Exhibit 1.1
ACCPAC INTERNATIONAL, INC.
____ Shares of Common Stock
Underwriting Agreement
__________, 1998
J.P. MORGAN SECURITIES INC.
SG COWEN SECURITIES CORPORATION
As Representatives of several Underwriters
listed in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
ACCPAC INTERNATIONAL, INC., a Delaware corporation (the
"Company") and a subsidiary of Computer Associates International, Inc., a
Delaware corporation ("Computer Associates"), proposes to issue and sell to the
several Underwriters listed on Schedule I hereto (the "Underwriters"), for whom
you are acting as representatives (the "Representatives"), an aggregate of _____
shares (the "Underwritten Shares") of common stock, par value $.01 per share, of
the Company (the "Common Stock") and for the sole purpose of covering
over-allotments in connection with the sale of Underwritten Shares, at the
election of the Underwriters, up to _______ additional shares of Common Stock
(the "Option Shares" and, together with the Underwritten Shares, the "Shares").
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-1 (File No. 333-56657), including a prospectus, relating to
the Shares. The registration statement as amended at the time when it became or
shall become effective including, in each case, information (if any) deemed to
be part of the registration statement at the time of effectiveness pursuant to
Rule 430A under the Securities Act, is referred to in this Agreement as the
"Registration Statement," and the prospectus in the form first used to confirm
sales of Shares is referred to in this Agreement as the "Prospectus." If the
Company has filed an abbreviated registration statement pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement.
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1. The Company agrees to issue and sell the Underwritten
Shares to the several Underwriters as hereinafter provided, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase,
severally and not jointly, from the Company the respective number of
Underwritten Shares set forth opposite such Underwriter's name on Schedule I
hereto at a purchase price per share of $_____ (the "Purchase Price").
In addition, the Company agrees to sell the Option Shares to
the several Underwriters and the Underwriters shall have the option to purchase
at their election up to _______ Option Shares for the sole purpose of covering
over-allotments (if any) in connection with the sale of the Underwritten Shares.
The Underwriters, on the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, shall have the
option to purchase, severally and not jointly, from the Company at the Purchase
Price, that portion of the number of Option Shares as to which such election
shall have been exercised (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying such number of Option Shares by a fraction the
numerator of which is the maximum number of Option Shares which such Underwriter
is entitled to purchase and the denominator of which is the maximum number of
Option Shares that all of the Underwriters are entitled to purchase hereunder,
for the sole purpose of covering over-allotments (if any) in connection with the
sale of the Underwritten Shares by the several Underwriters. For purposes of the
foregoing, if any Option Shares are to be purchased, each Underwriter, severally
and not jointly, agrees to purchase from the Company the number of Option Shares
which bears the same ratio to the aggregate number of Option Shares being
purchased from the Company by the several Underwriters as the number of
Underwritten Shares set forth opposite the name of such Underwriter on Schedule
I hereto (or such number increased as set forth in Section 9 hereof) bears to
the aggregate number of Underwritten Shares being purchased from the Company by
the several Underwriters.
The Underwriters may exercise the option to purchase the
Option Shares at any time (but not more than once) on or before the thirtieth
day following the date of this Agreement, by written notice from the
Representatives to the Company. Such notice shall set forth the aggregate number
of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same
date and time as the Closing Date (as hereinafter defined) but shall not be
earlier than the Closing Date nor later than the tenth full Business Day (as
hereinafter defined) after the date of such notice (unless such time and date
are postponed in accordance with the provisions of Section 9 hereof). Any such
notice shall be given at least two Business Days prior to the date and time of
delivery specified therein.
2. The Company understands that the Underwriters intend (i) to
make a public offering of the Shares as soon after (A) the Registration
Statement has become effec-
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tive and (B) the parties hereto have executed and delivered this Agreement, as
in the judgment of the Representatives is advisable and (ii) initially to offer
the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified to the Representatives by
the Company, in the case of the Underwritten Shares, on ________, 1998, or at
such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing or, in the case of the Option Shares, on the date and time specified
by the Representatives in the written notice of the Underwriters' election to
purchase such Option Shares. The time and date of such payment for the
Underwritten Shares are referred to herein as the "Closing Date" and the time
and date for such payment for the Option Shares, if other than the Closing Date,
are herein referred to as the "Additional Closing Date." As used herein, the
term "Business Day" means any day other than a day on which banks are permitted
or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or
the Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several Underwriters
of the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of J.P. Morgan Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4A. The Company represents and warrants to each Underwriter
that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus circulated to the public filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities
Act, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use therein;
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(b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) comply, or will
comply, as the case may be, in all material respects with the
Securities Act and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as
of the date of the Prospectus and any amendment or supplement thereto,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional Closing
Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided that this representation and warranty
shall not apply to statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly
for use therein;
(c) the consolidated financial statements, and the related
notes thereto, included in the Registration Statement and the
Prospectus, present fairly in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations and changes
in their consolidated cash flows for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and the
supporting schedules included in the Registration Statement present
fairly the information required to be stated therein;
(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries, or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Change"), otherwise than as set forth or contemplated in the
Prospectus; except as set forth or contemplated in the Prospectus,
since the respective dates to which information is given in the
Registration Statement and the Prospectus, neither the Company nor any
of its subsidiaries has entered into any transaction or agreement
(whether or not in the ordi-
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nary course of business) material to the Company and its subsidiaries,
taken as a whole;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operation of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect");
(f) each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws of
its jurisdiction of incorporation, with corporate power and authority
to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a
Material Adverse Effect; all the outstanding shares of capital stock of
each subsidiary of the Company have been duly authorized and validly
issued, are fully-paid and non-assessable, and are owned by the
Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims; DistribuPro, Inc., a
California corporation ("DistribuPro"), is the only subsidiary of the
Company that satisfies the criteria for a "significant subsidiary" set
forth in Rule 1.02(w) of Regulation S-X under the Securities Act;
(g) this Agreement has been duly authorized, executed and
delivered by the Company;
(h) the Company has an authorized capitalization as set forth
in the Prospectus and such authorized capital stock conforms as to
legal matters to the description thereof set forth in the Prospectus,
and all of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully-paid and
non-assessable and are not subject to any pre-emptive or similar
rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or any of its sub-
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sidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock
of the Company or any such subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options;
except for (i) an aggregate of 150,000 shares of Common Stock (net of
100,000 shares repurchased for tax withholding purposes) (the
"Restricted Common Stock") issued to certain executive officers and
employees of the Company in January 1998 (the "Restricted Stock
Grant") and (ii) the Shares, all issued shares of capital stock of the
Company are owned directly by Computer Associates;
(i) the Shares have been duly authorized, and, when issued and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be duly issued and will be fully paid and
non-assessable and will conform to the descriptions thereof in the
Prospectus; the issuance of the Shares is not subject to any preemptive
or similar rights;
(j) neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both would be, in
violation of or in default under its Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") or its Amended
and Restated By-Laws (the "By-Laws"), in the case of the Company, or
its respective certificate or articles of incorporation or
organization, in the case of its subsidiaries, or any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them or any of their respective properties is
bound, except for violations and defaults which individually or in the
aggregate could not reasonably be expected to have a Material Adverse
Effect; the issue and sale by the Company of the Shares and the
execution of this Agreement and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not in any material respect
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
any such action result in any violation of the
provisions of the Certificate of Incorporation or the By-Laws of the
Company nor will any such action result in any violation in any
material respect of any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company, its subsidiaries or any of their
respective properties; no consent, approval, authorization, order,
license, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares to be sold by the Company hereunder or the consummation by the
Company of the trans-
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actions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained or made under the Securities Act
and the Exchange Act (as hereinafter defined) and as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(k) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries or any of
their respective properties or to which the Company or any of its
subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have, or reasonably be expected to
have, a Material Adverse Effect, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required;
(l) the Company and its subsidiaries have good and marketable
title in fee simple to all items of real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects, except liens for
taxes not yet due and payable and except such as are described or
referred to in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made or
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid, existing
and enforceable leases with such exceptions as are not material and do
not interfere with the use made or proposed to be made of such property
and buildings by the Company or its subsidiaries;
(m) no relationship, direct or indirect, exists between or
among the Company or any or its subsidiaries on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or any of its subsidiaries on the other hand, which is required
by the Securities Act to be described in the Registration Statement and
the Prospectus which is not so described;
(n) no person has the right to require the Company to register
any securities for offering and sale under the Securities Act by reason
of the filing of the Registration Statement with the Commission or the
issue and sale of the Shares;
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(o) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or
an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(p) Ernst & Young LLP ("Ernst & Young"), who have certified
certain financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Securities Act;
(q) the Company and its subsidiaries have filed all federal,
state, local and foreign tax returns which have been required to be
filed by them and have paid all taxes shown thereon and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith; except as
disclosed in the Registration Statement and the Prospectus, there is no
tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company or any subsidiary;
(r) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(s) except as set forth in the Prospectus, each of the Company
and its subsidiaries owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities (including
foreign regulatory agencies), all self-regulatory organizations and all
courts and other tribunals, domestic or foreign, necessary to own or
lease, as the case may be, and to operate its properties and to carry
on its business as conducted as of the date hereof, except to the
extent that the failure to so own, possess, obtain, declare or file
would not, individually or in the aggregate, have a Material Adverse
Effect, and neither the Company nor any such subsidiary has received
any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization; each of the Company and its
subsidiaries is in compliance with all laws and regulations relating to
the conduct of its business as conducted as of the date hereof, except
to the extent that the failure to so comply would not, individually or
in the aggregate, have a Material Adverse Effect;
(t) the statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources which are believed by the Company to be reliable;
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(u) except for compensation to be received by the Underwriters
under this Agreement, the Company does not know of any outstanding
claims for services, either in the nature of a finder's fee or
origination fee, with respect to any of the transactions contemplated
hereby;
(v) the Company owns, is licensed to use or otherwise
possesses adequate rights to use the patents, patent rights, licenses,
inventions, trademarks, service marks, trade names, copyrights and
know-how, including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures (collectively, the "Intellectual Property"), reasonably
necessary to carry on the business conducted by it, except to the
extent that the failure to own, license to use or otherwise possess
adequate rights to use such Intellectual property would not have a
Material Adverse Effect, and, except as described in the Registration
Statement and the Prospectus, the Company has no knowledge of
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property, except for notices the content of which
if accurate would not have a Material Adverse Effect;
(w) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with, or slowdowns, strikes or work
stoppages involving the employees of the Company or any of its
subsidiaries which are likely to have a Material Adverse Effect;
(x) the Company and its subsidiaries (i) are 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 ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
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; and
(y) each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of
the Company and its affiliates has been maintained in compliance with
its terms and the requirements of any applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the
Internal Revenue Code of 1986, as amended ("Code"), except where such
noncompli-
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ance would not, individually or in the aggregate, have a Material
Adverse Effect. No prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred with
respect to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption. For each such plan which is
subject to the funding rules of Section 412 of the Code or Section 302
of ERISA no "accumulated funding deficiency" as defined in Section 412
of the Code has been incurred, whether or not waived, and the fair
market value of the assets of each such plan (excluding for these
purposes accrued but unpaid contributions) exceeded the present value
of all benefits accrued under such plan determined using reasonable
actuarial assumptions.
4B. Computer Associates represents and warrants to each
Underwriter that:
(a) Computer Associates has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Delaware;
(b) except for the Restricted Common Stock and the Shares, all
issued shares of capital stock of the Company are owned directly by
Computer Associates, free and clear of all liens, encumbrances,
equities or claims;
(c) this Agreement has been duly authorized, executed and
delivered on behalf of Computer Associates; and
(d) the issue and sale of the Shares by the Company hereunder,
the compliance by the Company and Computer Associates with all of the
provisions of this Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under (in each case material to Computer Associates and its
subsidiaries, considered as a whole), any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
Computer Associates is a party or by which Computer Associates is bound
or to which any of the property or assets of Computer Associates is
subject, nor will such action result in any violation of the provisions
of the certificate of incorporation or by-laws of Computer Associates,
nor will such action result in any violation (in each case material to
Computer Associates and its subsidiaries, considered as a whole) of any
applicable statute or any applicable order, rule or regulation of any
court or governmental agency or body having jurisdiction over Computer
Associates or any of its properties; no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale
of the Shares or the consummation by the Company and Computer
Associates of the transactions contemplated by this Agreement, except
such consents, approvals, authori-
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zations, orders, licenses, registrations or qualifications as have
been obtained or made under the Securities Act or the Exchange Act and
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters.
5A. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to use its reasonable best efforts to cause the
Registration Statement to become effective (if the Registration
Statement shall not have been declared effective prior to the execution
hereof) at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified
by Rule 424(b) and Rule 430A under the Securities Act and to furnish
copies of the Prospectus to the Underwriters in New York City prior to
10:00 a.m., New York City time, on the Business Day next succeeding the
date of this Agreement in such quantities as the Representatives may
reasonably request;
(b) to deliver, at the expense of the Company, to the
Representatives four signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits, and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment
thereto, in each case without exhibits and, during the period mentioned
in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as
the Representatives may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for
review and not to file any such proposed amendment or supplement to
which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm
such advice in writing (i) when the Registration Statement has become
effective (if such Registration Statement has not already become
effective), (ii) when any amendment to the Registration Statement has
been filed or becomes effective, (iii) when any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or
the
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Prospectus or the initiation or threatening of any proceeding for that
purpose, (vi) of the occurrence of any event, within the period
referenced in paragraph (e) below, as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, and (vii)
of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and to use its reasonable best efforts to prevent
the issuance of any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or
of any order suspending any such qualification of the Shares, or
notification of any such order thereof and, if issued, to obtain as
soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Shares as, in the opinion of counsel for the
Underwriters, a prospectus relating to the Shares is required by law to
be delivered in connection with sales by the Underwriters or any
dealer, any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriters and to the
dealers (whose names and addresses the Representatives will furnish to
the Company) to which Shares may have been sold by the Representatives
on behalf of the Underwriters and to any other dealers upon request,
such amendments or supplements to the Prospectus as may be necessary so
that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law;
(f) to endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such
qualification in effect so long as reasonably required for distribution
of the Shares; provided that in connection therewith the Company shall
not be required to qualify as a foreign corporation or file a general
consent to service of process in any jurisdiction;
(g) to make generally available to its security holders and to
the Representatives as soon as practicable an earnings statement
covering a period of at least twelve months beginning with the first
fiscal quarter of the Company occurring after the effective date of the
Registration Statement, which shall satisfy the provisions of
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Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder;
(h) during the period of five years after the date of this
Agreement, to furnish to the Representatives copies of all reports or
other communications (financial or other) furnished to holders of the
Shares, and copies of any reports and financial statements furnished to
or filed with the Commission, the National Association of Securities
Dealers, Inc. ("NASD") or any national securities exchange;
(i) for a period of 180 days after the date of the Prospectus,
not to, directly or indirectly (i) offer, sell, offer to sell, contract
to sell or otherwise dispose of any shares of Common Stock or
securities convertible or exchangeable into Common Stock or register
for sale under the Securities Act any Common Stock, (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock or (iii) permit
the sale, assignment, pledge or other transfer of Restricted Common
Stock by the holders thereof, whether any such transaction described in
clause (i), (ii) or (iii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise without the prior
written consent of J.P. Morgan Securities Inc., other than the Shares
to be sold by the Company hereunder, except the Company may issue, and
grant options to purchase, shares of Common Stock under its 1998 Stock
Incentive Plan;
(j) to use the net proceeds received by the Company from the
sale of the Shares by the Company pursuant to this Agreement in the
manner specified in the Prospectus under caption "Use of Proceeds";
(k) to use its best efforts to list for quotation the Shares
on the [ ];
(l) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
registration, transfer, execution and delivery of the Shares, (ii)
incident to the preparation, printing and filing under the Securities
Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and
supplements thereto), (iii) incurred in connection with the
registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including
reasonable fees of counsel for the Underwriters and its disbursements),
(iv) in connection with the listing of the Shares on the [ ], (v)
related to the filing with, and clearance of the of-
-14-
fering by, the NASD, (vi) in connection with the printing (including
word processing and duplication costs) and delivery of this Agreement,
the Preliminary and Supplemental Blue Sky Memoranda and the furnishing
to the Underwriters and dealers of copies of the Registration
Statement and the Prospectus, including mailing and shipping, as
herein provided, (vii) any expenses incurred by the Company in
connection with a "road show" presentation to potential investors,
(viii) the cost of preparing stock certificates and (ix) the cost and
charges of any transfer agent and any registrar.
5B. Computer Associates covenants and agrees with each of the
several Underwriters, for a period of 180 days after the date of this
Prospectus, not to, directly or indirectly, (i) offer, sell, offer to sell,
contract to sell or otherwise dispose of any shares of Common Stock or
securities convertible or exchangeable into Common Stock or cause to be
registered for sale under the Securities Act any Common Stock or (ii) enter into
any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise without the prior
written consent of J.P. Morgan Securities Inc.
6. The several obligations of the Underwriters hereunder to
purchase the Shares on the Closing Date or the Additional Closing Date, as the
case may be, are subject to the performance by each of the Company and Computer
Associates of its obligations hereunder and to the following additional
conditions:
(a) the Registration Statement shall have become effective (or
if a post-effective amendment is required to be filed under the
Securities Act, such post-effective amendment shall have become
effective) not later than 5:00 P.M., New York City time, on the date
hereof; no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment shall be in effect, and no
proceedings for such purpose shall be pending before or threatened by
the Commission; the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the
Securities Act and in accordance with Section 5(a) hereof; all requests
for additional information by the Commission shall have been complied
with to the reasonable satisfaction of the Representatives;
(b) the respective representations and warranties of the
Company contained herein shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be, as if
made on and as of the Closing Date or the Additional Closing Date, as
the case may be, and the Company shall have complied with all
agreements and all conditions on its part to be performed or satisfied
-15-
hereunder at or prior to the Closing Date or the Additional Closing
Date, as the case may be;
(c) the respective representations and warranties of Computer
Associates contained herein shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be, as if
made on and as of the Closing Date or the Additional Closing Date, as
the case may be, and Computer Associates shall have complied with all
agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date or the Additional Closing
Date, as the case may be;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any Material Adverse Change, or any development
involving a prospective Material Adverse Change, otherwise than as set
forth or contemplated in the Prospectus, the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares on
the Closing Date or the Additional Closing Date, as the case may be, on
the terms and in the manner contemplated in the Prospectus; neither the
Company nor any of its subsidiaries has sustained since the date of the
latest audited financial statements included in the Prospectus any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus;
(e) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of the Company, with specific
knowledge about the Company's financial matters, satisfactory to the
Representatives to the effect set forth in subsections (a), (b) and (d)
(with respect to the respective representations, warranties, agreements
and conditions of the Company) of this Section and to the further
effect that there has not occurred any Material Adverse Change, or any
development involving a prospective Material Adverse Change from that
set forth or contemplated in the Registration Statement;
(f) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of Computer Associates, with
specific knowledge about Computer Associates financial matters,
satisfactory to the Representatives to the effect set forth in
subsection (c) (with respect to the respective representations,
warranties, agreements and conditions of Computer Associates) of this
Section;
-16-
(g) Howard, Smith & Levin LLP, special counsel for the
Company, shall have furnished to the Representatives their written
opinion, dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) the Company is a corporation duly incorporated, validly
existing and good standing under the laws of its jurisdiction
of incorporation, with corporate power and authority to own
its properties and conduct its business as described in the
Prospectus;
(ii) to the best of such counsel's knowledge, other than as
set forth or contemplated in the Prospectus, there are no
legal or governmental investigations, actions, suits or
proceedings pending or threatened against the Company or any
of its subsidiaries or any of their respective properties or
to which the Company or any of its subsidiaries is or may be a
party or to which any property of the Company or its
subsidiaries is or may be the subject which, if determined
adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have, or reasonably be
expected to have, a Material Adverse Effect; and such counsel
does not know of any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus;
(v) the shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be sold by the Company
hereunder have been duly authorized and are validly issued,
fully paid and non-assessable;
(vi) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and when delivered to and
paid for by the Underwriters in accordance with the terms of
this Agreement, will be validly issued, fully paid and
non-assessable and the issuance of the Shares is not subject
to any preemptive or similar rights;
(vii) the statements in the Prospectus under "Description of
Capital Stock" and in the Registration Statement in Items 14
and 15, insofar as such statements constitute a summary of the
terms of the Common Stock, docu-
-17-
ments or proceedings referred to therein, fairly present the
information called for with respect to such terms, documents
or proceedings;
(viii) the issue and sale of the Shares being delivered on
the Closing Date or the Additional Closing Date, as the case
may be, to be sold by the Company hereunder and the
performance by the Company of its obligations under this
Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit
to the Registration Statement, nor will any such action result
in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or any applicable
law, statute or regulation known to such counsel or, to the
best knowledge of such counsel, any order of any court or
governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective
properties;
(ix) no consent, approval, authorization, order, license,
registration or qualification of or with any United States
Federal, New York or, to the extent required under the General
Corporation Law of the State of Delaware, Delaware court or
governmental agency or body is required for the issuance by
the Company of the Shares to be sold by it hereunder or the
consummation by the Company of the transactions contemplated
by this Agreement, except such consents, approvals,
authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act
and the Exchange Act and as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(x) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment
company" or entity "controlled" by an "investment company," as
such terms are defined in the Investment Company Act; and
(xi) the Registration Statement has been declared effective
under the Securities Act and, to such counsel's knowledge, no
stop order proceedings with respect thereto are pending before
or threatened by the Commission under the Securities Act.
Such opinion shall also contain a statement that such counsel
believes that the Registration Statement and the Prospectus and any
amendments and supplements thereto (other than the financial statements
and the notes thereto, and related sched-
-18-
ules therein and other financial and statistical data therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act. In
passing on the form of the Registration Statement and the Prospectus
and any amendments or supplements thereto made by the Company prior to
the Closing Date, such counsel may state that it has not independently
verified the accuracy, completeness or fairness of the statements made
or included therein and takes no responsibility therefor and that such
opinion is based upon such counsel's examination of the Registration
Statement, the Prospectus and any such amendments or supplements, its
investigation made in connection with the preparation of the
Registration Statement, the Prospectus and any such amendments or
supplements and its participation in conferences with certain officers
and employees of the Company, with certain officers and employees of
Computer Associates, with representatives of Ernst & Young and any
others referred to in such opinion; subject to the same
qualifications, such counsel shall also state that they have no
reason to believe that the Registration Statement as of its effective
date contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein
or necessary in order to make the statements therein not
misleading or that the Prospectus contains or, as of its date,
contained any untrue statement of a material fact or omits or,
as of its date, omitted to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
in each case, such counsel need not express a belief with respect to
financial statements and the notes thereto, related schedule or other
financial and statistical data.
In rendering such opinions, such counsel may, (A) limit its
opinion to the Federal laws of the United States, the laws of the State
of New York and the General Corporation Law of the State of Delaware;
and (B) rely as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Company and
certificates or other written statements of officials of jurisdictions
having custody of documents respecting the corporate existence or good
standing of the Company.
The opinion of Howard Smith & Levin LLP described above shall
be rendered to the Underwriters at the request of the Company and shall
so state therein;
(h) Jay H. Diamond, Esq., Associate Counsel of Computer
Associates, or such counsel satisfactory to the Representatives in
their reasonable judgment, shall have furnished to you his written
opinion, dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to the Representatives,
to the effect that:
-19-
(i) Computer Associates has been duly incorporated and is
validly existing and in good standing under the laws of the
State of Delaware;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be
so qualified or in good standing would not have a Material
Adverse Effect;
(iii) DistribuPro has been duly incorporated and is validly
existing as a corporation under the laws of California with
corporate power and authority to own its properties and
conduct its business as described in the Prospectus and has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified
and in good standing would not have a Material Adverse Effect;
all of the outstanding shares of capital stock of DistribuPro
have been duly and validly authorized and issued, are fully
paid and non-assessable, and are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances,
equities or claims;
(iv) except for the Restricted Common Stock and the Shares,
all issued shares of capital stock of the Company are owned
directly or indirectly by Computer Associates, free and clear
of all liens, encumbrances, equities or claims;
(v) this Agreement has been duly authorized, executed and
delivered by Computer Associates;
(vi) the issue and sale of the Shares being delivered at the
Closing Date or the Additional Closing Date, as the case may
be, by the Company, the compliance by the Company and Computer
Associates with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under (in
each case material to Computer Associates and its
subsidiaries, considered as a whole), any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or
instrument known to such counsel to which Computer Associates
is a party or by which Computer Associates is bound or to
which any of the property or assets of Computer Associates is
subject, nor will such action
-20-
result in any violation of the provisions of the certificate
of incorporation or by-laws of Computer Associates, nor will
such action result in any violation (in each case material
to Computer Associates and its subsidiaries, considered as a
whole) of any applicable law, statute or regulation known to
such counsel or, to the best knowledge of such counsel, any
applicable order, of any court or governmental agency or
body having jurisdiction over Computer Associates or any of
its properties;
(vii) neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both would be,
in violation of or in default under, its Certificate of
Incorporation or By-Laws or any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument filed
as an exhibit to the Registration Statement, except for
violations and defaults which individually and in the
aggregate are not material to the Company and its subsidiaries
taken as a whole;
(viii) to the best of such counsel's knowledge, each of the
Company and its subsidiaries owns, possesses or has obtained
all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts
and other tribunals, domestic or foreign, necessary to own or
lease, as the case may be, and to operate its properties and
to carry on its business as conducted as of the date hereof,
except where failure to obtain or possess such licenses,
permits, certificates, consents, orders, approvals or other
authorizations would not, individually or in the aggregate,
have a Material Adverse Effect, and, to the best of such
counsel's knowledge, neither the Company nor any such
subsidiary has received any actual notice of any proceeding
relating to revocation or modification of any such license,
permit, certificate, consent, order, approval or other
authorization, except as described in the Registration
Statement and the Prospectus; and, to the best of such
counsel's knowledge, each of the Company and its subsidiaries
is in compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date of the
Prospectus; and
(ix) no consent, approval, authorization, order, registration
or qualification of or with any United States Federal, New
York, or, to the extent required under the General Corporation
Law of the State of Delaware, Delaware court or governmental
agency or body is required for the issue and sale of the
Shares or the consummation by the Company and Computer
Associates of the transactions contemplated by this Agreement,
except such
-21-
consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under
the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
In rendering such opinions, such counsel may (A) limit his
opinion to Federal laws of the United States, the laws of the State of
New York and the General Corporation Law of the State of Delaware; and
(B) rely as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of Computer Associates
and the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company;
(i) on the effective date of the Registration Statement and
the effective date of the most recently filed post-effective amendment
to the Registration Statement and also on the Closing Date or
Additional Closing Date, as the case may be, Ernst & Young shall have
furnished to you letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
(j) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion
of Cahill Gordon & Reindel, counsel to the Underwriters, with respect
to the due authorization and valid issuance of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(k) each of the transactions contemplated in the Prospectus
under "Arrangements Between the Company and Computer Associates" to be
consummated on or before the Closing Date or the Additional Closing
Date, as the case may be, shall have been so consummated upon the terms
and conditions described in the Prospectus and as set forth in the
exhibits to the Registration Statement;
(l) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for listing on the Nasdaq National Market, subject to official notice
of issuance; and
-22-
(m) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company shall have furnished to the
Representatives such further certificates and documents as the
Representatives shall reasonably request.
7. The Company and Computer Associates, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein; provided, however, that the foregoing
indemnity shall not inure to the benefit of any Underwriter from whom the person
asserting such losses, claims, damages, liabilities and judgments purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(including any amendment or supplement thereto) was not sent or given by or on
behalf of such Underwriter to such person at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus
(including any amendment or supplement thereto) would have cured the defect
giving rise to such losses, claims, damages liabilities or judgments, unless
such failure to deliver a copy of the Prospectus was a result of the failure of
the Company to provide as many copies of such Prospectus as such Underwriter may
reasonably request in a timely manner.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
and Computer Associates to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to information relating to
such Underwriter furnished to the Company and Computer Associates in writing by
such Underwriter through the Representatives expressly for use in the
Registration Statement, the Prospectus, any amendment or supplement thereto, or
any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of
-23-
which indemnity may be sought pursuant to the preceding paragraphs of this
Section 7, such person (the "Indemnified Person") shall promptly notify the
person or persons against whom such indemnity may be sought (each an
"Indemnifying Person") in writing, and such Indemnifying Persons, upon request
of the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person and not the Indemnifying Persons unless (i) the
Indemnifying Persons and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Persons have failed within a reasonable time
to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both an Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Persons shall not, in connection with any proceedings or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Underwriters and such control persons
of Underwriters shall be designated in writing by J.P. Morgan Securities Inc.
and any such separate firm for the Company, its directors, its officers who sign
the Registration Statement and such control persons of the Company shall be
designated in writing by the Company and such separate firm for Computer
Associates as may be designated in writing by Computer Associates. No
Indemnifying Person shall be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, such
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
-24-
If the indemnification provided for in the first three
paragraphs of this Section 7 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and Computer Associates on the one
hand and the Underwriters on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and Computer Associates on the one hand and the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and Computer
Associates on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and the commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Shares. The relative fault of the Company
and Computer Associates on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and
Computer Associates or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, Computer Associates and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purposes) or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall
-25-
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Shares set forth opposite their names in Schedule I hereto, and not joint.
Without limiting either the full extent of the Company's
agreement to indemnify each Underwriter and each person, if any, who controls
such Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act or the extent of the Company's agreement to
contribute to amounts paid or payable by each such Indemnified Person, as herein
provided, Computer Associates' aggregate liability pursuant to this Section 7
shall be limited to $7.5 million.
The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and Computer
Associates set forth in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any other person controlling the Company or Computer Associates and (iii)
acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement
(or the obligations of the several Underwriters with respect to the Option
Shares) may be terminated in the absolute discretion of the Representatives, by
notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option Shares,
prior to the Additional Closing Date), (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange or the American Stock Exchange or the Nasdaq National
Market, (ii) trading of any securities of or guaranteed by the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities, or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered at
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
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9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they have agreed to purchase hereunder on such date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of Shares to be purchased on such date by all
Underwriters, the other Underwriters shall be obligated severally in the
proportions that the number of Shares set forth opposite their respective names
in Schedule I bears to the aggregate number of Underwritten Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as the Representatives may specify, to purchase the Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Shares that
any Underwriter has agreed to purchase pursuant to Section 1 be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such number of
Shares without the written consent of such Underwriter. If on the Closing Date
or the Additional Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Shares which it or they have
agreed to purchase hereunder on such date, and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives, the Company and Computer Associates for the
purchase of such Shares are not made within 36 hours after such default, this
Agreement (or the obligations of the several Underwriters to purchase the Option
Shares, as the case may be) shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or Computer Associates. In any such case
either you or the Company shall have the right to postpone the Closing Date (or,
in the case of the Option Shares, the Additional Closing Date), but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of the Company or
Computer Associates to comply with the terms or to fulfill any of the conditions
of this Agreement, or if for any reason the Company or Computer Associates shall
be unable to perform its obligations under this Agreement or any condition of
the Underwriters' obligations cannot be fulfilled, the Company agrees to
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
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(including the fees and expenses of its counsel) reasonably incurred by the
Underwriter in connection with this Agreement or the offering contemplated
hereunder.
11. This Agreement shall inure to the benefit of and be
binding upon the Company, Computer Associates and the Underwriters, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Shares from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by
the Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of
the Underwriters, and any such action taken by the Representatives jointly or by
J.P. Morgan Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260 (telefax: (212-648-5705); Attention: Syndicate Department, copy to
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005 (telefax:
(212) 269-5420), Attention: Gerald S. Tanenbaum, Esq. Notices to the Company
should be given to it at 2525 Augustine Drive, Santa Clara, California 95054
(telefax: 408-562-8740), Attention: President, copy to Howard, Smith & Levin
LLP, 1330 Avenue of the Americas, New York, New York 10019 (telefax:
212-841-1010), Attention: Stephen A. Infante, Esq. Notices to Computer
Associates should be given to it at One Computer Associates Plaza, Islandia, New
York 11788-7000 (telefax: 516-342-4854), Attention: Associate Counsel.
13. This Agreement may be signed in counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
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If the foregoing is in accordance with your understanding,
please sign and return four counterparts hereof.
Very truly yours,
ACCPAC INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
Accepted: _________, 199_
J.P. MORGAN SECURITIES INC.
SG COWEN SECURITIES CORPORATION
Acting severally on behalf of
themselves and the several
Underwriters listed in
Schedule I hereto.
By: J.P. MORGAN SECURITIES INC.
By:
----------------------------
Name:
Title:
SCHEDULE I
Number of Underwritten
Underwriter Shares To Be Purchased
- ----------- ----------------------
J.P. Morgan Securities Inc..................................................
SG Cowen Securities Corporation.............................................
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Total
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