇▇▇▇▇ ▇. Hole
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Trust ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
R. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇, ▇▇.
-▇▇-
▇▇▇▇▇▇▇▇ ▇
List of Subsidiaries
FormMaker Software, Inc.
Image Sciences, Inc.
Micro Dynamics, Ltd.
EZPS Acquisition Corp.
EZPower Systems, Inc. (as of the Closing Date)
Maitland Software, Inc. (as of the Closing Date)
-53-
Schedule C
Name of Underwriters % of Underwriter Shares
-------------------- -----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated 50%
Prudential Securities Incorporated 50%
-54-
Schedule D
Number of Shares
To Be Sold In
Name of Stockholder The Offering
------------------- ----------------
Safeguard Scientifics, Inc. 911,229
Xerox Corporation 700,240
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 455,129
Technology Leaders II 313,495
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 205,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,000
▇▇▇▇▇▇▇ ▇. Weatherform 20,000
▇▇▇▇▇ ▇▇▇ 20,000
▇▇▇▇ ▇▇▇▇▇▇ 12,000
▇▇▇▇▇ ▇▇▇▇▇▇ 1,690
Radnor Venture Partners LP 47,356
▇▇▇▇▇ ▇. ▇▇▇▇▇ 36,406
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 4,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 5,800
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 19,558
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 18,097
-55-