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EXHIBIT 1.1
NEUTRAL POSTURE ERGONOMICS, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
____________
October ____, 1997
Huberman Financial, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Dear Sirs:
Neutral Posture Ergonomics, Inc., a Texas corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you (the "Underwriter") an aggregate of 900,000 shares of Common Stock, par
value $.01 per share ("Stock") of the Company; Xxxxx X. Xxxxxxxx and Xxxxx X.
Xxxxx propose, subject to the terms and conditions stated herein and at the
election of the Underwriter, to sell to the Underwriter up to, respectively,
100,000 and 60,000 additional shares of Stock; and the shareholders of the
Company named in Schedule II hereto (the "Selling Shareholders") propose,
subject to the terms and conditions stated herein, to sell to the Underwriter
an aggregate of 434,000 shares of Stock. The aggregate of 1,334,000 shares to
be sold by the Company and the Selling Shareholders are herein called the "Firm
Shares" and the 160,000 additional shares to be sold by Messrs. Xxxxxxxx and
Xxxxx are herein called the "Optional Shares". The Firm Shares and the
Optional Shares which the Underwriter elects to purchase pursuant to Section 2
hereof are herein collectively called the "Shares".
1. (a) The Company represents and warrants to, and agrees
with, the Underwriter that:
(i) A registration statement on Form SB-1 (file no.
333-33675), as amended, in respect of the Firm Shares and Optional
Shares has been filed with the Securities and Exchange Commission (the
"Commission"); such registration statement, including a registration
statement (if any) filed pursuant to Rule 462(b) of the Securities Act
of 1933, as amended (the "Act"), and any post-effective amendment
thereto, each in the form heretofore delivered to you, have been
declared effective by the Commission in such
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form; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in such registration statement or
filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act, being hereinafter called
a "Preliminary Prospectus"; the various parts of such registration
statement, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the registration statement at the time it was declared
effective and including a registration statement, if any, filed
pursuant to Rule 462(b) of the Act increasing the size of the offering
under the Act, each as amended at the time such part of the
registration statement became effective, being hereinafter called the
"Registration Statement"; and such final prospectus, in the form first
filed pursuant to Rule 424(b) under the Act being hereinafter called
the "Prospectus");
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, 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 the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by (i) you expressly for use therein or (ii) a Selling
Shareholder expressly for use in the preparation of the information
required to be presented therein pursuant to Item 4(d) of Form A
pursuant to Alternative 2 of Form SB-1;
(iii) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder 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 applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by (i) you expressly for use therein or (ii) a Selling Shareholder for
use in the preparation of the information to be presented therein
pursuant to Item 4(d) of Form 1-A pursuant to Alternative 2 of Form
SB-1;
(iv) Any term sheet and prospectus subject to completion
provided by the Company to the Underwriter for use in connection with
the offering and sale of the Shares
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pursuant to Rule 434 under the Act together are not materially
different from the prospectus included in the Registration Statement
(exclusive of any information deemed to be a part thereof by virtue of
Rule 434(d));
(v) The Company has not sustained since the date of the
latest audited financial statements included in the Prospectus any
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, that is
material to the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company (collectively, a "Material Adverse Change"),
otherwise than as set forth or contemplated in the Prospectus, or any
change in the capital stock, short-term debt or long-term debt of the
Company;
(vi) The Company has good and marketable title in fee
simple to all material real property and good and marketable title to
all material personal property owned by it, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company; and any material
real property and buildings held under lease by the Company are held
by it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company;
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Texas, with full 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, or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction;
(viii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus;
(ix) The unissued Shares to be issued and sold by the
Company to the Underwriter hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and
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fully paid and non-assessable and will conform to the description
contained in the Prospectus;
(x) The issue and sale of the Shares by the Company and
the compliance by the Company with all of the provisions of this
Agreement, the Warrant Agreement executed and delivery concurrently
herewith (the "Warrant Agreement") or the Stock Purchase Warrant (the
"Warrant") delivered pursuant to the Warrant Agreement, and the
consummation of the transactions herein and therein 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, any indenture,
mortgage, deed of trust, loan agreement, sale/leaseback agreement,
patent, license or other agreement or instrument (collectively, the
"Specified Documents") to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the
Company is subject, other than such conflict, breach, violation or
default as would not cause a Material Adverse Change, nor will such
action result in any violation of the provisions of the Articles of
Incorporation, as amended and restated, or the By-laws of the Company
or any statute or any order, rule or regulation of any court or
government agency or body having jurisdiction over the Company or any
of its properties; and 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 of the transactions
contemplated by this Agreement or the Warrant Agreement, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriter;
(xi) Other than as set forth or described in the
Prospectus, there are no legal or governmental proceedings pending to
which the Company is a party or of which any property of the Company
is subject which, if determined adversely to the Company, would
individually or in the aggregate have a material adverse effect on the
financial position, shareholders' equity or results of operations of
the Company; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(xii) Deloitte & Touche LLP, who have certified financial
statements of the Company, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder;
(xiii) The Company has no subsidiaries;
(xiv) The Company owns, or possesses adequate rights to
use, all the patents, trademarks, service marks, trade names and
copyrights ("Intellectual Property") necessary for the present and
planned future conduct of its business. None of the activities
engaged in by the Company infringes or conflicts with Intellectual
Property rights of others and there is no infringement on the
Intellectual Property except as disclosed in the Prospectus
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or as the Company has otherwise advised you in writing. Without
limiting the preceding representation and warranty:
(a) The Company is the owner of all right, title and interest in
and to U.S. Patent No. 4,552,404 (the "404 patent") entitled
"Neutral Body Posture Chair," issued to Xxxxxx X. Xxxxxxxxx on
November 12, 1985 and that such patent will be in full force
and effect as of the Time of Delivery (as defined in Section 4
hereof), and the 404 patent is not subject to any liens,
licenses, security interests or encumbrances except for the
lien and security interest pursuant to the Loan Agreement
between Comerica Bank-Texas and the Company dated as of
December 30, 1996, as amended;
(b) The Company is the owner of all right, title and interest in
and to the following pending U.S. utility and design patent
applications: (IDENTIFY TYPE, SERIAL NUMBER, FILING DATE,
TITLE, INVENTORS AND PRESENT STATUS);
(c) The Company is the owner of all right, title and interest in
and to Federal Registration No. 1,725,745 for "NEUTRAL
POSTURE" used in connection with workplace furniture, and
Registration No. 1,725,745 is in full force and effect and is
not subject to any liens, licenses, security interests or
encumbrances and is not the subject of any proceedings in the
U.S. Patent and Trademark Office;
(d) The Company is the owner of the following common law marks:
ComputErgo(TM), Establishing the Standard of Acceptability(TM)
and Ergo 2000(TM) for which applications for federal
registration are currently pending in the U.S. Patent and
Trademark Office;
(e) The Company is not aware of any claims for patent, trademark
or copyright infringement, unfair competition,
misappropriation of trade secrets or confidential information
against the Company, its affiliates, predecessors in interest,
officers or directors that could materially affect the
Company's business except (LIST EXCEPTIONS, IF ANY);
(f) The Company is not aware of any claim by any third party
claiming an ownership interest in any of the Company's
intellectual property EXCEPT (LIST EXCEPTIONS, IF ANY);
(g) The Company is not (1) aware of any patent under which it
needs a license, (2) aware of any software or copyrightable
material for which it needs a license to conduct its existing
or future contemplated business, (3) to the best of its
knowledge, using any marks which conflict with the trademark
rights of any third party, and (4) to the best of its
knowledge, using in its business any confidential information
or trade secrets of any third party that would result in a
Material Adverse Change;
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(h) The Company is not involved in litigation concerning any of
its intellectual property rights or the intellectual property
rights of others except as described in the Prospectus;
(i) The Company is not aware of any illegal, unlicensed or pirated
copies of software being used by it or its employees in its
business that would result in a Material Adverse Change; and
(j) The Company has no written agreements or contracts with Xxxxxx
X. Xxxxxxxxx pertaining to the assignment of intellectual
property rights, including rights in future inventions and/or
improvements relating to ergonomic furniture, except as
described in the Prospectus;
(xv) Other than compensation payable to you or as
otherwise disclosed in the Prospectus, no person has the right to any
payment (including without limitation any finder's fee) in connection
with the offering or sale of the Shares;
(xvi) The pro forma financial information of the Company
included in the Registration Statement and Prospectus presents fairly
the information shown therein, and the assumptions used in the
preparation thereof are reasonable;
(xvii) The Company has provided or made available to you
originals or complete and accurate copies of all agreements,
contracts, corporate records, financial statements, business plans,
product literature and other instruments and documents material to the
business or operations of the Company, and has responded fully to all
requests for documents and information submitted to it by or for you,
and the Company has updated or supplemented any such document or
information to the extent necessary to reflect new developments or
additional information relevant thereto;
(xviii) The Company's financial performance during the
current fiscal quarter has been up to the date hereof consistent in
all material respects with the operating plans and budgets for such
quarter previously provided to you by the Company, and no aspect of
such performance requires the modification or supplementation of any
information contained in the Registration Statement or any Preliminary
Prospectus;
(xix) The election by the Company, and the consent to such
election by its shareholders (and, if applicable, by the spouses of
such shareholders) to cause the Company to be taxed as an S
corporation as provided in Section 1362 of the Internal Revenue Code
of 1986, as amended (and the predecessor Code) (the "Code"), was valid
and effective at all times from April 1, 1996 through and including
the Termination Date (as defined in the Registration Statement and
Prospectus), and neither the Internal Revenue Service nor any other
person or entity has challenged or indicated a present intention to
challenge the status of the Company as an S corporation during any
portion of such period; the Company has incurred no liability for
taxes under Section 1375 of the
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Code during or for any year in such period; and the Company has
validly adopted a fiscal year as provided in Sections 444 and 1378 of
the Code and Revenue Procedure 83-25, 1983-1 C.B. 689;
(xx) For all periods for which the Company's election to
be taxed as an S Corporation under Section 1362 of the Code was not in
effect, all material tax returns required to be filed by the Company
in any jurisdiction have been filed, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment
received by the Company have been paid, other than those being
contested in good faith and for which adequate reserves have been
provided;
(xxi) No officer, director or shareholder of the Company
has any direct or indirect affiliation or association with any NASD
member;
(xxii) Except as set forth in the Prospectus, no person has
any right to require the Company to register any securities under the
Act;
(xxiii) The Company has all requisite power and authority,
and has taken all necessary corporate action, to authorize, execute,
deliver and perform the Warrant Agreement, to execute, issue, sell and
deliver the Warrant and a certificate or certificates evidencing the
Warrant, to authorize and reserve for issuance and, upon payment from
time to time of the exercise price, to issue, sell and deliver, the
shares of the Stock issuable upon exercise of the Warrant, and to
perform all of its obligations under the Warrant Agreement and the
Warrant. The Warrant Agreement has been duly executed and delivered
by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general principles of equity. No authorization,
approval, consent or other order of any governmental authority is
required for such authorization, issue or sale except to the extent
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
and applicable federal and state securities laws; and
(xxiv) The Warrant, when delivered to the Underwriter, will
be duly authorized, executed and delivered and will be a legal, valid
and binding obligation of the Company enforceable in accordance with
its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and by general principles of
equity. The shares of Stock of the Company, when issued upon exercise
of the Warrant, will have been duly authorized for issuance and, when
issued in accordance with the terms of the Warrant Agreement, will be
validly issued and outstanding, fully paid and nonassessable and free
of statutory preemptive rights.
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(b) Each of the Selling Shareholders severally and not jointly
represents and warrants to, and agrees with, the Underwriter and the Company
that:
(i) The representations and warranties of the Company set
forth in subsection (a) of this Section 1 are true, accurate and
complete.
(ii) Such Selling Shareholder has granted [_____________] a
Power of Attorney (the "Power of Attorney") and a Custody Agreement
(the "Custody Agreement") for the sale and delivery of the Shares to
be sold by such Selling Shareholder hereunder; and such Selling
Shareholder has full right, power and authority to enter into this
Agreement, the Power of Attorney and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by such
Selling Shareholder hereunder;
(iii) The sale of the Shares to be sold by such Selling
Shareholder hereunder and the compliance by such Selling Shareholder
with all of the provisions of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions
herein and therein 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, any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is
bound or to which any of the property or assets of such Selling
Shareholder is subject, nor will such action result in any violation
of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over such
Selling Shareholder or the property of such Selling Shareholder;
(iv) Such Selling Shareholder has good and valid title to the
Shares to be sold at the First Time of Delivery (as defined in Section
4 hereof) (or, with respect to Optional Shares, at the First Time of
Delivery or the Second Time of Delivery (as defined in Section 4
hereof), as applicable) by such Selling Shareholder hereunder, free
and clear of all liens, encumbrances and claims, and immediately prior
to the applicable Time of Delivery such Selling Shareholder will have
good and valid title to the Shares to be sold at such Time of Delivery
by such Selling Shareholder hereunder, free and clear of all liens,
encumbrances or claims; and, upon delivery of such Shares and payment
therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances or claims, will pass to the
Underwriter;
(v) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement
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thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder
expressly for use therein (including without limitation information
furnished pursuant to Item 4(d) of Form 1-A pursuant to Alternative 2
of Form SB-1), such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or
supplements to the Registration Statement and the Prospectus will,
when they become effective or are filed with the Commission, as the
case may be, conform in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and
not 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
(vii) Such Selling Shareholder has not made a transfer of any
Stock which would cause the Company to lose its status as an S
Corporation under Section 1361 of the Code.
In order to document the Underwriter's compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the First Time of
Delivery (as hereinafter defined) a properly completed and executed United
States Treasury Department Form W-9 (or Form W-8 if applicable, or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
Each of the Selling Shareholders, severally and not jointly,
represents and warrants that certificates in negotiable form representing all
of the Shares to be sold by such Selling Shareholder hereunder have been placed
in custody under a Custody Agreement, in the form heretofore furnished to you,
duly executed and delivered by such Selling Shareholder to Xxxxxxx X. Xxxxxxx,
as custodian (the "Custodian"), and that such Selling Shareholder has duly
executed and delivered a Power of Attorney, in the form heretofore furnished to
you, appointing the persons indicated in Schedule II hereto, and each of them,
as such Selling Shareholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Shareholder, to determine the purchase price to be paid by the Underwriter to
the Selling Shareholders as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Shareholder hereunder and
otherwise to act on behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
Each of the Selling Shareholders specifically agrees severally and not
jointly that the Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriter hereunder and that the arrangements made by such
Selling Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable. Each of the Selling Shareholders specifically agrees
severally and not jointly that the obligations of the Selling Shareholders
hereunder shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Shareholder or by the occurrence of any
other event. If any individual Selling Shareholder should die or become
incapacitated, or
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if any other such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares shall be delivered by or on
behalf of the Selling Shareholders in accordance with the terms and conditions
of this Agreement and of the Custody Agreement, and actions taken by the
Attorneys-in Fact pursuant to the Powers of Attorney shall be as valid as if
such death, incapacity, or other event had not occurred, regardless of whether
or not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, or other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to the Underwriter 900,000 Firm Shares, (b)
each of the Selling Shareholders agrees, severally and not jointly, to sell to
the Underwriter that number of Firm Shares set forth opposite such Selling
Shareholder's name in Schedule II, and (c) the Underwriter agrees to purchase
from the Company and each of the Selling Shareholders, at a purchase price per
share of $ , the Firm Shares.
Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxx, severally and not jointly,
hereby grant to the Underwriter the one-time right to purchase at its election
up to, respectively, 100,000 and 60,000 Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
over allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to each of
Messrs. Xxxxxxxx and Xxxxx, given within a period of 45 calendar days after
the date of this Agreement, setting forth the aggregate number of Optional
Shares to be purchased (62.5% of which will be sold by Xx. Xxxxxxxx and 37.5%
of which will be sold by Xx. Xxxxx, subject to rounding) and the date on which
such Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery or, unless you and Messrs. Xxxxxxxx and
Xxxxx otherwise agree in writing, earlier than two or later than ten business
days after the date of such notice.
3. The Underwriter proposes to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. Certificates in definitive form for the Shares to be purchased by
the Underwriter hereunder, and in such denominations and registered in such
names as the Underwriter may request upon at least 48 hours' prior notice to
the Company and the Selling Shareholders, shall be delivered by or on behalf of
the Company and the Selling Shareholders to the Underwriter, against payment by
the Underwriter or on its behalf of the purchase price therefor by certified
bank checks, payable to the order of the Company and the Selling Shareholders
(which shall be delivered in care of the Custodian), as their interests may
appear in immediately available funds, or by payment in such other manner as
shall be agreed to in writing by the Company and the Underwriter, all at the
offices of Xxxxxxxx & Knight, A Professional Corporation, 0000 Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:00 a.m., Dallas time, on
the third or fourth business day, as required or unless otherwise permitted by
the Commission pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
following the date of the public offering, or at such other time and date as
you and
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the Company and the Selling Shareholders may agree upon in writing; and, with
respect to the Optional Shares, 9:00 a.m., Dallas time, on the date specified
by you in the written notice given by you of your election to purchase such
Optional Shares, or at such other time and date as you, Xxxxx X. Xxxxxxxx and
Xxxxx X. Xxxxx may agree upon in writing. Such time and date for delivery of
the Firm Shares is herein called the "First Time of Delivery," such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery," and each such time and date for
delivery is herein called a "Time of Delivery."
If registration of any certificate shall be requested in a name other
than that of the Underwriter, there shall be delivered to [________________] a
Transfer Application with respect to the person in whose name registration of
such certificate is so requested. The certificates will be made available for
checking and packaging at least 24 hours prior to each Time of Delivery at such
place as is designated by the Underwriter.
5. The Company agrees with the Underwriter:
(a) To prepare the Prospectus in a form reasonably approved
by you and to file such Prospectus pursuant to Rule 424(b) under the
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 Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be
disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when the
Registration Statement, or any amendment thereto, has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to
advise you, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus
or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, to use promptly its commercially reasonable efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions of the United States as
you may reasonably request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
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(c) To furnish you with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of the issue of the
Prospectus in connection with the offering or sale of the Shares and
if at such time any event shall have occurred 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 under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon
your reasonable request to prepare and furnish without charge to you
and to any dealer in securities as many copies as you may from time to
time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect
such compliance, and in case you are required to deliver a prospectus
in connection with sales of any of the Shares at any time nine months
or more after the time of issue of the Prospectus, upon your
reasonable request but at your expense, to prepare and deliver to you
as many copies as you may reasonably request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as
soon as practicable, but in any event not later than 18 months after
the effective date of the Registration Statement (as defined in Rule
158(c)), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act
and the rules and regulations thereunder (including at the option of
the Company Rule 158);
(e) During the period beginning from the date hereof and
continuing through January 1, 1999, not to offer, sell, contract to
sell or otherwise dispose of Stock or other securities which are
substantially similar to the Stock or which are convertible or
exchangeable into Stock or other securities which are substantially
similar to the Stock, without your prior written consent, except
pursuant to (i) the Warrant and (ii) employee benefit plans as
described in the Prospectus;
(f) To furnish to its shareholders within 90 days after the
end of each fiscal year an annual report (including a balance sheet
and statements of income, shareholders' equity and cash flow of the
Company and its consolidated subsidiaries, if any, certified by
independent public accountants) and, within 45 days after the end of
each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company
and its subsidiaries, if any, for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to shareholders,
and deliver to you as soon as they are available, copies
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of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed;
(h) To use its commercially reasonable efforts to have the
Shares accepted for quotation on the Nasdaq Stock Market's National
Market; and
(i) To apply the net proceeds of the sale of the Shares
substantially in accordance with the statements set forth under the
captain "Use of Proceeds" in the Prospectus.
6. The Company and each of the Selling Shareholders covenant and
agree with one another and with the Underwriter that, except as provided below,
the Company will pay or cause to be paid all costs and expenses incident to the
performance of the Company's and the Selling Shareholders' obligations
hereunder including: (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Shares under
the Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriter and dealers for a period of
time not exceeding nine months after the effective date of the Registration
Statement; (ii) the cost of printing this Agreement, the Blue Sky Memorandum
and any other documents in connection with the offering, purchase, sale and
delivery of the Shares; (iii) all expenses in connection with the qualification
of the Shares for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Underwriter in connection with such qualification and in connection with the
Blue Sky Memorandum; (iv) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Shares; (v) the cost of preparing stock certificates; (vi) the
cost and charges of any transfer agent or registrar; (vii) any fees and
expenses of counsel for the Selling Shareholders; (viii) each Selling
Shareholder's pro rata share of the fees and expenses of the Attorneys-in- Fact
and the Custodian; and (ix) all expenses and taxes incident to the sale and
delivery of the Shares to be sold by each Selling Shareholder to the
Underwriter hereunder; provided, however, that, notwithstanding the foregoing,
all underwriters' discounts and commissions in respect of the sale of the
Shares by any Selling Shareholder shall be paid by such Selling Shareholder.
It is understood, however, that the Company shall bear, and the Selling
Shareholders shall not be required to pay or reimburse the Company for, the
cost of any other matters not directly relating to the sale and purchase of the
Shares pursuant to this Agreement and that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriter will pay all of its own costs
and expenses, including the fees of its counsel, stock transfer taxes on resale
of any of the Shares by the Underwriter, and any advertising expenses connected
with any offers the Underwriter may make.
7. The obligations of the Underwriter hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in its discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Shareholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
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Shareholders shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) 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 Act and in
accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Xxxxxxxx & Knight, A Professional Corporation, counsel
for the Underwriter, shall have furnished to you such opinion or
opinions, dated such Time of Delivery, with respect to the
incorporation of the Company, this Agreement, the validity of the
Shares being delivered at such Time of Delivery, the Registration
Statement, the Prospectus, and other related matters as you 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;
(c) Xxxxxx and Xxxxx, LLP, counsel for the Company and the
Selling Shareholders, shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the 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 Texas, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the Shares being
delivered at such Time of Delivery, but with respect to such
Shares to be issued and delivered by the Company, when issued
and delivered by the Company pursuant to this Agreement
against payment therefor) have been duly and validly
authorized and issued and are fully paid and non-assessable;
and the Shares conform to the description of the Stock
contained in the Prospectus;
(iii) 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, or is subject to no
material liability or disability by reason of failure to be so
qualified in any such jurisdiction (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact
upon certificates of officers of the
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Company, provided that such counsel shall state that they
believe that both you and they are justified in relying upon
such opinions and officer's certificates);
(iv) The Company has no subsidiaries;
(v) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject which,
if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the financial position,
shareholders' equity or results of operations of the Company;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(vi) The Company has full corporate power and
authority to enter into this Agreement and to issue, sell and
deliver the Firm Shares to be issued and sold by the Company
hereunder, and this Agreement has been duly authorized,
executed and delivered by the Company and each Selling
Shareholder and is the legal, valid and binding agreement of
the Company and each Selling Shareholder enforceable in
accordance with its terms (except for provisions contained in
this Agreement purporting to limit rights of third parties and
except to the extent the enforceability of the indemnification
and contribution provisions of Section 8 of this Agreement may
be limited by public policy considerations as expressed in the
Act as construed by courts of competent jurisdiction, and
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and by general
principles of equity and for any other provisions of the type
listed in either (1) Section 14 of the American Bar
Association's Third Party Legal Opinion Report and Accord
(1991) or (2) the "Other Common Texas Qualifications"
contained in the Report of the Legal Opinions Committee
Regarding Legal Opinions in Business Transactions (such
provisions of the type listed in clauses (1) and (2) are
collectively referred to as the "Other Qualifications"));
(vii) A Power of Attorney and a Custody Agreement
have been duly authorized, executed and delivered by each such
Selling Shareholder and constitute valid and binding
agreements of such Selling Shareholder in accordance with
their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
laws affecting creditors' rights generally, by general
principles of equity and by the Other Qualifications;
(viii) The issue and sale to you of the Shares being
delivered at such Time of Delivery by the Company in
accordance with and upon the terms and conditions set forth
herein and the compliance by the Company with all of the
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provisions of this Agreement, the Warrant Agreement or the
Warrant and the consummation of the transactions herein and
therein 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, any agreement listed under Item 6
of the exhibits to the Registration Statement, nor will such
action result in any violation of the provisions of the
Articles of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its properties;
(ix) The sale of the Shares to be sold by each
Selling Shareholder hereunder and the compliance by such
Selling Shareholder with all of the provisions of this
Agreement, the Power of Attorney and the Custody Agreement and
the consummation of the transactions herein and therein
contemplated will not (a) conflict with the laws of the State
of Texas or the federal laws of the United States by which
such Selling Shareholder is bound, or (b) result in a breach
or violation of any order, rule or regulation known to such
counsel of any court or governmental agency or body which, to
such counsel's knowledge, has jurisdiction over such Selling
Shareholder or the Stock of such Selling Shareholder;
(x) 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 each
Selling Shareholder of the transactions contemplated by this
Agreement, except the registration under the Act of the
Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriter;
(xi) Title to the Shares to be sold by each Selling
Shareholder, free of all adverse claims, has been transferred
to the Underwriter who has purchased such Shares in good faith
and without notice of any such adverse claim within the
meaning of the Uniform Commercial Code;
(xii) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the
financial statements and the notes thereto and the schedules
and statistical data included therein, as to which such
counsel need not express any opinion) appear on their face to
be appropriately responsive in all material respects with the
requirements of the Act and the rules and regulations
thereunder;
(xiii) The Company has all requisite corporate power
and authority, and has taken all necessary corporate action,
to authorize, execute, deliver and perform the Warrant
Agreement, to execute, issue, sell and deliver the Warrant and
a
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certificate or certificates evidencing the Warrant, to
authorize and reserve for issuance and, upon payment of the
exercise price, to issue, sell and deliver, the shares of the
Stock issuable upon exercise of the Warrant, and to perform
all of its obligations under the Warrant Agreement and the
Warrant. The Warrant Agreement has been duly executed and
delivered by the Company and will be a legal, valid and
binding agreement of the Company enforceable in accordance
with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors' rights generally, by
general principles of equity and by the Other Qualifications.
No authorization, approval, consent or other order of any
governmental authority is required for such authorization,
issue or sale except to the extent required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and
applicable federal and state securities laws; and
(xiv) The Warrant, when delivered to the
Underwriter, will be duly authorized, executed and delivered
and will be a legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and by general
principles of equity. The shares of Stock of the Company,
when issued upon exercise of the Warrant, will have been duly
authorized for issuance and, when issued in accordance with
the terms of the Warrant Agreement, will be validly issued and
outstanding, fully paid and nonassessable and free of
statutory preemptive rights.
Xxxxxx and Xxxxx, LLP shall confirm in its opinion letter that
it has received certificates of good standing for the Company from the
States of Texas, Illinois and the District of Columbia, which
certificates shall be attached as an exhibit to such opinion letter.
Xxxxxx and Xxxxx, LLP shall further confirm that, to its knowledge,
the issue and sale of the Shares being issued at such Time of Delivery
and the performance of this Agreement and the consummation of the
transactions herein contemplated do not violate any order, judgment or
decree of any court or governmental agency or body having jurisdiction
over the Company or any of its properties or assets.
Such counsel shall also state that, although counsel has not
undertaken, except as otherwise indicated in their opinion, to
determine independently, and does not assume any responsibility for,
the accuracy or completeness of the statements in the Registration
Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and
discussion of the contents thereof, and nothing has come to the
attention of such counsel that has caused it to believe that the
Registration Statement at the time the Registration Statement became
effective, or the Prospectus, as of its date and as of each Time of
Delivery, 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 any amendment or
supplement to the
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Prospectus, as of its respective date, and as of each Time of
Delivery, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and the notes thereto
and the schedules and other financial and statistical data included in
the Registration Statement or the Prospectus).
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the
laws of the State of Texas (excluding conflict of law rules) and the
federal laws of the United States;
(d) Xxxxxx, White & Xxxxxx, intellectual property counsel
for the Company, shall have furnished to you such opinion or opinions,
dated such Time of Delivery, in form and substance satisfactory to
you, to the effect that:
(i) The Company is the owner of all right, title
and interest in and to the 404 patent, and such patent is in
full force and effect as of the Time of Delivery and is not
subject to any liens, licenses, security interests or
encumbrances;
(ii) The Company is the owner of all right, title
and interest in and to the following pending U.S. utility and
design patent applications: (IDENTIFY TYPE, SERIAL NUMBER,
FILING DATE, TITLE, INVENTORS AND PRESENT STATUS);
(iii) The Company is the owner of all right, title
and interest in and to Federal Registration No. 1,725,745 for
"NEUTRAL POSTURE" used in connection with workplace furniture,
and Registration No. 1,725,745 is in full force and effect and
is not subject to any liens, licenses, security interests or
encumbrances and is not the subject of any proceedings in the
U.S. Patent and Trademark Office;
(iv) The Company is the owner of the following
common law marks: ComputErgo(TM), Establishing the Standard of
Acceptability(TM) and Ergo 2000(TM) for which applications for
federal registration are currently pending in the U.S. Patent
and Trademark Office;
(v) They are not aware of any claims for patent,
trademark or copyright infringement, unfair competition,
misappropriation of trade secrets or confidential information
against the Company, its affiliates, predecessors in interest,
officers or directors that could materially affect the
company's business EXCEPT (LIST EXCEPTIONS, IF ANY);
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(vi) They are not aware of any claim by any third
party claiming an ownership interest in any of the Company's
intellectual property EXCEPT (LIST EXCEPTIONS, IF ANY);
(vii) They are not aware of any patent under which
the Company needs a license, and they are not aware of any
software or copyrightable material for which the Company needs
a license to conduct its existing or future contemplated
business; the Company is not, to the best of such counsel's
knowledge, using any marks which conflict with the trademark
rights of any third party, and the Company is not, to the best
of such counsel's knowledge, using in its business any
confidential information or trade secrets of any third party
that could materially adversely affect the Company;
(viii) The Company is not involved in litigation
concerning any of its intellectual property rights or the
intellectual property rights of others except as follows:
(LIST, IF ANY);
(ix) They are not aware of any illegal, unlicensed
or pirated copies of software being used by the Company or its
employees in its business that could materially adversely
affect the Company; and
(x) The Company has the following written
agreements or contracts with Xxxxxx X. Xxxxxxxxx pertaining to
the assignment of intellectual property rights including
rights in future inventions and/or improvements relating to
ergonomic furniture: (LIST).
(e) At 9:00 a.m., Dallas time, 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
at each Time of Delivery, Deloitte & Touche LLP shall have furnished
to you a letter or letters, dated the respective date of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(f) (i) The Company shall not have sustained since the date
of the latest audited financial statements included in the Prospectus
any 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, and
(ii) since the respective dates as of which information is given in
the Prospectus there shall not have been any change in the capital
stock (other than issuances of stock upon the exercise of stock
options which were outstanding on the date of the latest balance sheet
included in the Prospectus), short-term or long-term debt of the
Company or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company
otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in
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clause (i) or (ii), is in your judgment so material and adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the
Prospectus;
(g) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market's National Market;
(ii) a general moratorium on commercial banking activities in New York
declared by either federal or New York authorities; or (iii) the
outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war,
if the effect of any such event specified in this clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the
public offering or delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated by the
Prospectus;
(h) The Shares to be sold by the Company at such Time of
Delivery shall have been duly accepted, subject to notice of issuance,
for quotation on the Nasdaq Stock Market's National Market;
(i) The Company and the Selling Shareholders shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and of the Selling
Shareholders, respectively, satisfactory to you as to the accuracy of
the representations and warranties of the Company, and of the Selling
Shareholders respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Shareholders of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery, and as to such other matters as you
may reasonably request and the Company shall have furnished or caused
to be furnished certificates as to the matters set forth in
subsections (a) and (f) of this Section and as to such other matters
as you may reasonably request; and
(j) The Company shall have executed and delivered to the
Underwriter the Warrant pursuant to and in the form of the Warrant
Agreement.
8. (a) The Company will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities to which the Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Underwriter for any legal or other expenses
reasonably incurred by the Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company
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shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by you expressly for use therein or (ii)
an untrue statement or omission or alleged untrue statement or omission made in
any Preliminary Prospectus that is corrected in the Prospectus if the person
asserting any such loss, claim, damage or liability purchased shares but was
not sent or given a copy of the Prospectus at or prior to written confirmation
of the sale of such Shares to such person and the loss, claim, damage or
omission was corrected in the Prospectus.
(b) Each of the Selling Shareholders, severally and not jointly, will
indemnify and hold harmless the Underwriter against any losses, claims, damages
or liabilities to which the Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by the
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that (i) the Selling
Shareholders shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Underwriter expressly for use
therein and (ii) in no event shall the liability of any Selling Shareholder
under this subsection (b) exceed the total gross proceeds from the sale of
Shares by such Selling Shareholder hereunder.
(c) The Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the Registration
Statement, each person, if any, who controls the Company or any Selling
Shareholders within the meaning of Section 15 of the Act and each Selling
Shareholder against any losses, claims, damages or liabilities to which the
Company or such Selling Shareholder may become subject, under the Act 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 any material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the 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 in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by you expressly for use
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therein; and will reimburse the Company and any such director, officer or
control person and each Selling Shareholder for any legal or other expenses
reasonably incurred by the Company and any such director, officer or control
person or such Selling Shareholder in connection with investigating or
defending any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection unless the defense
of such claim is materially prejudiced by such omission. In case any such
action 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 therein 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 (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriter on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Shareholders on the one hand and the Underwriter on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling Shareholders on the one hand and the Underwriter on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares purchased under this Agreement (before deducting
expenses) received by the Company and the Selling Shareholders bear to the
total underwriting discounts and commissions received by the Underwriter with
respect to the Shares purchased under this Agreement, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Selling Shareholders on the one hand
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or the Underwriter on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, each of the Selling Shareholders and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), (i) the Underwriter
shall not 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 which the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) no Selling
Shareholder shall be required to contribute any amount in excess of the gross
proceeds from the sale of Shares by such Selling Shareholder hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Selling Shareholders'
obligations in this subsection (e) to contribute are several and not joint.
(f) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriter within the meaning of the Act; and the obligations of
the Underwriter under this Section 8 shall be in addition to any liability
which the Underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each person,
if any, who controls the Company or any Selling Shareholder within the meaning
of the Act.
9. (a) Subject to Section 9(b) below, if the Underwriter shall
default in its obligation to purchase a portion of the Shares which it has
agreed to purchase hereunder at the Time of Delivery, you shall use your
commercially reasonable efforts to arrange for another party or other parties
to purchase such Shares on the terms contained herein. If within 36 hours
after such default you do not arrange for the purchase of such Shares, then the
Company and the Selling Shareholders shall be entitled to a period of 36 hours
within which to procure another party or other parties to purchase such Shares
on such terms. In the event that, within the prescribed period, the Company
and the Selling Shareholders notify you that they have so arranged for the
purchase of such Shares, you or the Company and the Selling Shareholders shall
have the right to postpone such Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which may thereby be made necessary.
The term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
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(b) If, after giving effect to any arrangements for the purchase of
the Shares by the Company and the Selling Shareholders as provided in
subsection (a) above, the aggregate number of Shares which remains unpurchased
exceeds one- eleventh of the aggregate number of all the Shares to be purchased
at such Time of Delivery, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriter to purchase and of the
Company to sell the Optional Shares) shall thereupon terminate, without
liability on the part of the Company or the Selling Shareholders, except for
the expenses to be borne by the Company and the Selling Shareholders as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve the Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and
the Underwriter, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Underwriter or any controlling person of
the Underwriter, or the Company, or any of the Selling Shareholders or any
officer or director or controlling person of the Company, or controlling person
of any Selling Shareholder, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Shareholders shall be under any
liability to the Underwriter except as provided in Section 6 and Section 8
hereof; but, if for any other reason any Shares are not delivered by on behalf
of the Company and the Selling Shareholders as provided herein, the Company and
each of the Selling Shareholders pro rata (based on the number of Shares to be
sold by the Company and such Selling Shareholder hereunder) will reimburse the
Underwriter for all out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Underwriter in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company and
the Selling Shareholders shall then be under no further liability to the
Underwriter in respect of the Shares not so delivered except as provided in
Section 6 and Section 8 hereof.
12. All statements, requests, notices, and agreements hereunder
shall be in writing, and if to the Underwriter shall be delivered or sent by
mail, telex or facsimile transmission to you at 0000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000; if to the Company or any Selling Shareholder shall be
delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Registration Statement, Attention: Secretary.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriter, the Company and the Selling Shareholders and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company and each person who controls the Company, any Selling
Shareholder, or the Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right by
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virtue of this Agreement. No purchaser of any of the Shares from the
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. Each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any such
provision of this Agreement is held to be invalid, illegal or unenforceable
under any applicable law or rule in any jurisdiction, such provision will be
ineffective only to the extent of such invalidity, illegality or
unenforeability in such jurisdiction.
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding
agreement among you, Company and each of the Selling Shareholders.
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Shareholder represents by so doing that he has been duly
appointed as Attorney-in-Fact by such Selling Shareholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact
to take such action.
Very truly yours,
NEUTRAL POSTURE ERGONOMICS, INC.
By:
----------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
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SELLING SHAREHOLDERS LISTED ON
SCHEDULE II:
By:
----------------------------
As Attorney-in-Fact acting on
behalf of each of the Selling
Shareholders named in Schedule
II to this Agreement
Accepted as of the date hereof:
HUBERMAN FINANCIAL, INC.
By:
------------------------------
Xxxx Xxxxxxxx
President
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SCHEDULE II
NUMBER OF
OPTIONAL
TOTAL SHARES TO BE
NUMBER OF SOLD IF
FIRM MAXIMUM
SHARES TO BE OPTION
SOLD EXERCISED
------------ ---------
The Company . . . . . . . . . . . . . . . 900,000 -0-
The Selling Shareholders: . . . . . . . .
Xxxxxxx X. Xxxxxxx . . . . . . .
Xxxx X. Xxxxxxxxx . . . . . . .
Xxxxx X. Xxxxxxxx . . . . . . . 100,000
Xxxxxxx X. Xxxx . . . . . . . .
Xxxxx X. Xxxxx . . . . . . . . . 60,000
Xxxx X. Xxxxx . . . . . . . . .
Xxxxxxxxx Xxxxx . . . . . . . .
Xxxxxxx Xxxxxx . . . . . . . . .
------------ ---------
Total . . . . . . . . . . . . . 1,334,000 160,000
============ =========
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ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, Deloitte &
Touche LLP shall furnish letters to the Underwriter to the effect that:
(i) They are independent certified public accountants with
respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma
financial information examined) by them and included in the Prospectus
or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited interim financial statements, selected financial
data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the Underwriter.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of
officers of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) any unaudited statements of income, balance
sheets and statements of cash flows as of dates or for periods
beginning after June 30, 1997 included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations thereunder, or are not in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with the basis for
the audited statements of income, balance sheets and
statements of cash flows included in the Prospectus;
(B) any other unaudited income statement data and
balance sheet items for the periods or as of the dates
referred to in Clause (A) above included in the Prospectus do
not agree with the corresponding items in the unaudited
financial statements from which such data and items were
derived, and any such unaudited
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data and items were not determined on a basis substantially
consistent with the basis for the corresponding amounts in the
audited financial statements included in the Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived any
unaudited condensed financial statements as of dates or for
periods beginning after ___________________ and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined
on a basis substantially consistent with the basis for the
audited financial statements included in the Prospectus;
(D) any unaudited pro forma condensed financial
statements included in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, in
each case which were outstanding on the date of the latest
financial statements included in the Prospectus) or any
increase in the long-term debt of the Company, or any
decreases in net current assets or net assets or other items
specified by the Underwriter or any increases in any items
specified by the Underwriter, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus; except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in net revenues or operating profit or the total or
per share amounts of net income or other items specified by
the Underwriter, or any increases in any items specified by
the Underwriter, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Underwriter, except in
each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(iv) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with
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respect to certain amounts, percentages and financial information
specified by the Underwriter, which are derived from the general
accounting records of the Company, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriter, and have compared certain of
such amounts, percentages and financial information with the
accounting records of the Company and have found them to be in
agreement.
3
