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Exhibit 1.1
Draft 6.4.96
REMEDYTEMP, INC.
CLASS A COMMON STOCK
($0.01 Par Value)
UNDERWRITING AGREEMENT
, 1996
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UNDERWRITING AGREEMENT
, 1996
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022
The Robinson-Humphrey Company, Inc.
Atlanta Financial Center
3333 Peachtree Road, N.E.
Atlanta, Georgia 30326
as Managing Underwriters
Dear Sirs:
RemedyTemp, Inc., a California corporation (the "Company"),
proposes to issue and sell, and the persons named in Schedule B (the "Selling
Shareholders") propose to sell, to the underwriters named in Schedule A (the
"Underwriters") an aggregate of 3,100,000 shares (the "Firm Shares") of Class A
Common Stock, par value $ 0.01 per share (the "Class A Common Stock"), of the
Company, of which 1,715,000 shares are to be issued and sold by the Company and
an aggregate of 1,385,000 shares are to be sold by the Selling Shareholders in
the respective amounts set forth opposite their names in Schedule B. In
addition, solely for the purpose of covering over-allotments, the Company
proposes to issue and sell, and the Selling Shareholder propose to sell in the
respective amounts set forth opposite their names in Schedule B, to the
Underwriters, at the Underwriters' option, up to 155,000 and 310,000 additional
shares, respectively, of Class A Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are collectively referred to as the
"Shares." The Shares are described in the Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1, including a prospectus,
relating to the Shares. The Company has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(collectively, the "Preliminary Prospectus") relating to the Shares. Except
where the context otherwise requires, the registration statement as in effect at
the time of execution of this Agreement or, if the registration statement is not
yet effective, as amended when it becomes effective, including all documents
filed as a part thereof, and including any registration statement filed pursuant
to Rule 462(b) under the Act increasing the size of the offering registered
under the Act and any information contained in a
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prospectus subsequently filed with the Commission pursuant to Rule 424(b) under
the Act and deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is herein called the
"Registration Statement," and the prospectus in the form filed by the Company
with the Commission pursuant to Rule 424(b) under the Act or, if no such filing
is required, in the form of final prospectus included in the Registration
Statement at the time it became effective, is herein called the "Prospectus."
The Company, the Selling Shareholders and the Underwriters agree
as follows:
1. Sale and Purchase. On the basis of the representations and
warranties and the other terms and conditions herein set forth, each of the
Company and each Selling Shareholder, severally and not jointly, agrees to sell
to the respective Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and each Selling Shareholder the
respective number of Firm Shares (subject to such adjustment as you may
determine to avoid fractional shares) which bears the same proportion to the
number of Firm Shares to be sold by the Company or by that Selling Shareholder,
as the case may be, as the number of Firm Shares set forth opposite the name of
such Underwriter on Schedule A bears to the total number of Firm Shares to be
sold by the Company and the Selling Shareholders, in each case at a purchase
price of $____ per Share. You may release the Firm Shares for public sale
promptly after this Agreement becomes effective. You may from time to time
increase or decrease the public offering price after the initial public offering
to such extent as you may determine.
In addition, on the basis of the representations and warranties
and the other terms and conditions herein set forth, the Company and the Selling
Shareholders hereby grant to the several Underwriters an option to purchase, and
the Underwriters shall have the right to purchase, severally and not jointly,
from the Company and the Selling Shareholders all or a portion of the Additional
Shares as may be necessary to cover over-allotments made in connection with the
offering of the Firm Shares, at the same purchase price per share to be paid by
the several Underwriters to the Company and the Selling Shareholders for the
Firm Shares. This option may be exercised in whole or in part from time to time
on or before the thirtieth day following the date hereof, by written notice to
the Company and the Selling Shareholders. Any such notice shall set forth the
aggregate number of Additional Shares as to which the option is being exercised,
and the date and time when the Additional Shares are to be delivered (any such
date and time being herein referred to as an "additional time of purchase");
provided, however, that no additional time of purchase shall occur earlier than
the time of purchase (as defined below) nor earlier than the second business
day* after the date on which the option shall have been exercised nor later than
the eighth business day after the date on which the option shall have been
exercised. The notice shall also set forth the aggregate number of Additional
Shares to be sold by each of the Company and each Selling Shareholder at an
additional time of purchase, which in each case shall equal the product of (i)
the maximum number of Additional Shares which may be purchased from the Company
and each Selling Shareholder pursuant to the option (as indicated in the first
paragraph of this
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* As used herein, "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
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Agreement) and (ii) a fraction, the numerator of which is the aggregate number
of Additional Shares as to which the option is being exercised at such
additional time of purchase, and the denominator of which is 465,000 (subject,
in each case to such adjustment as you may determine to eliminate fractional
shares). The number of respective Additional Shares to be sold by each of the
Company and each Selling Shareholder to each Underwriter at an additional time
of purchase shall be the number which bears the same proportion to the aggregate
number of Additional Shares being purchased from the Company or that Selling
Shareholder, as the case may be, at such additional time of purchase as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A bears to the total number of Firm Shares (subject, in each case, to
such adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the
Firm Shares shall be made to the Company and to the Attorney-in-Fact referred to
in Section 4(d) on behalf of the Selling Shareholders by certified or official
bank checks, in New York Clearing House funds, at the office of Dillon, Read &
Co. Inc. in New York City, against delivery of the certificates for the Firm
Shares to you for the respective accounts of the Underwriters. Such payment and
delivery shall be made at 9:30 A.M., New York City time, on ____________, 1996
(unless another time shall be agreed to by you, the Company and the Selling
Shareholders or unless postponed in accordance with the provisions of Section
9). The time at which such payment and delivery are actually made is called the
"time of purchase." Certificates for the Firm Shares shall be delivered to you
in definitive form in such names and in such denominations as you shall specify
on the second business day preceding the time of purchase. For the purpose of
expediting the checking of the certificates for the Firm Shares by you, the
Company and the Selling Shareholders agree to make such certificates available
to you for such purpose at least one full business day preceding the time of
purchase.
Payment of the purchase price for the Additional Shares shall be
made to the Company and to the Attorney-in-Fact on behalf of the Selling
Shareholders at the additional time of purchase in the same manner and at the
same office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding the
additional time of purchase. For the purpose of expediting the checking of the
certificates for the Additional Shares by you, the Company and the Selling
Shareholders agree to make such certificates available to you for such purpose
at least one full business day preceding the additional time of purchase.
3. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) Each Preliminary Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act; when the Registration
Statement becomes or became effective and at all times subsequent
thereto up to the time of purchase and the additional time of purchase,
the Registration Statement and the Prospectus, and any supplements or
amendments thereto, complied and will comply in all
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material respects with the provisions of the Act; and the Registration
Statement at all such times did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Prospectus at all such times did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representation or warranty with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning the Underwriters and furnished
in writing by or on behalf of any Underwriter through you to the
Company expressly for use in the Registration Statement or the
Prospectus and set forth in the section of the Registration Statement
and the Prospectus entitled "Underwriting."
(b) As of the date of this Agreement, the Company has an
authorized capitalization as set forth under the column entitled "March
31, 1996 Actual" in the section of the Registration Statement and the
Prospectus entitled "Capitalization" and, as of the time of purchase,
the capitalization of the Company will be as set forth under the column
entitled "March 31, 1996 Pro Forma As Adjusted" in the section of the
Registration Statement and the Prospectus entitled "Capitalization";
all of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable and are free of statutory and contractual preemptive
rights.
(c) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of California with full power and authority to (i) own its properties
and conduct its business as described in the Registration Statement and
the Prospectus and (ii) execute and deliver this Agreement and to
issue, sell and deliver the Shares as herein contemplated. The
Company's Amended and Restated Articles of Incorporation and Amended
and Restated Bylaws (each in the form included as an exhibit to the
Registration Statement) have been duly authorized and adopted and are
in full force and effect as the Company's articles of incorporation and
bylaws, respectively; the Reclassification and the 1.812 for 1 split of
the Company's Class A Common Stock and Class B Common Stock, par value
$0.01 per share (the "Class B Common Stock"), in each case as described
in the Registration Statement and the Prospectus, have been
consummated.
(d) The Company has no subsidiaries.
(e) The Company is duly qualified or licensed by and is in
good standing in each jurisdiction in which it owns or leases property
or conducts its business and in each other jurisdiction in which the
failure, individually or in the aggregate, to be so qualified or
licensed could have a material adverse effect on the properties,
assets, operations, business, business prospects or condition
(financial or other) of the Company.
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(f) The Company is not in breach of, or in default under (nor
has any event occurred which with notice, lapse of time or both would
constitute a breach of, or default under), its charter or bylaws, or in
the performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, lease, mortgage, deed of
trust, bank loan or credit agreement, material supply agreement or
other agreement or instrument to which the Company is a party or by
which the Company or its properties may be bound or affected. The
execution, delivery and performance of this Agreement, the issuance of
the Shares and the consummation of the transactions contemplated hereby
will not conflict with, or result in any breach of or constitute a
default under (nor constitute any event which with notice, lapse of
time or both would constitute a breach of, or default under), the
charter or bylaws of the Company or under any provision of any license,
indenture, lease, mortgage, deed of trust, bank loan or credit
agreement, material supply agreement or other agreement or instrument
to which the Company is a party or by which the Company or its
properties may be bound or affected, or under any federal, state, local
or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company.
(g) The Firm Shares and the Additional Shares, when issued and
delivered to and paid for by the Underwriters as contemplated hereby,
will be duly authorized and validly issued and fully paid and
nonassessable, free and clear of any pledge, lien, encumbrance,
security interest, preemptive right or other claim.
(h) This Agreement has been duly authorized, executed and
delivered by the Company.
(i) The capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus; and the certificates
for the Shares are in due and proper form and the holders of the Shares
after making payment therefor will not be subject to personal liability
by reason of being such holders. Each share of Class A Common Stock and
Class B Common Stock to be outstanding after giving effect to the sales
contemplated hereby, including the Shares, will have attached thereto
one right (collectively, the "Rights") to purchase one-thousandth of a
share of Series A Junior Participating Preferred Stock, par value $0.01
per share (the "Series A Preferred Stock"), of the Company. The Rights
are being issued pursuant to a Shareholders Rights Agreement, dated as
of June [__], 1996 (the "Rights Agreement"), between the Company and
American Stock Transfer & Trust Company, as Rights Agent. The Rights
Agreement has been duly authorized, executed and delivered by the
Company and constitutes the valid and binding agreement of the Company
and is enforceable against the Company in accordance with the terms
thereof; the Rights have been duly authorized by the Company and, when
issued upon issuance of the Shares, will be validly issued, and the
Series A Preferred Stock has been duly authorized by the Company and
validly reserved for issuance upon the exercise of the Rights and, when
issued upon such exercise in accordance with the terms of the Rights
Agreement, will be validly issued, fully paid and non-assessable. The
Class A Common Stock has been
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approved for quotation, subject to official notice of issuance, on the
Nasdaq National Market.
(j) No approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares as contemplated hereby, other
than registration of the Shares under the Act, clearance of the
offering of the Shares with the National Association of Securities
Dealers, Inc. (the "NASD") and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters.
(k) No person has the right, contractual or otherwise, to
cause the Company to issue to it any securities of the Company in
consequence of the issue and sale of the Shares to the Underwriters
hereunder. Each person who has the right, contractual or otherwise, to
cause the Company to register pursuant to the Act any securities of the
Company in consequence of the issue and sale of the Shares to the
Underwriters hereunder either included such securities in the
Registration Statement or duly waived such right.
(l) Price Waterhouse LLP, whose reports on the financial
statements of the Company are included in the Registration Statement
and the Prospectus, are independent public accountants with respect to
the Company as required by the Act and the applicable published rules
and regulations thereunder.
(m) All legal or governmental proceedings, contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required.
(n) There is no action, suit or proceeding pending or
threatened against the Company or any of its properties, at law or in
equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency
that could result in a judgment, decree or order having a material
adverse effect on the properties, assets, operations, business,
business prospects or condition (financial or other) of the Company.
(o) The audited and unaudited financial statements included in
the Registration Statement and the Prospectus present fairly the
financial condition of the Company as of the dates indicated and the
results of operations and cash flows of the Company for the periods
specified; such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis during the periods involved. The pro forma financial data of the
Company included in the Registration Statement and the Prospectus are
based upon good faith estimates and assumptions believed by the Company
to be reasonable and have been prepared in accordance with the Act. No
other pro forma data is required by the Act to be included in the
Registration Statement or the Prospectus. The liability for accrued
workers' compensation costs and expenses set forth in the
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Company's March 31, 1996 balance sheet included in the Registration
Statement and the Prospectus represents the Company's good faith
estimate as of such date (based upon assumptions believed by the
Company to be reasonable) of the Company's future costs with respect to
existing and incurred but not yet reported worker's compensation claims
covered by the Company's self-insurance program described in the
Registration and the Prospectus.
(p) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may be otherwise stated in the Registration Statement or the
Prospectus, there has not been: (i) any material adverse change in the
properties, assets, operations, business, business prospects or
condition (financial or other), present or prospective, of the Company;
(ii) any transaction contemplated or entered into by the Company that
is material to the Company; or (iii) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company that is
material to the Company.
(q) The Company has obtained the agreement of the Company's
shareholders, directors and officers listed on Schedule C not to offer,
sell, contract to sell, grant any option to sell, transfer or otherwise
encumber or dispose of, directly or indirectly, any shares of Class A
Common Stock, or securities convertible into or exchangeable for Class
A Common Stock or warrants or other rights to purchase Class A Common
Stock for a period of 180 days from the date of the Prospectus without
the prior written consent of Dillon, Read & Co.
Inc.
(r) (i) The Company has been, and is, in compliance with all
applicable foreign, federal, state and local laws and regulations,
including without limitation those relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), federal and
state laws relating to employment of illegal aliens or to
discrimination in the hiring, promotion or pay of employees, federal
and state wages and hours laws and all applicable provisions of the
Employee Retirement Income Security Act and the rules and regulations
promulgated thereunder, except where the failure, individually or in
the aggregate, to be so in compliance would not have a material adverse
effect on the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company.
(ii) The Company has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits"), including without limitation under any applicable
Environmental Laws, as are necessary to own, lease and operate its
properties and to conduct its business; the Company has fulfilled and
performed all of its material obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such
permit; and, such permits contain no restrictions that are materially
burdensome to the Company.
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(iii) In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws
on the business, operations and properties of the Company, in the
course of which it identifies and evaluates associated costs and
liabilities (including without limitation any capital or operating
expenditure required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company reasonably has
concluded that such associated costs and liabilities, singly or in the
aggregate, would not have a material adverse effect on the properties,
assets, operations, business, business prospects or condition
(financial or other) of the Company.
(s) Neither the Company nor any employee of the Company has
made any payment of funds of the Company prohibited by law, and no
funds of the Company have been set aside to be used for any payment
prohibited by law.
(t) The Company has filed all federal or state income or
franchise tax returns required to be filed and has paid all taxes shown
thereon as due, and there is no material tax deficiency which has been
or might be asserted against the Company; all material tax liabilities
are adequately provided for on the books of the Company. The Company is
a "small business corporation" and has maintained a valid election to
be an "S corporation" under Subchapter S of the Internal Revenue Code
of 1986, as amended, and the equivalent provisions of all applicable
state income tax statutes since October 1, 1987.
(u) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions
herein contemplated.
(v) (i) The Company has good title to all properties and
assets owned or leased by it, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and
defects (except such as are described or referred to in the Prospectus
and the financial statements and the notes thereto contained therein or
such as do not interfere with the use made and proposed to be made of
such property by the Company).
(ii) The Company owns or possesses adequate rights to
use all patents, trademarks, trade names, service marks, copyrights,
trade secrets, know-how, technology, technical data and other rights
(collectively, "intellectual property") necessary for or incidental to
the conduct of its business as described in the Prospectus and the
Company has not received any notice of conflict with, or infringement
of, the asserted rights of others with respect to any such intellectual
property, and the Company does not know of any basis therefor. No
licenses or rights to intellectual property presently owned or held by
the Company are in dispute or are in any conflict with the right of any
other person or entity, and the Company (i) has the right to use, free
and clear of all liens, charges, claims, encumbrances, pledges,
security interests, defects, restrictions or equities of any kind
whatsoever all licenses and rights to the intellectual property used in
the conduct of its
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business as now conducted or proposed to be conducted without
infringing upon or otherwise acting adversely to the right or claimed
right of any other person, and (ii) is not or will not be, as the case
may be, obligated or under any liability whatsoever to make any payment
by way of royalties, fees or otherwise (except as described in the
Prospectus) to any owner or licensee of, or other claimant to, any
intellectual property with respect to the use thereof or in connection
with the conduct of its business or otherwise.
(iii) The Company maintains insurance policies and
surety bonds including, but not limited to, general liability, workers'
compensation and property insurance, which insures the Company and its
employees against losses and risks severally insured against by
comparable companies in the temporary staffing services industry.
(w) The Company is not an "investment company" or a person
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and is not subject to
regulation under such Act.
4. Representations and Warranties of the Selling Shareholders.
Each Selling Shareholder, severally and not jointly, represents and warrants to
each Underwriter that:
(a) Such Selling Shareholder is and at the time of delivery of
the Shares to be sold by such Selling Shareholder will be the lawful
owner of the number of Shares or securities convertible into or
warrants exercisable for the number of Shares to be sold by such
Selling Shareholder pursuant to this Agreement and, at the time of
delivery thereof, will have valid and marketable title to such Shares,
and upon delivery of and payment for such Shares the Underwriters will
acquire valid and marketable title to such Shares free and clear of any
claim, lien, encumbrance, security interest, community property right,
restriction on transfer or other defect in title, assuming each of the
Underwriters has purchased the Shares purchased by it in good faith and
without notice of any adverse claim.
(b) Such Selling Shareholder has and at the time of delivery
of such Shares will have full legal right, power and capacity, and any
approval required by law to enter into this Agreement and the Power of
Attorney and Custody Agreement (as defined below) and to sell, assign,
transfer and deliver such Shares in the manner provided in this
Agreement.
(c) This Agreement and the Power of Attorney and Custody
Agreement executed by the Selling Shareholders (the "Power of Attorney
and Custody Agreement") among the Selling Shareholders and
[________________], as custodian, have been duly executed and delivered
by such Selling Shareholder. The Power of Attorney and Custody
Agreement is the legal, valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms.
(d) Such Selling Shareholder has duly and irrevocably
authorized the Attorney-inFact (as defined in the Power of Attorney and
Custody Agreement), on behalf of such Selling Shareholder, to execute
and deliver this Agreement and any other document
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necessary or desirable in connection with the transactions contemplated
hereby and to deliver the Shares to be sold by such Selling Shareholder
and receive payment therefor pursuant hereto.
(e) The sale of the Shares by such Selling Shareholder
pursuant hereto is not prompted by any material adverse information
concerning the Company; and all information furnished in writing by or
on behalf of such Selling Shareholder specifically for use in the
Registration Statement and the Prospectus, and any supplement or
amendment thereto, is and will be when the Registration Statement
became effective and at all times subsequent thereto up to the time of
purchase and the additional time of purchase, true and correct and
complete and at all such times did not and will not contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(f) Neither the execution, delivery or performance of this
Agreement or the Power of Attorney and Custody Agreement by such
Selling Shareholder, the compliance by such Selling Shareholder with
the provisions hereof and thereof or the consummation of the
transactions contemplated hereby or thereby (i) requires the consent,
approval, authorization or order of any court or regulatory agency or
body (except such as have been obtained under the Act and such as may
be required by the NASD or under state securities or blue sky laws in
connection with the purchase and distribution by the Underwriters of
the Shares to be sold by such Selling Shareholder), or (ii) will
conflict with, or result in a breach or violation of, or constitute a
default under the terms of any agreement, contract, indenture, lease or
other instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder or any of such Selling Shareholder's
properties are bound, or (iii) will conflict with or violate any law,
regulation or rule, or any decree, judgment, order, consent or
memorandum of understanding applicable to such Selling Shareholder of
any court, regulatory body, administrative agency or governmental body
or arbitrator having jurisdiction over such Selling Shareholder or such
Selling Shareholder's property.
(g) At the time of purchase or additional time of purchase, as
the case may be, all stock transfer or other taxes (other than income
taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold by such Selling Shareholder to the
Underwriters will have been fully paid or provided for by such Selling
Shareholder and all laws imposing such taxes will have been fully
complied with.
(h) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of any of the Shares.
5. Certain Covenants of the Company. The Company hereby
agrees:
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(a) to furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such states as you may
designate and to maintain such qualifications in effect as long as
required for the distribution of the Shares, provided that the Company
shall not be required to qualify as a foreign corporation or to consent
to the service of process under the laws of any such state (except
service of process with respect to the offering and sale of the
Shares); promptly to advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and to use its best efforts to obtain
the withdrawal of any order of suspension at the earliest practicable
moment;
(b) to make available to you in New York City, as soon as
practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendment or supplement
thereto after the effective date of the Registration Statement) as the
Underwriters may request for the purposes contemplated by the Act;
(c) to advise you promptly and if requested by you to confirm
such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes
effective and (ii) when the Prospectus is filed with the Commission
pursuant to Rule 424(b) under the Act, if required under the Act (which
the Company agrees to file in a timely manner under such Rule);
(d) to advise you promptly, confirming such advice in writing,
of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for or
the entry of a stop order suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement
the Registration Statement or the Prospectus and to file no such
amendment or supplement to which you shall object in writing;
(e) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement
(i) copies of all reports or other communications that the Company
shall send to its shareholders or from time to time shall publish or
publicly disseminate and (ii) copies of all annual, quarterly and
current reports filed with the Commission on Forms 10-K, 10-Q and 8-K,
or such other similar form as may be designated by the Commission, and
any other document filed by the Company pursuant to Section 12, 13, 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
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(f) to advise the Underwriters promptly of the happening of
any event known to the Company within the time during which a
prospectus relating to the Shares is required to be delivered under the
Act that, in the reasonable judgment of the Company, would require the
making of any change in the Prospectus then being used, so that the
Prospectus, as then supplemented, would not include an untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they are made, not misleading and, during such time, promptly to
prepare and furnish, at the Company's expense, to the Underwriters such
amendments or supplements to such Prospectus as may be necessary to
reflect any such change in such quantities as requested by the
Underwriters, and to furnish to you a copy of such proposed amendment
or supplement before filing any such amendment or supplement with the
Commission;
(g) to make generally available to its security holders, and
to deliver to you, an earnings statement of the Company (which need not
be audited and which will satisfy the provisions of Section 11(a) of
the Act including, at the option of the Company, Rule 158) covering a
period of 12 months beginning after the effective date of the
Registration Statement but ending not later than 15 months after the
date of the Registration Statement, as soon as is reasonably
practicable after the termination of such 12-month period;
(h) to furnish to you three signed copies of the Registration
Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and sufficient
conformed copies of the foregoing (other than exhibits) for
distribution of a copy to each of the other Underwriters;
(i) to furnish to you as early as practicable prior to the
time of purchase and the additional time of purchase, as the case may
be, but not later than two business days prior thereto, a copy of the
latest available unaudited interim financial statements, if any, of the
Company that have been read by the Company's independent certified
public accountants as stated in their letter to be furnished pursuant
to Section 8(c);
(j) to apply the net proceeds from the sale of the Shares sold
by the Company in the manner set forth under the caption "Use of
Proceeds" in the Registration Statement and the Prospectus;
(k) to use its best efforts to maintain the quotation of the
Shares on the Nasdaq National Market;
(l) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement otherwise becomes effective
or is terminated, to pay all expenses, fees and taxes (other than fees
and disbursements of your counsel except as set forth under Section 7
and clauses (iii) and (iv) below) in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus and any amendment or supplement thereto, and
the printing and furnishing of copies of each thereof to you and to
dealers (including costs of mailing and shipment), (ii) the issuance,
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sale and delivery of the Shares, (iii) the word processing or printing
of this Agreement and any dealer agreements, and the reproduction or
printing and furnishing of copies of each thereof to you and to dealers
(including costs of mailing and shipment), (iv) the qualification of
the Shares for offering and sale under state laws as aforesaid
(including legal fees and filing fees and other disbursements of your
counsel) and the printing and furnishing of copies of any blue sky
surveys to you and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for inclusion in the
Nasdaq National Market and any registration thereof under the Exchange
Act, (vi) any filing for review of the public offering of the Shares by
the NASD and (viii) the performance of the Company's and the Selling
Shareholders' other obligations hereunder;
(m) not to offer, sell, contract to sell, grant any option to
sell, transfer or otherwise encumber or dispose of, directly or
indirectly, any shares of Class A Common Stock or securities
convertible into or exchangeable for Class A Common Stock or warrants
or other rights to purchase Class A Common Stock or permit the
registration under the Act of any shares of Class A Common Stock, in
each case, for a period commencing on the date hereof and continuing
for 180 days after the date of the Prospectus, without the prior
written consent of Dillon, Read & Co. Inc., except for (i) the
registration of the Shares and the sales to you pursuant to this
Agreement, (ii) the issuance of Class A Common Stock upon the exercise
of options granted under the Company's 1996 Employee Stock Incentive
Plan as described in footnote (1) to the table under the caption
"Capitalization" in the Preliminary Prospectus and (iii) the granting
of options to purchase shares of Class A Common Stock under the
Company's 1996 Employee Stock Incentive Plan; and
(n) to refrain from investing the proceeds from the sale of
the Shares in a manner to cause the Company to become an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
6. Certain Covenants of the Selling Shareholders. Each Selling
Shareholder agrees with each Underwriter that:
(a) such Selling Shareholder will not offer, sell, contract to
sell, grant any option to sell, transfer or otherwise encumber or
dispose of, directly or indirectly, any shares of Class A Common Stock
or securities convertible into or exchangeable for Class A Common Stock
or warrants or other rights to purchase Class A Common Stock, except for
the sales to you pursuant to this Agreement, for a period commencing on
the date hereof and continuing for 180 days after the date of the
Prospectus, without the prior written consent of Dillon, Read & Co.
Inc.; and
(b) such Selling Shareholder will advise the Underwriters
promptly of the happening of any event known to such Selling Shareholder
within the time during which a Prospectus relating to the Shares is
required to be delivered under the Act that, in the reasonable judgment
of such Selling Shareholder, would require the making of any change in
the Prospectus then being used, so that the Prospectus, as then
supplemented, would not
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include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
7. Reimbursement of Underwriters' Expenses. If the Firm Shares
or the Additional Shares are not delivered for any reason, other than the
failure of the Underwriters to purchase the Firm Shares or the Additional Shares
as provided herein (unless such failure is permitted under the provisions of
Section 8 or Section 9(b) of this Agreement), the Company will reimburse the
Underwriters for all of their out-of-pocket expenses, including the fees and
disbursements of their counsel.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders on the date hereof and at the time of purchase (and the several
obligations of the Underwriters at any additional time of purchase are subject
to the accuracy of the representations and warranties on the part of the Company
and the Selling Shareholders on the date hereof and at the time of purchase and
at such additional time of purchase, as the case may be), the performance by
each of the Company and the Selling Shareholders of its and their obligations
hereunder and to the following conditions:
(a) The Company shall furnish to you at the time of purchase
and at such additional time of purchase, as the case may be, an opinion
of Gibson, Dunn & Crutcher LLP, counsel for the Company, addressed to
the Underwriters and dated the time of purchase or such additional time
of purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form satisfactory to you, stating that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of California, with full corporate power and
authority (A) to own its properties and conduct its business
as described in the Registration Statement and the Prospectus
and (B) to execute and deliver this Agreement and to issue,
sell and deliver the Shares as herein contemplated. The
Company's Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws (each in the form included as an
exhibit to the Registration Statement) have been duly
authorized and adopted and are in full force and effect as the
Company's articles of incorporation and bylaws, respectively;
the Reclassification and the 1.812 for 1 split of the Class A
Common Stock and the Class B Common Stock, in each case as
described in the Registration Statement and the Prospectus,
have been consummated;
(ii) to the best of such counsel's knowledge, after
due inquiry, the Company has no subsidiaries;
(iii) the Company is duly qualified or licensed to do
business by, and is in good standing as a foreign corporation
in, each jurisdiction in which it conducts
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business or owns property and in each other jurisdiction in
which the failure, individually or in the aggregate, to be so
licensed or qualified could have a material adverse effect on
the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Rights Agreement has been duly authorized,
executed and delivered by the Company and constitutes the
valid and binding agreement of the Company and is enforceable
against the Company in accordance with the terms thereof,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and general
principles of equity; the Rights have been duly authorized by
the Company and, when issued upon issuance of the Shares, will
be validly issued, and the Series A Preferred Stock has been
duly authorized by the Company and validly reserved for
issuance upon the exercise of the Rights and, when issued upon
such exercise in accordance with the terms of the Rights
Agreement, will be validly issued, fully paid and
non-assessable;
(vi) the Shares, when delivered to and paid for by
the Underwriters, will be duly authorized, validly issued,
fully paid and nonassessable, and will be free of any pledge,
lien, encumbrance, claim or preemptive right; and the
certificates for the Shares are in due and proper form and the
holders of the Shares will not be subject to personal
liability by reason of being such holders;
(vii) the Company has an authorized capitalization as
set forth under the column entitled "March 31, 1996 Pro Forma
As Adjusted" under the heading in the Registration Statement
and the Prospectus entitled "Capitalization", and the
outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid,
nonassessable and free of statutory and contractual preemptive
rights;
(viii) the capital stock of the Company, including
the Shares, conforms in all material respects to the
description thereof contained in the Registration Statement
and the Prospectus;
(ix) the Registration Statement and the Prospectus
(except as to the financial statements and schedules contained
therein as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Act;
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(x) the Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no
stop order proceedings with respect thereto are pending or
threatened under the Act;
(xi) no approval, authorization, consent or order of
or filing with any federal, state, local or foreign
governmental or regulatory commission, board, body, authority
or agency is required in connection with the issuance or sale
of the Shares as contemplated hereby, other than registration
of the Shares under the Act (except such counsel need express
no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriters);
(xii) the execution, delivery and performance of this
Agreement by the Company, the issuance of the Shares and the
consummation by the Company of the transactions contemplated
hereby do not and will not conflict with, or result in any
breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time or both would
constitute a breach of or default under), the charter or
bylaws of the Company or under any provision of any license,
indenture, lease, mortgage, deed of trust, bank loan or credit
agreement or other agreement or instrument to which the
Company is a party or by which the Company or its properties
are bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or
order applicable to the Company;
(xiii) the Company is not in breach of or in default
under (nor has any event occurred which with notice, lapse of
time or both would constitute a breach of or default under)
its charter or bylaws, or in the performance or observance of
any obligation, agreement, covenant or condition contained in
any license, indenture, lease, mortgage, deed of trust, bank
loan or credit agreement or any other agreement or instrument
to which the Company or by which the Company or its properties
are bound or affected, except for such matters as could not,
individually or in the aggregate, have a material adverse
effect on the properties, assets, operations, business,
business prospects or condition (financial or other) of the
Company;
(xiv) (1) to the best of such counsel's knowledge,
after due inquiry, the Company is in compliance with all
applicable foreign, federal, state and local laws and
regulations, including without limitation Environmental Laws,
federal and state laws relating to employment of illegal
aliens or to discrimination in the hiring, promotion or pay of
employees, federal and state wages and hours laws and all
applicable provisions of the Employee Retirement Income
Security Act and the rules and regulations promulgated
thereunder, except where the failure, individually or in the
aggregate, to be so in compliance would not have a material
adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other)
of the Company;
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(2) the Company has such permits, licenses,
franchises and authorizations of governmental or regulatory
authorities ("permits"), including without limitation under
any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business in the manner described in the Prospectus; to the
best of such counsel's knowledge, after due inquiry, the
Company has fulfilled and performed all of its material
obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any
such permit; and such permits contain no restrictions that are
materially burdensome to the Company;
(xv) all contracts or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement have been so described or filed;
(xvi) except as described in the Registration
Statement and the Prospectus, there are no actions, suits or
proceedings of which such counsel has knowledge pending or
threatened against the Company or any of its properties, at
law or in equity, or before or by any federal, state, local or
foreign governmental or regulatory commission, board, body,
authority or agency that individually or in the aggregate
could result in a judgment, decree or order having a material
adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other)
of the Company;
(xvii) no person has the right, contractual or
otherwise, to cause the Company to issue to it any securities
of the Company in consequence of the issue and sale of the
Shares to the Underwriters hereunder; each person who has the
right, contractual or otherwise, to cause the Company to
register pursuant to the Act any securities of the Company in
consequence of the issue and sale of the Shares to the
Underwriters hereunder either included such securities in the
Registration Statement or duly waived such rights;
(xviii) the statements in the Registration Statement
and the Prospectus under the captions "Prospectus Summary,"
"Risk Factors," "Prior S Corporation Status and
Distributions," "Business," "Management," " Certain
Transactions," "Description of Capital Stock" and "Shares
Eligible For Future Sale," insofar as they are descriptions of
laws, regulations and rules, of legal and governmental
proceedings or of contracts, agreements, leases and other
legal documents, or refer to statements of law or legal
conclusions, have been reviewed by such counsel and are
accurate in all material respects;
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(xix) the Company is not an "investment company" or a
person "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xx) nothing has come to the attention of such
counsel that causes them to believe that the Registration
Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus or any supplement thereto at the date of such
Prospectus or such supplement, and at all times up to and
including the time of purchase or additional of purchase, as
the case may be, 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, in light
of the circumstances under which they were made, not
misleading (it being understood that such counsel need express
no opinion with respect to the financial statements and
schedules and other financial data included in the
Registration Statement or Prospectus).
(b) The Selling Shareholders shall furnish to you at the time
of purchase and at such additional time of purchase, as the case may
be, an opinion of [_________], counsel for the Selling Shareholders,
addressed to the Underwriters and dated the time of purchase or such
additional time of purchase, as the case may be, with reproduced copies
for each of the other Underwriters and in form satisfactory to you,
stating that:
(i) this Agreement and the Power of Attorney and
Custody Agreement have been duly executed and delivered by
each of the Selling Shareholders; the Power of Attorney and
Custody Agreement is a legal, valid and binding agreement of
each of the Selling Shareholders enforceable in accordance
with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and
general principles of equity;
(ii) each of the Selling Shareholders has full legal
right and power, and has obtained any authorization or
approval required by law (other than those imposed by the Act
and the securities or blue sky laws of certain jurisdictions),
to enter into this Agreement and the Power of Attorney and
Custody Agreement and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Shareholder in the
manner provided in this Agreement;
(iii) delivery of certificates for the Shares to be
sold by the Selling Shareholders pursuant hereto will pass
title thereto to the Underwriters severally, free and clear of
any claim, lien, encumbrance, security interest, community
property right, restriction on transfer or other defect in
title assuming that the
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several Underwriters are good faith purchasers and without
notice of any adverse claim;
(iv) the consummation of the transactions
contemplated hereby and by the Power of Attorney and Custody
Agreement and the fulfillment of the terms hereof and thereof
will not (a) conflict with or result in any breach of or
constitute a default under the terms of any indenture,
mortgage, deed of trust, lease or other agreement or
instrument to which any of the Selling Shareholders is a party
or by which any of the Selling Shareholders or any of their
respective properties is bound or (b) will conflict with or
violate any law, regulation or rule, or any decree, judgment,
order, consent or memorandum of understanding applicable to
any Selling Stockholder of any court, regulatory body,
administrative agency or governmental body or arbitrator
having jurisdiction over any Selling Stockholder or any
Selling Stockholder's property;
(v) the Attorney-in-Fact has been duly authorized by
each Selling Shareholder to execute and deliver on behalf of
each Selling Shareholder this Agreement and any other document
necessary or desirable in connection with the transactions
contemplated hereby and to deliver the Shares to be sold by
the Selling Shareholder and receive payment therefor pursuant
hereto;
(vi) no approval, authorization, consent or order of
or filing with any federal, state, local or foreign
governmental or regulatory commission, board, body, authority
or agency is required in connection with the sale of the
Shares to be sold by the Selling Shareholders as contemplated
hereby other than registration of the Shares under the Act
(except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky
laws of the various jurisdictions in which the Shares are
being offered by the Underwriters); and
(vii) there are no transfer or similar taxes payable
in connection with the sale and delivery of Shares by the
Selling Shareholders to the several Underwriters.
(c) You shall have received from Price Waterhouse LLP letters
dated, respectively, the date of this Agreement and the time of
purchase and additional time of purchase, as the case may be, and
addressed to the Underwriters (with reproduced copies for each of the
Underwriters) in form and substance satisfactory to you.
(d) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Howard,
Darby & Levin in form and substance satisfactory to you.
(e) No amendment or supplement to the Registration Statement
or the Prospectus shall be filed prior to the time the Registration
Statement becomes effective to which you shall have objected in
writing.
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(f) The Registration Statement shall become effective at or
before 12:00 Noon, New York City time, on the date of this Agreement
and, if Rule 430A under the Act is used, the Prospectus shall have been
filed with the Commission pursuant to Rule 424(b) under the Act at or
before 5:00 P.M., New York City time, on the second full business day
after the date of this Agreement; provided, however, that the Company,
the Selling Shareholders and you and any group of Underwriters,
including you, who have agreed hereunder to purchase in the aggregate
at least 50% of the Firm Shares from time to time may agree in writing
or by telephone, confirmed in writing, on a later date.
(g) Prior to the time of purchase or the additional time of
purchase, as the case may be: (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued
under the Act or proceedings initiated under Section 8(d) or 8(e) of
the Act; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(iii) the Prospectus and all amendments or supplements thereto, or
modifications thereof, if any, shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may
be, there has not been: (i) any material and adverse change, present or
prospective, in the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company other than
as described in the Registration Statement and the Prospectus; (ii) any
transaction that is material to the Company contemplated or entered
into by the Company other than as described in the Registration
Statement and the Prospectus; or (iii) any obligation, contingent or
otherwise, directly or indirectly, incurred by the Company that is
material to the Company other than as described in the Registration
Statement and the Prospectus.
(i) The Company, at the time of purchase or additional time of
purchase, as the case may be, will deliver to you a certificate of two
of its executive officers to the effect that the representations and
warranties of the Company as set forth in this Agreement are true and
correct as of each such date and the conditions set forth in Section
8(g) and Section 8(l) have been met.
(j) You shall have received a signed letter, dated the date of
this Agreement, from each of the Company's shareholders, directors, and
officers listed in Schedule C to the effect that such persons shall not
offer, sell, contract to sell, grant any option to sell, transfer or
otherwise encumber or dispose of, directly or indirectly, any shares of
Class A Common Stock or securities convertible into or exchangeable for
Class A Common Stock or warrants or other rights to purchase Class A
Common Stock for a period of 180 days
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from the date of the Prospectus without the prior written consent of
Dillon, Read & Co. Inc.
(k) The Company and the Selling Shareholders shall have
furnished to you such other documents and certificates as to the
accuracy and completeness of any statement in the Registration
Statement or the Prospectus as of the time of purchase and the
additional time of purchase, as the case may be, as you reasonably may
request.
(l) The Company and the Selling Shareholders shall have
performed such of their respective obligations under this Agreement as
are to be performed by the terms hereof at or before the time of
purchase and at or before the additional time of purchase, as the case
may be.
(m) The Shares shall have been duly approved for quotation on
the Nasdaq National Market.
(n) Each Selling Shareholder at the time of purchase or
additional time of purchase, as the case may be, shall have delivered
to you a certificate (which may be signed by the Attorney-in-Fact) to
the effect that the representations and warranties of such Selling
Shareholder as set forth in this Agreement are true and correct as of
such date and the conditions set forth in Section 8(l) with respect to
such Selling Shareholder have been met.
9. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective (i) if Rule 430A under
the Act is not used, when you shall have received notification of the
effectiveness of the Registration Statement, or (ii) if Rule 430A under the Act
is used, when the parties hereto have executed and delivered this Agreement.
(b) The obligations of the several Underwriters hereunder shall
be subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares if, at any time prior to the time of
purchase or, with respect to the purchase of any Additional Shares, the
additional time of purchase, as the case may be, trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall have
been established on the New York Stock Exchange or if a banking moratorium shall
have been declared either by the United States or New York State authorities, or
if the United States shall have declared war in accordance with its
constitutional processes or there shall have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in your judgment or in the judgment of
such group of Underwriters, makes it impracticable to market the Shares. If you
or any group of Underwriters elect to terminate this Agreement as provided in
this Section 9(b), the Company and each other Underwriter shall be notified
promptly by letter or telegram.
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(c) If any Underwriter shall default in its obligation to take
up and pay for the Firm Shares to be purchased by it hereunder and if the number
of Firm Shares which all Underwriters so defaulting shall have agreed but failed
to take up and pay for does not exceed 10% of the total number of Firm Shares,
the non-defaulting Underwriters shall take up and pay for (in addition to the
aggregate principal amount of Firm Shares they are obligated to purchase
pursuant to Section 1) the number of Firm Shares agreed to be purchased by all
such defaulting Underwriters as hereinafter provided. Such Shares shall be taken
up and paid for by such non-defaulting Underwriter or Underwriters in such
amount or amounts as you may designate with the consent of each Underwriter so
designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule A.
(d) If any Underwriter shall default in its obligation to take
up and pay for the Firm Shares to be purchased by it hereunder and if the number
of Firm Shares which all Underwriters so defaulting shall have agreed but failed
to take up and pay for exceeds 10% of the total number of Firm Shares, and
arrangements satisfactory to you and the Company are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter.
(e) Without relieving any defaulting Underwriter from its
obligations hereunder, the Company and the Selling Shareholders agree with the
non-defaulting Underwriters that they will not sell any Firm Shares hereunder
unless all of the Firm Shares are purchased by the Underwriters (or by
substituted underwriters selected by you with the approval of the Company or
selected by the Company with your approval pursuant to Section 9(d)). If a new
Underwriter or Underwriters are substituted for a defaulting Underwriter or
Underwriters in accordance with Section 9(d), the Company or you shall have the
right to postpone the time of purchase for a period not exceeding five business
days in order that any necessary change in the Registration Statement and the
Prospectus and other documents may be effected. The term Underwriter as used in
this Agreement shall refer to and include any Underwriter substituted under this
Section 9 with like effect as if such substituted Underwriter had originally
been named in Schedule A.
(f) If the purchase of the Shares by the Underwriters, as
contemplated by this Agreement, is not consummated for any reason permitted
under this Agreement or if such purchase is not consummated because the Company
shall be unable to comply with any of the terms of this Agreement, the Company
shall not be under any obligation or liability under this Agreement (except to
the extent provided in Sections 5(l), 7 and 10), and the Underwriters shall be
under no obligation or liability to the Company or the Selling Shareholders
under this Agreement (except to the extent provided in Section 10).
10. Indemnity by the Company, the Selling Shareholders and the
Underwriters.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify, defend and hold harmless each Underwriter, each
person that controls any Underwriter
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within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and each Underwriter's agents, employees, officers and directors and the agents,
employees, officers and directors of any such controlling person (collectively,
the "Underwriter indemnified parties") from and against any and all losses,
claims, damages, judgments, liabilities and expenses (including the fees and
expenses of counsel and other expenses in connection with investigating,
defending or settling any such action or claim) which, jointly or severally, any
Underwriter indemnified party may incur as they are incurred (and regardless of
whether such Underwriter indemnified party is a party to the litigation, if any)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the registration statement relating to the Shares
or the Prospectus or any Preliminary Prospectus, or arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, judgments, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or alleged untrue statement or omission based upon and in conformity with
information with respect to any Underwriter furnished in writing by any
Underwriter through you to the Company expressly for use therein with reference
to such Underwriter; provided, however, that no Selling Shareholder shall be
liable under this Section 10 in an amount exceeding the total price at which the
Shares sold by such Selling Shareholder were offered to the public. This
indemnity agreement will be in addition to any liability the Company or the
Selling Shareholders otherwise may have.
(b) If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
Underwriter indemnified party, with respect to which indemnity may be sought
against the Company or a Selling Shareholder pursuant to this Section 10, such
Underwriter indemnified party shall promptly notify the Company and each Selling
Shareholder in writing, and the Company and the Selling Shareholders shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Underwriter indemnified party and payment of all fees and
expenses; provided that the omission so to notify the Company and the Selling
Shareholders shall not relieve them from any liability that they may have to any
Underwriter indemnified party. An Underwriter indemnified party shall have the
right to employ separate counsel in any such action or proceeding and to assume
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter indemnified party unless (i) the employment of such
counsel has been authorized in writing by the Company or the Selling
Shareholders, (ii) the Company and the Selling Shareholders have failed promptly
to assume the defense and employ counsel satisfactory to the Underwriter
indemnified party or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Underwriter indemnified party
and the Company or the Selling Shareholders and such Underwriter indemnified
party shall have reasonably concluded that there may be one or more legal
defenses available to it that are different from or additional to those
available to the Company and the Selling Shareholders (in which case the Company
and the Selling Shareholders shall not have the right to assume the defense of
such action on behalf of such Underwriter indemnified party), in any of which
events such fees and expenses shall be borne by the Company and the Selling
Shareholders and reimbursed as they are incurred. It is understood, however,
that the Company and the Selling Shareholders shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same
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jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Underwriter indemnified
parties, which firm shall be designated in writing by Dillon, Read & Co. Inc.,
and that all such fees and expenses shall be reimbursed as they are incurred.
The Company and the Selling Shareholders shall not be liable for any settlement
of any such action effected without the written consent of the Company or the
Selling Shareholders (which consent shall not be unreasonably withheld or
delayed), but if settled with the written consent of the Company or the Selling
Shareholders, or if there is a final judgment with respect thereto, the Company
and the Selling Shareholders agree to indemnify and hold harmless each
Underwriter indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, and any person that controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (collectively, the
"Company indemnified parties") and each Selling Shareholder to the same extent
as the foregoing indemnity from the Company and the Selling Shareholders to the
Underwriter indemnified parties, but only with respect to information concerning
such Underwriter furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use with respect to such Underwriter in
the Registration Statement, any Preliminary Prospectus or the Prospectus. In
case any action shall be brought against any Company indemnified party or any
Selling Shareholder based on the Registration Statement, any Preliminary
Prospectus or the Prospectus and in respect of which indemnity may be sought
against any Underwriter pursuant to this Section 10(c), such Underwriter shall
have the rights and duties given to the Company and the Selling Shareholders by
Section 10(b) (except that if the Company and the Selling Shareholders shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, provided that the fees and expenses of such separate counsel shall be
at the expense of such Underwriter), and the Company indemnified parties and the
Selling Shareholders shall have the rights and duties given to the Underwriter
indemnified parties by Section 10(b).
The statements under the caption "Underwriting" in the
Registration Statement and the Prospectus (to the extent such statements relate
to an Underwriter) constitute the only information furnished to the Company in
writing by such Underwriter expressly for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus.
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless any Underwriter indemnified
party or any Company indemnified party or any Selling Shareholder, then the
party required to indemnify such indemnified party under this Section 10, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, judgments, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand from
the offering of the Shares, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the
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relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Shareholders on the one hand and of the Underwriters
on the other hand in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, by the Selling Shareholders or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
judgments, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any claim or action.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
10(d) were determined by pro rata allocation or by any other method of
allocation (even if the Underwriters were treated as one entity for such
purpose) that does not take account of the equitable considerations referred to
in this Section 10(d). Notwithstanding the provisions of this Section 10(d), no
Underwriter indemnified party shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by such Underwriter indemnified party and distributed to the public were offered
to the public exceeds the amount of any damages which such Underwriter
indemnified party otherwise has been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 10 are several in proportion to their respective
underwriting commitments and are not joint.
(e) The indemnity and contribution agreements contained in this
Section 10 and the representations, warranties and covenants of the Company and
the Selling Shareholders contained in this Agreement shall remain in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter indemnified party or by or on behalf of any Company indemnified
party or any Selling Shareholder, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. Subject to the provisions
of Section 10(b) and Section 10(c), the Company, each Selling Shareholder and
each Underwriter agree promptly to notify the other of the commencement of any
litigation or proceeding against it in connection with the issuance and sale of
the Shares or in connection with the Registration Statement or the Prospectus.
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11. Notices. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered or
sent to Dillon, Read & Co. Inc., 535 Madison Avenue, New York, New York 10022,
Attention: Syndicate Department; if to the Company, shall be sufficient in all
respects if delivered or sent to the Company at the offices of the Company at
RemedyTemp, Inc., 32122 Camino Capistrano, San Juan Capistrano, California
96275, Attention: [____________]; and if to the Selling Shareholders, shall be
sufficient in all respects, if delivered or sent to [____________].
12. Construction. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE SECTION HEADINGS
IN THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF CONVENIENCE OF
REFERENCE AND ARE NOT A PART OF THIS AGREEMENT.
13. Parties at Interest. The Agreement herein set forth has been
and is made solely for the benefit of the Underwriters, the Company, the Selling
Shareholders, the Underwriter indemnified parties and the Company indemnified
parties, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
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If the foregoing correctly sets forth the understanding among
the Company, the Selling Shareholders and the Underwriters, please so indicate
in the space provided below for such purpose, whereupon this letter and your
acceptance shall constitute a binding agreement among the Company, the Selling
Shareholders and the Underwriters, severally.
Very truly yours,
REMEDYTEMP, INC.
By:
------------------------------
Name:
Title:
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE B ATTACHED HERETO
By:
-----------------------------
Attorney-in-fact
Accepted and agreed to as of
the date first above written,
on behalf of themselves,
The Robinson-Humphrey Company, Inc.
and the other several
Underwriters named in
Schedule A
DILLON, READ & CO. INC., as
Managing Underwriter
By:
------------------------------
Name:
Title:
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SCHEDULE A
Number of
Underwriters Firm Shares
- ------------ -----------
Dillon, Read & Co. Inc.....................
The Robinson-Humphrey Company, Inc.........
Total.............................. 3,100,000
=========
30
SCHEDULE B
Number of Firm
Name Shares to be Sold
- ---- -----------------
31
SCHEDULE C
SHAREHOLDERS, DIRECTORS AND OFFICERS
WHO HAVE EXECUTED LOCK-UP AGREEMENTS