EXHIBIT 1.1
[2,200,000] Shares
VDI Media
Common Stock
UNDERWRITING AGREEMENT
________ __, 1996
Oppenheimer & Co., Inc.
Prudential Securities Incorporated
c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
VDI Media, a California corporation (the "Company"), and the selling
shareholder named on Schedule II to this Agreement (the "Selling
Shareholder") propose to sell to you and the other underwriters named on
Schedule I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of [2,200,000] shares (the "Firm Shares") of
the Company's Common Stock, no par value (the "Common Stock"). Of the
[2,200,000] Firm Shares, [2,100,000] are to be issued and sold by the Company
and [100,000] are to be sold by the Selling Shareholder. In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional [315,000] shares (the "Option Shares") of Common Stock from it
solely for the purpose of covering over-allotments in connection with the
sale of the Firm Shares. The Firm Shares and the Option Shares are together
called the "Shares."
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1. SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company and the Selling Shareholder agree, severally and
not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase, at $[ ]
per share (the "Initial Price"), the total number of Firm Shares
(adjusted by the Representatives to eliminate fractions) which bears
the same proportion to the number of Firm Shares to be sold by the
Company or the Selling Shareholder, as the case may be, as the number
of Firm Shares set forth opposite the name of such Underwriter on
Schedule I to this Agreement bears to the total number of Firm Shares
to be sold by the Company and the Selling Shareholder.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by
the Representatives to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Underwriter
is purchasing of the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date (as defined below), and only once thereafter
within 30 days after the date of this Agreement, in each case upon
written or facsimile notice, or verbal or telephonic notice confirmed
by written or facsimile notice, by the Representatives to the Company
no later than 12:00 noon, New York City time, on the business day
before the Firm Shares Closing Date or at least two business days
before the Option Shares Closing Date (as defined below), as the case
may be, setting forth the number of Option Shares to be purchased and
the time and date (if other than the Firm Shares Closing Date) of such
purchase.
2. DELIVERY AND PAYMENT. Delivery of the certificates for the Firm
Shares shall be made by the Company and the Custodian (as hereinafter
defined) on behalf of the Selling Shareholder to the Representatives for the
respective accounts of the Underwriters, and payment of the purchase price by
certified or official bank check or checks payable in New York Clearing House
(next day) funds to the Company and the Custodian, shall take place at the
offices of Oppenheimer & Co., Inc., at Oppenheimer Tower, World Financial
Center, New York, New York 10281, at 10:00 a.m., New York City time, on the
third business day following the date of this Agreement; provided, however,
that if the Shares
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sold hereunder are priced and this Agreement is entered into after 4:30 p.m.,
New York City time, on any business day, payment and delivery in respect of
the Firm Shares shall take place on the fourth business day following the
date of this Agreement; in either case unless some other time shall be agreed
upon by the Company, the Selling Shareholder and the Representatives (such
time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the option with respect to the Option Shares is exercised,
delivery of the certificates for the Option Shares shall be made by the
Company to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price by certified or official bank
check or checks payable in New York Clearing House (next day) funds to the
Company shall take place at the offices of Oppenheimer & Co., Inc. specified
above at the time and on the date (which may be the same date as, but in no
event shall be earlier than, the Firm Shares Closing Date) specified in the
notice referred to in Section 1(b) (such time and date of delivery and
payment are called the "Option Shares Closing Date"). The Firm Shares
Closing Date and the Option Shares Closing Date are called, individually, a
"Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking
and packaging, at such place as is designated by the Representatives, on the
business day before the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared in conformity with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form (No.
333-[ ]), including a preliminary prospectus relating to the Shares, and
has filed with the Commission the Registration Statement (as hereinafter
defined) and such amendments thereof as may have been required to the date of
this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related preliminary prospectus have heretofore
been delivered by the Company to you. The term "preliminary prospectus"
means the preliminary prospectus (as described in Rule 430 of the Rules)
included at any time as a part of the Registration Statement or filed with
the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules. The Registration Statement, as amended
at the time and on the date it becomes effective (the "Effective Date"),
including all exhibits and information, if
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any, deemed to be part of the Registration Statement pursuant to Rule 424(b)
and Rule 430A of the Rules, is called the "Registration Statement." The term
"Prospectus" means the prospectus in the form first used to confirm sales of
the Shares (whether such prospectus was included in the Registration
Statement at the time of effectiveness or was subsequently filed with the
Commission pursuant to Rule 424(b) of the Rules). If the Company files a
registration statement to register a portion of the Shares and relies on Rule
462(b) for such registration statement to become effective upon filing with
the Commission (the "Rule 462(b) Registration Statement"), then any reference
to the "Registration Statement" herein shall be deemed to include both the
registration statement referred to above (No. 333-[ ]) and the Rule
462(b) Registration Statement, as each such registration statement may be
amended pursuant to the Securities Act.
The Company and the Selling Shareholder understand that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant
to the Prospectus, as soon after the Effective Date and the date of this
Agreement as the Representatives deem advisable. The Company and the Selling
Shareholder hereby confirm that the Underwriters and dealers have been
authorized to distribute or cause to be distributed each preliminary
prospectus and are authorized to distribute the Prospectus (as from time to
time amended or supplemented if the Company furnishes amendments or
supplements thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement and
all other registration statements and reports filed with the Commission
by the Company complied, and on the date of the Prospectus, on the date
any post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the Prospectus is
filed with the Commission, at all times that a prospectus must be
delivered by the Underwriters pursuant to the Securities Act and on
each Closing Date, the Registration Statement, the Prospectus (and any
amendment thereof or supplement thereto) and all other registration
statements and reports filed with the Commission by the Company will
comply, in all material respects, with the applicable provisions of the
Securities Act and the Rules and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder; the Registration Statement did not, as of the
Effective Date, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and on the
other dates referred to above neither the Registration Statement nor
the Prospectus, nor any
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amendment thereof or supplement thereto, will contain any untrue statement
of a material fact or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. When any related preliminary prospectus was first filed with
the Commission (whether filed as part of the Registration Statement or
any amendment thereto or pursuant to Rule 424(a) of the Rules) and when
any amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus as amended or supplemented
complied in all material respects with the applicable provisions of
the Securities Act and the Rules and did not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein not misleading. Notwithstanding the foregoing, the Company
makes no representation or warranty as to the last paragraph of the
cover page of the Prospectus, the paragraph with respect to
stabilization on the inside front cover page of the Prospectus and the
statements contained under the caption "Underwriting" in the Prospectus
(to the extent such statements relate to the Underwriters). The Company
acknowledges that the statements referred to in the previous sentence
constitute the only information furnished in writing by the
Representatives on behalf of the several Underwriters specifically for
inclusion in the Registration Statement, any preliminary prospectus or
the Prospectus.
(b) The consolidated financial statements of the Company
(including all notes and schedules thereto) included in the
Registration Statement and Prospectus comply as to form in all material
respects with the requirements of the Securities Act and the Exchange
Act and present fairly on a consolidated basis the financial position,
the results of operations and cash flows and the shareholders' equity
and the other information purported to be shown therein of the Company
at the respective dates and for the respective periods to which they
apply; and such financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of the results for such periods have been made; and
the other financial and statistical information and the supporting
schedules included in the Prospectus and in the Registration Statement
present fairly, in all material respects, the information required to
be stated therein.
(c) Price Waterhouse LLP, whose report is filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants
as required by the Securities Act and the Rules.
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(d) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of California. The Company has no subsidiary or subsidiaries and does
not control, directly or indirectly, any corporation, partnership,
joint venture, association or other business organization. The Company
is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its business
makes such qualification necessary, except for such jurisdictions where
the failure to so qualify would not have a material adverse effect on
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company. Except as disclosed
in the Registration Statement and the Prospectus, the Company does not
own, lease or license any asset or property or conduct any business
outside the United States of America. The Company has all requisite
power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies, including without limitation the
Federal Communications Commission, or any other person or entity, to
own, lease and license its assets and properties and conduct its
businesses as now being conducted and as described in the Registration
Statement and the Prospectus, except for such authorizations,
approvals, consents, orders, licenses, certificates and permits the
failure to so obtain would not have a material adverse effect upon the
assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company; no such
authorization, approval, consent, order, license, certificate or permit
contains a materially burdensome restriction other than as disclosed in
the Registration Statement and the Prospectus; and the Company has all
such corporate power and authority, and such authorizations, approvals,
consents, orders, licenses, certificates and permits to enter into,
deliver and perform this Agreement and to issue and sell the Shares to
be issued and sold by the Company (except as may be required under the
Securities Act and state and foreign Blue Sky laws).
(e) Neither the Commission nor the Blue Sky or securities
authorities of any jurisdiction has issued an order suspending the
effectiveness of the Registration Statement, preventing or suspending
the use of any preliminary prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit
the effectiveness of the Registration Statement or suspending the
registration or qualification of the Shares, nor has any of such
authorities instituted or threatened to institute any proceedings with
respect to such an order in any jurisdiction in which the Shares are to
be sold.
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(f) The Company owns, or possesses adequate and enforceable
rights to use, all licenses or other rights to use, all patents,
trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, technology, know-how and other
similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as described in the
Registration Statement and the Prospectus. The Company has not
received any notice of, or is not aware of, any infringement of or
conflict with asserted rights of others with respect to any Intangibles
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect upon
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company, taken as a whole.
Except as set forth in the Registration Statement or the Prospectus,
the discoveries, inventions, products or processes of the Company
referred to in the Registration Statement or the Prospectus do not
infringe or conflict with any right or patent of any third party, or
any discovery, invention, product or process which is the subject of a
patent application filed by any third party which would have a material
adverse effect on the Company.
(g) The Company has good title to each of the items of real
and personal property which are reflected in the financial statements
referred to in Section 4(b) or are referred to in the Registration
Statement and the Prospectus as being owned by it and valid and
enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Registration Statement
and the Prospectus as being leased by it, in each case free and clear
of all liens, encumbrances, claims, security interests and defects,
other than those described in the Registration Statement and the
Prospectus and those which do not and will not have a material adverse
effect upon the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(h) There is no litigation or governmental or other
proceeding or investigation before any court or before or by any public
body or board pending or, to the knowledge of the Company, threatened
(and the Company does not know of any basis therefor) against, or
involving the assets, properties or business of, the Company which
would materially adversely affect the value or the operation of any
such assets or properties or the business, results of operations,
prospects or condition (financial or otherwise) of the Company, which
would prevent the consummation of the transactions contemplated by this
Agreement or is required to be disclosed in the Prospectus.
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(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as described therein, (i) there has not been any material
adverse change in the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company, whether or not arising from transactions in the ordinary
course of business; (ii) the Company has not sustained any material
loss or interference with its assets, businesses or properties (whether
owned or leased) from fire, explosion, earthquake, hurricane, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree; and (iii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus, except as
reflected therein, the Company has not (A) issued any securities or
incurred any liability or obligation, direct or contingent, for
borrowed money, except such liabilities or obligations incurred in the
ordinary course of business, (B) entered into any transaction not in
the ordinary course of business or (C) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or otherwise
acquire any shares of its stock or other securities.
(j) There is no document or contract of a character required
to be described in the Registration Statement and the Prospectus or to
be filed as an exhibit to the Registration Statement which is not
described or filed as required. Each agreement to which the Company is
a party which is described in the Prospectus or is filed as an Exhibit
to the Registration Statement is in full force and effect and is valid
and enforceable by and against the Company, in accordance with its
terms, assuming the due authorization, execution and delivery thereof
by each of the other parties thereto. Neither the Company, nor, to the
best knowledge of the Company, any other party is in default in the
observance or performance of any term or obligation to be performed by
it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any
such case which default or event would have a material adverse effect
on the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company. No default
exists, and no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance
of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which it
or its properties or business may be bound or affected which default or
event would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company.
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(k) The Company is not in violation of any term or provision
of its charter or by-laws, or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a material adverse effect on
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or provision of,
or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or
waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company is a party or by
which the Company or any of its properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or violate any provision of the
Articles of Incorporation or By-laws of the Company except for such
consents or waivers which have already been obtained and are in full
force and effect.
(m) The Company has authorized and outstanding capital stock
as set forth under the captions "Capitalization" and "Description of
Capital Stock" in the Prospectus. All of the outstanding shares of
Common Stock, no par value, have been duly and validly issued and are
fully paid and nonassessable and none of them was issued in violation
of any preemptive or other similar right. The Shares, when issued and
sold by the Company pursuant to this Agreement, will be duly and
validly issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right. Except
as disclosed in the Registration Statement and the Prospectus, there is
no outstanding option, warrant or other right calling for the issuance
of, and there is no commitment, plan or arrangement to issue, any share
of stock of the Company, or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus.
(n) Except as described in the Registration Statement and
the Prospectus, no holder of any security of the Company has the right
to have any security owned by such
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holder included in the Registration Statement or to demand registration
of any security owned by such holder during the period ending 180 days
after the date of this Agreement.
(o) Each Shareholder listed on Schedule III hereto, director
and executive officer of the Company has delivered to the
Representatives his or her enforceable written agreement that, except,
in the case of the Selling Shareholder, for the sale of the Shares to
be sold by the Selling Shareholder pursuant to the Registration
Statement, he or she will not, for a period of 180 days after the date
of this Agreement, directly or indirectly, offer, sell (including
"short sales"), assign, encumber or otherwise transfer or dispose of
(collectively, "Transfer"), or contract to Transfer, any shares of
Common Stock, or any other securities convertible into or exchangeable
for shares of Common Stock, or any other equity securities of the
Company owned by him or her, without the prior written consent of the
Representatives, except for (i) sales to the several Underwriters
pursuant to this Agreement or (ii) pursuant to will or the laws of
intestate succession, provided the transferee agrees in writing to be
bound by such restrictions.
(p) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles and
(ii) to the extent that rights to indemnity or contribution under this
Agreement may be limited by Federal and state securities laws or the
public policy underlying such laws.
(q) The Company is not involved in any labor dispute nor, to
the knowledge of the Company, is any such dispute threatened, which
dispute would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company; and the Company is not aware
of any existing or imminent labor disturbances by the employees of any
of its principal suppliers, manufacturers or contractors which would
have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Company.
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(r) No transaction has occurred between or among the Company
and any of its officers, directors or shareholders or any affiliate or
affiliates of any such officer, director or shareholder, that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of
any of the Shares.
(t) The Company has filed all Federal, state, local and
foreign tax returns which are required to be filed through the date
hereof, or has received valid extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to the
extent that the same are material and have become due.
(u) The Shares have been duly authorized for quotation on
the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") National Market.
(v) The Company has complied with all of the requirements
and filed the required forms as specified in Florida Statutes Section
517.075.
(w) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as each such term is defined in the Investment
Company Act of 1940, as amended.
(x) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are customary in the business in which it is engaged; and
the Company has no reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely
affect the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company, except as described in
or contemplated by the Prospectus.
(y) The Company has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of
property, however characterized, to any
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finder, agent, government official or other party, in the United States
or any other country, which is in any manner related to the business
or operations of the Company, which the Company knows or has reason
to believe have been illegal under any federal, state or local laws
of the United States or any other country having jurisdiction; and
the Company has not participated, directly or indirectly, in any
boycotts or other similar practices in contravention of law
affecting any of its actual or potential customers.
(z) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the accounting
records for assets are compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(aa) The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"), (ii) has received all permits,
licenses or other approvals required under applicable Environmental
Laws to conduct business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the
Company.
(bb) The Company meets, and on the Effective Date of the
Registration Statement and on each Closing Date will meet, the
conditions for use of Form S -1 under the Securities Act and the Rules.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER. The
Selling Shareholder represents and warrants to each Underwriter that:
(a) Such Selling Shareholder is, and on each Closing Date
will be, the sole lawful owner of the Shares to be sold by it
hereunder, and has, and on such date will have, good title to the
Shares to be sold by such Selling Shareholder hereunder, free and clear
of any lien, charge, claim, encumbrance, security interest,
Shareholders'
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agreement, voting trust, restriction on transfer or other defect
in title, provided that all restrictions on the sale of the
Shares as contemplated hereby have been waived and the purchasers of
the Shares shall acquire the Shares free of such agreements and
restrictions as more fully provided in Section 5(b) hereof.
(b) Such Selling Shareholder has, and on each Closing Date
will have, full legal right, power and authority, and every approval
required by law, to sell, assign, transfer and deliver such Shares in
the manner provided in this Agreement; delivery of certificates for the
Shares to be sold by such Selling Shareholder pursuant hereto will,
upon payment therefor, pass good title thereto to each Underwriter,
free and clear of any lien, charge, claim, encumbrance, security
interest, Shareholders' agreement, voting trust, restriction on
transfer or other defect in title; and there are no outstanding
options, warrants, rights or other agreements or arrangements requiring
such Selling Shareholder at any time to transfer any Shares which may
be sold to the Underwriters pursuant to this Agreement.
(c) Such Selling Shareholder has duly executed and delivered
a power of attorney (the "Power of Attorney"), in the form heretofore
delivered to the Representatives, appointing [______________] as such
Selling Shareholder's attorney-in-fact (the "Attorney-in-Fact"), with
full power and authority to execute, deliver and perform this Agreement
on behalf of such Selling Shareholder.
(d) Such Selling Shareholder has duly executed and delivered
a custody agreement (the "Custody Agreement"), in the form heretofore
delivered to the Representatives pursuant to which certificates in
negotiable form for the Shares to be sold by such Selling Shareholder
under this Agreement, in the case of the Shares, were deposited with
[______________], as a custodian (the "Custodian"). The Custody
Agreement and the Custodian's authority thereunder and the appointment
of the Attorney-in-Fact are irrevocable and the obligations of such
Selling Shareholder hereunder and under the Custody Agreement are not
subject to termination by such Selling Shareholder, except as provided
in this Agreement, the Power of Attorney or the Custody Agreement, or
by operation of law, whether by the death or incapacity of such Selling
Shareholder (if such Selling Shareholder is an individual), the death
or incapacity of any trustee or executor or the termination of any
trust or estate (if such Selling Shareholder is a trust or estate), the
dissolution or liquidation of any corporation or partnership (if such
Selling Shareholder is a corporation or a partnership), or the
occurrence of any other event. If any event referred to in the
preceding sentence should occur before the delivery of the Shares
hereunder, the certificates for the Shares to be sold by such Selling
Shareholder shall be delivered by the Custodian on behalf of such
Selling Shareholder in accordance with the terms and
-13-
conditions of this Agreement and the Custody Agreement, and action taken
by the Custodian pursuant to the Custody Agreement shall be as valid as if
such event had not occurred, whether or not the Custodian or the
Attorney-in-Fact, or any one of them, shall have received notice of
such event.
(e) The execution, delivery and performance of this
Agreement, the Power of Attorney, and the Custody Agreement and the
consummation of the transactions to be performed by such Selling
Shareholder contemplated hereby and thereby, including the delivery and
sale of the Shares to be delivered and sold by such Selling Shareholder
hereunder and thereunder, will not conflict with or result in a
violation by such Selling Shareholder of, or constitute a default
under, any material agreement, indenture or other instrument to which
such Selling Shareholder is a party or by which it is bound, or to
which any of its properties is subject, nor will the performance by
such Selling Shareholder of its obligations hereunder or thereunder
violate any law, rule, administrative regulation, or decree of any
court or any governmental agency or body, having jurisdiction over such
Selling Shareholder or any of its properties or result in the creation
or imposition of any lien, charge, claim, security interest,
encumbrance or restriction whatsoever upon such Shares.
(f) Except for permits and similar authorizations required
under the Securities Act, the securities or Blue Sky laws of certain
jurisdictions, and such permits and authorizations which have been
obtained, no consent, approval, authorization or order of any court,
governmental agency or body, or financial institution is required in
connection with the consummation of the transactions to be performed by
such Selling Shareholder contemplated by this Agreement, including the
delivery and sale of the Shares to be sold by such Selling Shareholder.
(g) Each of this Agreement, the Power of Attorney, and the
Custody Agreement has been duly and validly authorized, executed and
delivered by such Selling Shareholder and constitutes a legal, valid
and binding obligation of such Selling Shareholder, enforceable against
such Selling Shareholder in accordance with its terms, except (i) as
the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles and (ii) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
(h) The sale by such Selling Shareholder of Shares pursuant
hereto is not prompted by any adverse information concerning the
Company.
-14-
(i) Such Selling Shareholder has not since the filing of the
Registration Statement (i) sold, bid for, purchased, attempted to
induce any person to purchase, or paid anyone any compensation for
soliciting purchases of, the Common Stock or (ii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any
securities of the Company, except for the sale of the Shares by the
Selling Shareholder under this Agreement.
(j) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(k) To the extent that any statements or omissions are made
in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by or
on behalf of the Selling Shareholder specifically for use therein: (i)
on the Effective Date, the Registration Statement and all other
registration statements and reports filed with the Commission by the
Company complied, and on the date of the Prospectus, on the date any
post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the Prospectus is
filed with the Commission, at all times that a prospectus must be
delivered by the Underwriters pursuant to the Securities Act and on
each Closing Date, the Registration Statement, the Prospectus (and any
amendment thereof or supplement thereto) and all other registration
statements and reports filed with the Commission by the Company will
comply, in all material respects, with the applicable provisions of the
Securities Act and the Rules and the Exchange Act and the rules and
regulations of the Commission thereunder; the Registration Statement
did not, as of the Effective Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and on the other dates referred to above, neither of the
Registration Statement, nor the Prospectus, nor any amendment thereof
or supplement thereto, will contain any untrue statement of a material
fact or will or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading; and (ii) when any related preliminary prospectus was
first filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the
Rules) and when any amendment thereof or supplement thereto was first
filed with the Commission, such preliminary prospectus as amended or
supplemented complied in all material respects with the applicable
provisions of the Securities Act and the Rules and did not contain any
untrue statement of a material fact or
-15-
omit to state any material fact required to be state therein
or necessary to make the statements therein not misleading. Such
Selling Shareholder has reviewed the most recent preliminary
prospectus, the Prospectus and the Registration Statement and
the information regarding such Selling Shareholder set forth
therein under the caption "Principal and Selling Shareholders" is
complete and accurate. From the date of such effectiveness or filing,
as the case may be, through each Closing Date, such Selling Shareholder
will advise the Representatives in writing if and to the extent that
such information does not conform with the requirements of the
Securities Act and the Rules or contains any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares are subject
to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(A)(a) of this Agreement. The
Registration Statement shall have become effective no later than 5:00
p.m., New York City time, on the date of this Agreement or such later
time and date as shall be consented to in writing by the
Representatives.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Representatives.
(c) The representations and warranties of the Company and
the Selling Shareholder contained in this Agreement and in the
certificates delivered pursuant to Sections 6(d) and 6(e),
respectively, shall be true and correct when made and on and as of each
Closing Date as if made on such date and the Company and the Selling
Shareholder shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it or them at or before such Closing Date.
-16-
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial or chief accounting officer of the Company to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus and this Agreement and that the
representations and warranties of the Company in this Agreement are
true and correct on and as of such Closing Date with the same effect as
if made on such Closing Date and the Company has performed all
covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to
such Closing Date.
(e) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the Selling Shareholder, to the effect that such
Selling Shareholder has carefully examined the Registration Statement,
the Prospectus and this Agreement and that the representations and
warranties of such Selling Shareholder contained in this Agreement are
true and correct as if made on and as of such Closing Date, with the
same effect as if made on such Closing Date, and such Selling
Shareholder has performed all covenants and agreements and satisfied
all conditions contained in this Agreement required to be performed or
satisfied by such Selling Shareholder at or prior to such Closing Date.
(f) The Representatives shall have received on the Effective
Date, at the time this Agreement is executed and on each Closing Date:
(i) A signed letter from Price Waterhouse LLP addressed to the
Representatives and dated, respectively, the Effective Date, the
date of this Agreement and each such Closing Date, in form and
substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the
Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them
and stating in effect that:
(A) in their opinion the audited financial statements and
the schedules to the financial statements included in the
Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and
the Rules;
-17-
(B) on the basis of a reading of the amounts included in
the Registration Statement and the Prospectus under the
headings "Summary Financial Information," "Selected
Consolidated Financial Information," "Capitalization,"
"Dilution" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to
the comments set forth in such letter, a reading of the
minutes of the meetings of the shareholders and directors of
the Company (including committees thereof), and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company, as to
transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(1) the amounts in "Summary Financial Information,"
"Selected [Consolidated] Financial Data,"
"Capitalization," "Dilution" and "Management's Discussion
and Analysis of Financial Condition and Results of
Operations," included in the Registration Statement and
the Prospectus do not agree with the corresponding
amounts in the audited financial statements from which
such amounts were derived; and
(2) (x) there were, at a specified date not more
than five business days prior to the date of the letter,
any changes in the short-term or long-term debt of the
Company or capital stock of the Company or any decreases
in net income or in working capital or the Shareholders'
equity in the Company, as compared with the amounts shown
on the Company's unaudited March 31, 1996 balance sheet
included in the Registration Statement or (y) for the
period from March 31, 1996 to such specified business
date not more than five business days prior to the date
of the letter, there were any decreases, as compared with
the corresponding period in the preceding year, in net
revenues or in the total per share amounts of net income
in which case the Company shall deliver to the
Representatives a letter containing an explanation by the
Company as to the significance thereof unless said
explanation is not deemed necessary by the
Representatives or is set forth in or contemplated by the
Registration Statement;
(C) on the basis of a reading of the pro forma financial
statements included in the Registration Statement and the
Prospectus, carrying
-18-
out certain procedures that would not necessarily reveal matters
of significance with respect to the comments set forth in
this clause (C), inquiries of certain officials of the Company
who have responsibility for financial and accounting matters
and proving the arithmetic accuracy of the application of the
pro forma adjustments to the historical amounts in the pro
forma financial statements, nothing came to their attention
that caused them to believe that the pro forma financial
statements included in the Prospectus do not comply in
form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X, or
that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those
statements; and
(D) they have performed certain other procedures as a
result of which they have determined that certain information
of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company)
set forth in the Registration Statement and the Prospectus
and reasonably specified by the Representatives agrees with
the accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at the date
of the letter.
(g) The Representatives shall have received on each Closing Date
from Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel for the
Company [and the Selling Shareholder], an opinion, addressed to the
Representatives, dated such Closing Date, and stating in effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of California. The Company has no other subsidiary and does
not control, directly or indirectly, any corporation, partnership,
joint venture, association or other business organization. The
Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed)
or the nature of its businesses makes such qualification
necessary, except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company.
(ii) The Company has all requisite power and authority to
own, lease and license its assets and properties and conduct its
business as now being
-19-
conducted and as described in the Registration Statement and
the Prospectus; and the Company has all requisite corporate
power and authority and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits, other
than those required under the Securities Act and state and
foreign Blue Sky laws, to enter into, deliver and perform this
Agreement and to authorize, issue and sell the Shares.
(iii) The Company has authorized and issued capital stock
as set forth in the Registration Statement and the Prospectus.
The certificates evidencing the Shares are in due and proper legal
form and have been duly issued by the Company. All of the
outstanding shares of Common Stock of the Company have been duly
and validly authorized and have been duly and validly issued and
are fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The Shares,
when issued and sold pursuant to this Agreement, will be duly and
validly issued, outstanding, fully paid and nonassessable and none
of them will have been issued in violation of any preemptive or
other similar right. To such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus, there
is no outstanding option, warrant or other right calling for the
issuance of, and no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company. The
Common Stock and the Shares conform in all material respects to
the descriptions thereof contained in the Registration Statement
and the Prospectus.
(iv) The agreement of the Company's Shareholders set forth
on Schedule III to this Agreement and directors and officers
stating that, except in the case of the Selling Shareholder, for
the sale of the Shares to be sold by the Selling Shareholder
pursuant to the Registration Statement, for a period of 180 days
from the date of this Agreement they will not, without the
Representatives' prior written consent, directly or indirectly
offer, sell (including "short sales"), assign, encumber or
Transfer, or contract to Transfer, any shares of Common Stock, or
any other securities convertible into or exchangeable for shares
of Common Stock or any other equity securities owned by them,
except for (i) sales to the several Underwriters pursuant to this
Agreement or (ii) pursuant to will or the laws of intestate
succession, provided the transferee agrees in writing to be bound
by such restrictions, has been duly and validly executed and
delivered by such persons and constitutes the legal, valid and
binding obligation of each such person enforceable against each such
person in accordance with its terms, except as the enforceability
-20-
thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable usury, bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (ii) to the
extent that rights to indemnity or contribution under this
Agreement may be limited by Federal or state securities laws or
the public policy underlying such laws.
(vi) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares to be issued
and sold by the Company) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with
or result in the breach of any term or provision of, or constitute
a default (or any event which with notice or lapse of time, or
both, would constitute a default) under, or require consent or
waiver under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets of the
Company pursuant to the terms of, any indenture, mortgage, deed of
trust, note or other agreement or instrument of which such counsel
is aware and to which the Company is a party or by which the
Company or any of its respective properties or businesses is
bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of which such counsel is aware or
violate any provision of the Articles of Incorporation or the
By-laws of the Company.
(vii) To such counsel's knowledge, no default exists, and no
event has occurred which with notice or lapse of time, or both,
would constitute a default, in the due performance and observance
of any term, covenant or condition by the Company of any
indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the Company is a party or by which the Company
or any of its respective assets or properties or businesses may be
bound or affected, where the
-21-
consequences of such default would have a material and adverse
effect on the assets, properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(viii) To such counsel's knowledge, the Company is not in
violation of any term or provision of its Articles of
Incorporation or Bylaws or charter or by-laws, as the case may be,
or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such
violation would have a material adverse effect on the assets or
properties, businesses, results of operations, prospects or
condition (financial or otherwise) of the Company.
(ix) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
performance of this Agreement by the Company or the consummation
of the transactions contemplated hereby, except such as have been
obtained under the Securities Act and such as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several
Underwriters.
(x) To the best of such counsel's knowledge there is no
litigation or governmental or other proceeding or investigation
before any court or before or by any public body or board pending
or threatened against, or involving the assets, properties or
businesses of, the Company which might have a material adverse
effect upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(xi) The Company owns, or possesses adequate and enforceable
rights to use, all licenses or other rights to use, all
Intangibles necessary for the conduct of its business as described
in the Prospectus. The Company has not infringed or is not in
conflict with asserted rights of others with respect to
Intangibles which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding would have a material
adverse effect upon its assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company. Except as set forth in the Registration Statement or the
Prospectus, the discoveries, inventions, products or processes of
the Company referred to in the Registration Statement or
Prospectus do not infringe or conflict with any right or patent of
any third party, or any discovery, invention, product or process
which is the subject of a patent application filed by any third
party which would have a material adverse effect on the Company.
-22-
(xii) The statements in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale,"
"Business," "Management," "Risk Factors," "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Certain Transactions," insofar as
such statements constitute a summary of documents referred to
therein or matters of law, are fair summaries in all material
respects and accurately present the information called for with
respect to such documents and matters. All contracts and other
documents required to be filed as exhibits to, or described in,
the Registration Statement have been so filed with the Commission
or are fairly described in the Registration Statement, as the case
may be.
(xiii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or supplement
thereto (except for the financial statements and schedules and
other financial data included therein, as to which such counsel
expresses no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the Rules.
(xiv) The Registration Statement has become effective under
the Securities Act, and no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are threatened, pending
or contemplated.
(xv) Such counsel does not know that any of the
representations and warranties of the Company or the Selling
Shareholder contained in this Agreement are not true or correct or
that any of the covenants and agreements herein contained to be
performed on the part of the Company or the Selling Shareholder or
any of the conditions herein contained, or set forth in the
Registration Statement and the Prospectus, to be fulfilled or
complied with by the Company or the Selling Shareholder, have not
been or will not be duly and timely performed, fulfilled or
complied with.
(xvi) Assuming that the Underwriters acquire their respective
interests in the Shares to be sold by the Selling Shareholder in
good faith and without notice of any adverse claims (within the
meaning of Section 8-302 of the Uniform Commercial Code), upon
delivery to the Underwriters of such Shares registered in their
names, the Underwriters will acquire good title to such Shares
free and clear of all adverse claims.
-23-
(xvii) To the best of such counsel's knowledge, the execution,
delivery and performance of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions
to be performed by the Selling Shareholder contemplated hereby and
thereby (including, without limitation, the delivery and sale of
the Shares to be delivered and sold by such Selling Shareholder
hereunder and thereunder), will not give rise to a right to
terminate or accelerate the due date of any payment due under, or
violate or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default)
under, or require consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon
any properties or assets of such Selling Shareholder pursuant to
the terms of any indenture, mortgage, deed of trust, note or other
agreement or instrument of which such counsel is aware and to
which such Selling Shareholder is a party or by which it or any of
such Selling Shareholder's properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute,
rule or regulation of which such counsel is aware, which would
have a material adverse effect upon the ability of such Selling
Shareholder to consummate the transactions contemplated hereby and
thereby, or result in the creation of imposition of any lien,
charge, claim, encumbrance, security interest or restriction
whatsoever upon the Shares to be sold by such Selling Shareholder.
(xviii) No consent, approval, authorization or order of any
court, governmental agency or body or financial institution is
required in connection with the performance of this Agreement by
the Selling Shareholder or the consummation of the transactions
contemplated hereby, including the delivery and sale of the Shares
to be delivered and sold by such Selling Shareholder, except such
as have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the several
Underwriters.
(xix) Each of this Agreement, the Power of Attorney and the
Custody Agreement has been duly and validly, executed and
delivered by the Selling Shareholder and constitutes a legal,
valid and binding obligation of such Selling Shareholder,
enforceable against such Selling Shareholder in accordance with
its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) to the extent
-24-
that rights to indemnity or contribution under this Agreement may
be limited by Federal and state securities laws or the public
policy underlying such laws.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company, the
Selling Shareholder and public officials and on the opinions of other counsel
satisfactory to the Representatives as to matters which are governed by laws
other than the laws of the State of California, the General Corporation Law
of the State of Delaware and the Federal laws of the United States; PROVIDED
that such counsel shall state that in their opinion the Underwriters and they
are justified in relying on other opinions. Copies of such certificates and
other opinions shall be furnished to the Representatives and counsel for the
Underwriters. Such counsel shall also state that, in rendering its opinion
to the Underwriters pursuant to Section 6(h), Schulte Roth & Zabel may rely
on the opinion of such counsel as to all maters which are governed by
California law.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives, counsel to the Underwriters, and
representatives of the independent certified public accountants of the
Company, at which conferences the contents of the Registration Statement and
the Prospectus and related matters were discussed and, although 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 (except as specified in the foregoing opinion),
on the basis of the foregoing, no facts have come to the attention of such
counsel which lead such counsel to believe that the Registration Statement at
the time it became effective (except with respect to the financial statements
and notes and schedules thereto and other financial data, as to which such
counsel need express no belief) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements and notes and schedules thereto and other financial data, as to
which such counsel need express no belief), on the date thereof, contained
any untrue statement of a material fact or omitted 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.
(h) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their
counsel and the Underwriters shall have received from Schulte Roth &
Zabel a favorable opinion, addressed to the Representatives and dated
each Closing Date, with respect to the Shares, the Registration
Statement and the Prospectus, and such other related matters as the
Representatives may reasonably request, and the Company shall have
furnished to Schulte Roth & Zabel such documents as they may reasonably
request for the purpose
-25-
of enabling them to pass upon such matters. In rendering its opinion
to the Underwriters, Schulte Roth & Zabel may rely on the opinion of
Kaye, Scholer, Fierman, Hays & Handler, LLP, as to all matters which
are governed by California law.
(i) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives, and dated such
Closing Date, of an executive officer of the Company to the effect that
the signer of such certificate has reviewed and understands the
provisions of Section 517.075 of the Florida Statutes, and represents
that the Company has complied, and at all times will comply, with all
provisions of Section 517.075 and further, that as of such Closing
Date, neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba.
(j) The Representatives shall have received from each of the
Shareholders listed on Schedule III hereto and each director and
executive officer of the Company his or her enforceable written
agreement as described in Section 4(o).
(k) The Company shall have furnished or caused to be furnished
to the Representative such further certificates or documents as the
Representative shall have reasonably requested.
7. COVENANTS OF THE COMPANY. (A) The Company covenants and agrees as
follows:
(a) The Company shall prepare the Prospectus in a form approved by
the Representatives and file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Securities Act, and shall
promptly advise the Representatives (i) when any amendment to the
Registration Statement shall have become effective, (ii) of any request
by the Commission for any amendment of the Registration Statement or
the Prospectus or for any additional information, (iii) of the
prevention or suspension of the use of any preliminary prospectus or
the Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv)
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.
-26-
The Company shall not file any amendment of the Registration Statement
or supplement to the Prospectus unless the Company has furnished the
Representatives a copy for their review prior to filing and shall not
file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 7(A), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(c) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at
the end of the fiscal quarter of the Company during which the Effective
Date occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earnings statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(d) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) and
to each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the
Securities Act or the Rules, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Representatives may reasonably request.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale under
the laws of such jurisdictions as the Representatives may designate and
shall maintain such qualifications in effect so
-27-
long as required for the distribution of the Shares; PROVIDED, HOWEVER,
that the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
(f) For a period of five years after the date of this Agreement,
the Company shall supply to the Representatives, and to each other
Underwriter who may so request in writing, copies of such financial
statements and other periodic and special reports as the Company may
from time to time distribute generally to the holders of any class of
its capital stock and to furnish to the Representatives a copy of each
annual or other report it shall be required to file with the Commission.
(g) Without the prior written consent of the Representatives, for
a period of 180 days after the date of this Agreement, the Company
shall not directly or indirectly, offer, sell (including "short
sales"), assign, encumber or Transfer, or contract to Transfer, any
shares of Common Stock, or any other securities convertible into or
exchangeable for shares of Common Stock, or any other equity securities
of the Company, except for (i) the issuance of the Shares pursuant to
the Registration Statement; (ii) the issuance of shares of Common Stock
and/or pursuant to stock options outstanding on the date hereof or the
issuance of shares of Common Stock or stock options thereon pursuant to
the Company's 1996 Stock Plan (the "1996 Plan") In the event that
during this period, any shares of Common Stock are issued in connection
with (i) the 1996 Plan or (ii) any registration effected on Form S-8 or
any successor form, the Company shall obtain the enforceable written
agreement of such grantee or purchaser or holder of such securities
that, for a period of 180 days after the date of this Agreement, such
person will not directly or indirectly, without the prior written
consent of the Representatives, offer, sell (including "short sales"),
assign, encumber or Transfer, or contract to Transfer or exercise any
registration rights with respect to, any shares of Common Stock (or any
other securities convertible into or exchangeable for any shares of
Common Stock, or any other equity securities) owned by such person.
(h) The Company shall cause each director and executive officer of
the Company, and each Shareholder set forth on Schedule III to this
Agreement to deliver to the Representatives his or her enforceable
written agreement that, except, in the case of a Selling Shareholder,
for the sale of the Shares to be sold by such Selling Shareholder
pursuant to the Registration Statement, he or she will not, for a
period of 180 days after the date of this Agreement, directly or
indirectly, without the prior written consent of the Representatives,
offer, sell (including "short sales"), assign,
-28-
encumber or Transfer, or contract to Transfer any shares of Common
Stock, or any other securities convertible into or exercisable or
exchangeable for, shares of Common Stock, or any other equity securities
of the Company except for (i) sales to the several Underwriters pursuant
to this Agreement or (ii) pursuant to will or the laws of intestate
succession, provided the transferee agrees in writing to be bound by
such restrictions.
(i) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the
Nasdaq (including any required registration under the Exchange Act).
(j) The Company shall file timely and accurate reports in
accordance with the provisions of Florida Statutes Section 517.075, or
any successor provision, and any regulations promulgated thereunder, if
at any time after the Effective Date, the Company or any of its
affiliates commences engaging in business with the government of Cuba
or any person or affiliate located in Cuba.
(k) The Company will apply the net proceeds from the offering of
the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident
to the public offering of the Shares and the performance of the obligations
of the Company and the Selling Shareholder under this Agreement including
those relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement, the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the fees and disbursements of counsel
for the Company and the Selling Shareholder and of the Company's independent
public accountants; (iii) the preparation and delivery of certificates for
the Shares to the Underwriters; (iv) the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of the
various jurisdictions referred to in Section 7(A)(e), including the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such registration and qualification and the preparation,
printing, distribution and shipment of preliminary and supplementary Blue Sky
memoranda; (v) the furnishing (including costs of shipping and mailing) to
the Representatives and to the Underwriters of copies of each preliminary
prospectus, the Prospectus and all amendments or supplements to the
Prospectus, and of the several documents required by this Section to be so
furnished, as may be reasonably requested for
-29-
use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold; (vi) the filing fees
of the National Association of Securities Dealers, Inc. in connection with
its review of the terms of the public offering; (vii) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of all reports and information required by Section
6(A)(f); (viii) inclusion of the Common Stock for quotation on the Nasdaq;
and (ix) all transfer taxes, if any, with respect to the sale and delivery of
the Shares by the Company and the Selling Shareholder to the Underwriters.
Subject to the provisions of Section 9, the Underwriters agree to pay,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance
of the obligations of the Underwriters under this Agreement not payable by
the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement, the Prospectus,
or any amendment thereof or supplement thereto, or arise out of or are
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; PROVIDED, HOWEVER, that such indemnity shall
not inure to the benefit of any Underwriter (or any person controlling
such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue
statement or omission was made in such preliminary prospectus, the
Registration Statement, the Prospectus, or such amendment or
supplement, and was contained in the last paragraph of the cover page
of the Prospectus, in the paragraph relating to stabilization on the
inside front cover page of the Prospectus or under the caption
"Underwriting" in the Prospectus (to the extent such statements relate
to the
-30-
Underwriters). This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Selling Shareholder agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims,
damages and liabilities, joint and several (including any reasonable
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which it may become subject, under the
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement, or the Prospectus or any amendment thereof or supplement
thereto, or arise out of or are 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, in each
case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made
therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Selling Shareholder for
use in any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto. Notwithstanding
the foregoing, the liability of the Selling Shareholder pursuant to the
provisions of this Section 8(b) shall be limited to an amount equal to
the aggregate net proceeds received by each Selling Shareholder from
the sale of the Shares sold by each Selling Shareholder hereunder.
This indemnity agreement will be in addition to any liability which the
Selling Shareholder may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholder, each person, if
any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, each director
of the Company and each officer of the Company who signs the
Registration Statement, to the same extent as the foregoing indemnities
from the Company and the Selling Shareholder to each Underwriter, but
only insofar as such losses, claims, damages or liabilities arise out
of or are based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary prospectus, the
Registration Statement, the Prospectus, or any amendment thereof or
supplement thereto, and was contained in the last paragraph of the
cover page
-31-
of the Prospectus, in the paragraph relating to stabilization on the
inside front cover page of the Prospectus or under the caption
"Underwriting" in the Prospectus (to the extent such statements relate
to the Underwriters); PROVIDED, HOWEVER, that the obligation of each
Underwriter to indemnify the Company or the Selling Shareholder
(including any controlling person, director or officer thereof), as the
case may be, shall be limited to the net proceeds received by the
Company or the Selling Shareholder, as the case may be, from such
Underwriter.
(d) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served. No indemnification provided for in Section 8(a),
8(b) or 8(c) shall be available to any party who shall fail to give
notice as provided in this Section 8(d) if the party to whom notice was
not given was unaware of the proceeding to which such notice would have
related and was materially prejudiced by the failure to give such
notice, but the omission so to notify such indemnifying party of any
such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses, except as provided below and except for
the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the
defense of such action (in which case the indemnifying parties shall
not have the right to direct the defense of such action on behalf of
the indemnified party) or (iii) the indemnifying parties shall not have
-32-
employed counsel, as provided above, to assume the defense of such
action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying parties. An indemnifying party
shall not be liable for any settlement of any action, suit, proceeding
or claim effected without its written consent.
9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8(a), 8(b) or 8(c) for any reason is unavailable to or insufficient
to hold harmless an indemnified party under Section 8(a), 8(b) or 8(c) then
each indemnifying party shall contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted) to
which the indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholder on the one hand and the Underwriters on the other from
the offering of the Shares or, if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the
Company and the Selling Shareholder, on the one hand and the Underwriters on
the other 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, the Selling Shareholder and the Underwriters shall be deemed to be
in the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company
or the Selling Shareholder, as set forth in the table on the cover page of
the Prospectus, bear to (y) the underwriting discounts received by the
Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company, the Selling Shareholder or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to
information supplied by the Company, the Selling Shareholder or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholder and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 9, (i) in no case shall any
Underwriter (except as may be provided in the Agreement Among Underwriters)
be liable or responsible for any amount in excess of the underwriting
discount applicable to the Shares purchased by such Underwriter hereunder
-33-
less the amount of any damages which such Underwriter has otherwise been
required to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission which was made in any preliminary prospectus,
the Registration Statement, the Prospectus or any amendment thereof or
supplement thereto; and (ii) the Company shall be liable and responsible for
any amount in excess of the amount set forth in clause (i) of this sentence;
and (iii) in no case shall any Selling Shareholder be liable and responsible
for any amount in excess of the aggregate net proceeds of the sale of the
Shares received by such Selling Shareholder hereunder; PROVIDED, HOWEVER,
that no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 9, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Securities Act or Section 20(a) of
the Exchange Act shall have the same rights to contribution as such
Underwriter and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i), (ii) and
(iii) in the immediately preceding sentence of this Section 9. Any party
entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made against another party or
parties under this Section, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties from whom contribution may be sought shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this Section. No party shall
be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
10. TERMINATION. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives notifying the
Company and the Selling Shareholder at any time:
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or
in the opinion of the Representatives will in the future materially
disrupt, the securities markets; (ii) if the Company shall have
sustained a loss or interference with its business by fire, flood,
accident, hurricane, earthquake,
-34-
theft, sabotage or other calamity or malicious act which is material to
the Company, whether or not said loss shall have been insured, or by
court or governmental action, order or decree which will, in the
opinion of the Representatives, make it inadvisable or impractical to
proceed with the offering; (iii) if there has been, since the
respective dates as of which information is given in the Prospectus,
any material adverse change in the assets or properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Company, whether or not arising in the ordinary course of
business; (iv) if there has occurred any new outbreak or material
escalation of hostilities or other calamity or crisis the effect of
which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable or impractical
to proceed with the offering; (v) if there shall be such a material
adverse change in general financial, political or economic conditions
in the United States or elsewhere or the effect of international
conditions on the financial markets in the United States is such as to
make it, in the judgment of the Representatives, inadvisable or
impractical to proceed with the offering; (vi) if trading in the Shares
has been suspended by the Commission or trading generally on The New
York Stock Exchange, Inc., on the American Stock Exchange, Inc. or the
Nasdaq has been suspended or limited, or minimum or maximum ranges for
prices for securities shall have been fixed, or maximum ranges for
prices for securities have been required, by said exchanges or
automated quotation system or by order of the Commission, the National
Association of Securities Dealers, Inc., or any other governmental or
regulatory authority; or (vii) if a banking moratorium has been
declared by any state or Federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
neither the Company nor the Selling Shareholder shall be under any liability
to any Underwriter (except as otherwise provided in Section 7(B), and no
Underwriter shall be under any liability to the Company or the Selling
Shareholder except that (y) if this Agreement is terminated by the
Representatives because of any failure, refusal or inability on the part of
the Company or the Selling Shareholder to comply with the terms or to fulfill
any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees
and disbursements of their counsel) incurred by them in connection with the
proposed purchase and sale of the Shares or in contemplation of performing
their obligations hereunder and (z) no Underwriter who shall have failed or
refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation
or termination of its
-35-
obligations under this Agreement, shall be relieved of liability to the
Company, the Selling Shareholder or to the other Underwriters for damages
occasioned by its failure or refusal.
11. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 10) to purchase on any Closing
Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more
substitute underwriters to purchase such Shares or make such other
arrangements as the Representatives may deem advisable or one or more of the
remaining Underwriters may agree to purchase such Shares in such proportions
as may be approved by the Representatives, in each case upon the terms set
forth in this Agreement. If no such arrangements have been made by the close
of business on the business day following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing
Date, then each of the nondefaulting Underwriters shall be obligated to
purchase such Shares on the terms herein set forth in proportion to
their respective obligations hereunder; PROVIDED, HOWEVER, that in no
event shall the maximum number of Shares that any Underwriter has
agreed to purchase pursuant to Section 1 be increased pursuant to this
Section 11 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date,
then the Company shall be entitled to an additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase
such Shares upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration
Statement or Prospectus) may be effected by the Representatives and the
Company. If the number of Shares to be purchased on such Closing Date by such
defaulting Underwriter or Underwriters shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, and none
of the nondefaulting Underwriters or the Company shall make arrangements
pursuant to this Section within the period stated for the purchase of the
Shares that the defaulting Underwriters agreed to purchase, this Agreement
shall terminate with respect to the
-36-
Shares to be purchased on such Closing Date without liability on the part of
any nondefaulting Underwriter to the Company or the Selling Shareholder and
without liability on the part of the Company or the Selling Shareholder,
except in both cases as provided in Sections 7(B), 8, 9 and 10. The
provisions of this Section shall not in any way affect the liability of any
defaulting Underwriter to the Company, the Selling Shareholder or to the
nondefaulting Underwriters arising out of such default. A substitute
underwriter hereunder shall become an Underwriter for all purposes of this
Agreement.
12. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its directors
or officers, of the Selling Shareholder and of the Underwriters set forth in
or made pursuant to this Agreement shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
the Company, the Selling Shareholder or any of the officers, directors or
controlling persons referred to in Sections 8 and 9 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 7(B), 8,
9 and 10 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and the Selling Shareholder and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters and the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser
of Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed
or delivered or by telephone, telex or facsimile transmission if subsequently
confirmed in writing, (a) if to the Representatives, c/o Oppenheimer & Co.,
Inc., Oppenheimer Tower, World Financial Center, New York, New York 10281
Attention: Mark A. Leavitt; (b) if to the Company or the Selling
Shareholder, to the Company's agent for service as such agent's address
appears on the cover page of the Registration Statement.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflict of
laws.
-37-
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
VDI MEDIA
By: ___________________________________
Name: _____________________________
Title: ____________________________
SELLING SHAREHOLDER NAMED ON
SCHEDULE II ANNEXED HERETO
By_____________________________________
Attorney-in-Fact For the
Selling Shareholder listed on
Schedule II annexed hereto
Confirmed:
OPPENHEIMER & CO., INC.
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf of themselves
and as representatives of the several
Underwriters named in Schedule I annexed
hereto.
By: OPPENHEIMER & CO., INC.
-38-
By: ___________________________________
Name: _____________________________
Title: ____________________________
-39-
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
- ---- ------------
Oppenheimer & Co., Inc.
Prudential Securities, Incorporated
Total
------------
------------
-1-
SCHEDULE II
SELLING SHAREHOLDER
Number of
Firm Shares
Selling Shareholder To Be Sold
- ------------------- -----------
Total
------------
------------
-1-
SCHEDULE III
SHAREHOLDERS EXECUTING CERTAIN AGREEMENTS
PURSUANT TO SECTION 7(A)(h)
-1-