EXHIBIT 1.1
VOLCOM, INC.
____,000 Shares of Common Stock
UNDERWRITING AGREEMENT
________, 2005
Wachovia Capital Markets, LLC
X.X. Xxxxxxxx & Co.
Xxxxx Xxxxxxx & Co.
As Representatives of the several Underwriters
c/o Wachovia Capital Markets, LLC
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Volcom, Inc., a Delaware corporation (the "Company," which term, as used
herein, includes its predecessor Stone Boardwear, Inc., a California corporation
("SBI")), and each of the stockholders of the Company named on Exhibit D hereto
(collectively, the "Selling Stockholders" and each, a "Selling Stockholder")
confirm their respective agreements with Wachovia Capital Markets, LLC
("Wachovia") and each of the other Underwriters named in Exhibit A hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Wachovia,
X.X. Xxxxxxxx & Co. and Xxxxx Xxxxxxx & Co. are acting as representatives (in
such capacity, the "Representatives"), with respect to the issue and sale by the
Company and the sale by the Selling Stockholders of a total of __________ shares
(the "Initial Securities") of the Company's common stock, par value $0.001 per
share (the "Common Stock"), and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of Initial Securities set
forth in said Exhibit A hereto, and with respect to the grant by the Company and
the Selling Stockholders to the Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of
__________ additional shares of Common Stock to cover over-allotments, if any.
The Initial Securities to be purchased by the Underwriters and all or any part
of the ___________ shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities." Certain terms used in this Agreement are defined
in Section 15 hereof.
The Company and the Selling Stockholders understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company, the Selling Stockholders and the Underwriters agree that up
to approximately 5% of the Initial Securities to be purchased by the
Underwriters (the "Reserved Securities") shall be reserved for sale by the
Underwriters to the Company's directors, officers, employees, business
associates and other persons related to the Company (the "Reserved Security
Offerees"), as set forth in the Prospectus under the heading "Underwriting," as
part of the distribution of the
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Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the NASD and all other
applicable laws, rules and regulations. To the extent that any Reserved
Securities are not confirmed for purchase by any Reserved Security Offerees
before 9:00 A.M. (Eastern time) on the first day of trading of the Common Stock,
such Reserved Securities may, at the sole and absolute discretion of the
Representatives, be offered to the public as part of the public offering
contemplated hereby or offered or sold to any other Reserved Security Offerees,
as set forth in the Prospectus.
The Company has filed with the Commission the Initial Registration
Statement covering the registration of the Securities under the 1933 Act.
Promptly after the execution of this Agreement, the Company will prepare and
file with the Commission a prospectus in accordance with the provisions of the
1933 Act, including but not limited to Rule 430A and Rule 424(b), and the
Company has previously advised you of all information (financial and other) that
will be set forth therein. Such prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "Prospectus."
Prior to the purchase of the Initial Securities by the Underwriters on the
Closing Date referred to in Section 2(c):
(a) the Company shall have completed its reincorporation in the State of
Delaware (the "Reincorporation"),
(b) the Company shall have (i) declared a $20 million distribution to its
existing stockholders (which amount consists of the estimated amount of
the Company's undistributed Subchapter S corporation earnings through the
date of termination of the Company's Subchapter S corporation status) (the
"Existing Stockholder Dividend") and (ii) taken all steps necessary to
terminate its status as a Subchapter S corporation under the Internal
Revenue Code of 1986, as amended (the "Code") and to terminate the status
of its Subsidiary (as defined below) as a Qualified Subchapter S
Subsidiary under the Code (the "S Corporation Conversion"),
(c) the Company's certificate of incorporation and by-laws shall have been
amended and restated and such amended and restated certificate of
incorporation shall have been filed with the Secretary of State of the
State of Delaware (collectively, the "Amendment and Restatement"),
(d) the Company shall have effected a 23.3192-for-1 forward stock split
(the "Stock Split"), and
(e) all consents, approvals, waivers, assignments and amendments necessary
or appropriate under any of the Organizational Documents, Company
Documents, Subject Instruments or Intellectual Property (as defined below)
in connection with the Reincorporation, the S Corporation Conversion, the
Amendment and Restatement, the Stock Split and the issuance, sale and
offering of the Securities, or for the Company and/or the Selling
Stockholders to enter into this Agreement and perform their respective
obligations under this Agreement, shall have been obtained and shall be in
full force and effect (collectively, the "Consents and Assignments"),
except where the failure to obtain
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any such Consents and Assignments would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
all on the terms contemplated by the Prospectus. The Reincorporation, S
Corporation Conversion, Amendment and Restatement, Stock Split and Consents and
Assignments are hereinafter called, collectively, the "Pre-Closing
Transactions").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Date,
and as of each Option Closing Date (if any) referred to in Section 2(b) hereof,
and agrees with each Underwriter, as follows:
(1) Compliance with Registration Requirements. The Securities have
been duly registered under the 1933 Act pursuant to the Registration
Statement. Each of the Initial Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Initial Registration Statement
or any Rule 462(b) Registration Statement has been issued under the 1933
Act and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Initial Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became or become effective and at the Closing Date (and, if any Option
Securities are purchased, at the applicable Option Closing Date), the
Initial Registration Statement, any Rule 462(b) Registration Statement and
any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the
time the Prospectus or any such amendment or supplement was issued, at the
Closing Date (and, if any Option Securities are purchased, at the
applicable Option Closing Date), and at any time when a prospectus is
required by applicable law to be delivered in connection with sales of
Securities, contained or will contain an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties
in this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through Wachovia expressly for use
in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed, in all material respects with the
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requirements of the 1933 Act and the 1933 Act Regulations and each
preliminary prospectus and the Prospectus and any amendments or
supplements thereto delivered to the Underwriters for use in connection
with the offering of the Securities was identical to the electronically
transmitted copy thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(2) Pre-Closing Transactions. The Pre-Closing Transactions will be
consummated prior to the Closing Date (or such earlier date as may be
contemplated by the Prospectus) on the terms contemplated by this
Agreement and the Prospectus.
(3) Independent Accountants. Deloitte & Touche LLP and Xxxx Xxxxx
LLP, the accountants who certified the financial statements and (if
applicable) supporting schedules included in the Registration Statement
and the Prospectus, are independent registered public accountants with
respect to the Company and its Subsidiary as required by the 1933 Act and
the 1933 Act Regulations.
(4) Financial Statements. The financial statements of the Company
and its Subsidiary included in the Registration Statement and the
Prospectus, together with the related schedules (if any) and notes,
present fairly in all material respects the financial position of the
Company and its consolidated Subsidiary at the dates indicated and the
results of operations, changes in stockholders' equity and cash flows of
the Company and its consolidated Subsidiary for the periods specified; and
all such financial statements have been prepared in conformity with GAAP
applied on a consistent basis throughout the periods involved, except as
otherwise stated therein, and comply with all applicable accounting
requirements under the 1933 Act and the 1933 Act Regulations. The
supporting schedules, if any, included in the Registration Statement
present fairly, in accordance with GAAP, the information required to be
stated therein. The information in the Prospectus under the captions
"Summary Consolidated Financial Data," "Capitalization," "Dilution" and
"Selected Consolidated Financial Data" presents fairly the information
shown therein and has been compiled on a basis consistent with that of the
audited financial statements of the Company included in the Registration
Statement and the Prospectus.
(5) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus (in each case exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement), except as otherwise
stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiary considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered
into by the Company or its Subsidiary which are material with respect to
the Company and its Subsidiary considered as one enterprise, and (C)
except for the Existing Stockholder Dividend and regular S Corporation
distributions in amounts per share that are consistent with past practice,
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
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(6) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of California and
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except (solely in the case of jurisdictions other than the
State of California) where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(7) Good Standing of Subsidiary. Volcom Entertainment (the
"Subsidiary") is the only subsidiary of the Company. The Subsidiary has
been duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, has power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement and the Prospectus, all of the issued and
outstanding capital stock of the Subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable and are owned directly
by the Company, free and clear of any Lien; and none of the outstanding
shares of capital stock of such Subsidiary was issued in violation of any
preemptive rights, rights of first refusal or other similar rights of any
securityholder of such Subsidiary or any other person. The Subsidiary is
not a "significant subsidiary" as defined by Rule 1-02 of Regulation S-X.
(8) Capitalization. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in
the column entitled "Actual" and in the corresponding line items under the
caption "Capitalization" in the Prospectus and, immediately prior to the
purchase of the Initial Securities by the Underwriters at the Closing Date
and as of each Option Closing Date (if any), the authorized, issued and
capital stock of the Company will be as set forth in the column entitled
"Pro Forma As Adjusted" and in the corresponding line items under such
caption (in each case except for subsequent issuances pursuant to this
Agreement, pursuant to stock based plans referred to in the Prospectus or
pursuant to the conversion of options referred to in the Prospectus). The
shares of issued and outstanding capital stock of the Company (including
the Securities to be sold by the Selling Stockholders to the Underwriters
under this Agreement) have been duly authorized and validly issued and are
fully paid and non-assessable; and none of the outstanding shares of
capital stock of the Company was issued in violation of any preemptive
rights, rights of first refusal or other similar rights of any
securityholder of the Company, SBI or any other person. Except for stock
options intended to be issued pursuant to the stock based plans referred
to in the Prospectus, which will include a stock option to be issued in
satisfaction of the right to purchase $200,000 of the Company's Common
Stock set forth in the January 2004 contractual agreement between the
Company and a service provider, and the stock option granted in
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January 2000 that will convert as described in the Prospectus, there are
no rights, warrants or options outstanding to purchase any Common Stock or
other capital stock of the Company and there are no outstanding securities
convertible into, or exercisable or exchangeable for, Common Stock or
other capital stock of the Company.
(9) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(10) Authorization of Securities. The Securities have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be
validly issued, fully paid and non-assessable; no holder of the Securities
is or will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to any
preemptive rights, rights of first refusal or other similar rights of any
securityholder of the Company or any other person.
(11) Description of Securities. The Common Stock, the authorized but
unissued Preferred Stock, and the Company's certificate of incorporation
and bylaws conform in all material respects to all of the respective
statements relating thereto contained in the Prospectus and such
statements conform to the rights set forth in the respective instruments
and agreements defining the same.
(12) Absence of Defaults and Conflicts. Neither the Company nor its
Subsidiary is in violation of its Organizational Documents or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any Company Document, except (solely in the case of
Company Documents other than Subject Instruments) for such defaults that
would not result in a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement and the Prospectus
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Company with
its obligations under this Agreement do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event under, or result in
the creation or imposition of any Lien upon any property or assets of the
Company or its Subsidiary pursuant to any Company Documents, except
(solely in the case of Company Documents other than Subject Instruments)
for such conflicts, breaches, defaults or Liens that would not result in a
Material Adverse Effect, nor will such action result in any violation of
the provisions of the Organizational Documents of the Company or its
Subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or its
Subsidiary or any of their respective assets, properties or operations.
(13) Absence of Labor Dispute. No labor dispute with the employees
of the Company or its Subsidiary exists or, to the knowledge of the
Company, is imminent, and
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the Company is not aware of any existing or imminent labor disturbance by
the employees of any of the principal suppliers, manufacturers, customers
or contractors of the Company or its Subsidiary which, in any such case,
may reasonably be expected to result in a Material Adverse Effect.
(14) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or its
Subsidiary which is required to be disclosed in the Registration Statement
or the Prospectus (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations under this Agreement; the aggregate of all pending legal or
governmental proceedings to which the Company or its Subsidiary is a party
or of which any of their respective property or assets is the subject
which are not described in the Registration Statement or the Prospectus,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Company, there is no statute or regulation which is
required to be disclosed in the Registration Statement or the Prospectus
(other than as disclosed therein).
(15) Accuracy of Descriptions and Exhibits. The information in the
Prospectus under the captions "Risk Factors -- Risks Related To This
Offering -- The large number of shares eligible for sale following this
offering may depress the market price of our common stock," "Risk Factors
-- Risks Related To This Offering -- Anti-takeover provisions in our
charter documents and Delaware law may make an acquisition of us more
difficult," "Prior S Corporation Status," "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Business -- Licensing," "Business -- Imports and
Import Restrictions," "Business -- Government Regulation," "Business --
Litigation," "Management -- Limitation on Liability and Indemnification
Matters," "Management -- Employee Benefit Plans," "Shares Eligible for
Future Sale," "Description of Capital Stock," "Underwriting," and "Related
Party Transactions," in each case to the extent that it constitutes
matters of law, summaries of legal matters, summaries of provisions of the
Company's certificate of incorporation or bylaws or any other instruments
or agreements, summaries of legal proceedings, or legal conclusions, is
correct in all material respects; all descriptions in the Registration
Statement and the Prospectus of any Company Documents are accurate in all
material respects; and there are no franchises, contracts, indentures,
mortgages, deeds of trust, loan or credit agreements, bonds, notes,
debentures, evidences of indebtedness, leases, subleases or other
instruments or agreements required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been so described and filed as
required.
(16) Possession of Intellectual Property. The Company and its
Subsidiary own or possess or have the right to use on reasonable terms all
patents, patent rights, patent applications, licenses, inventions,
copyrights, works of authorship, know-how (including
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trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names, service names, domain names and other intellectual
property (collectively, "Intellectual Property") necessary to carry on
their respective businesses as described in the Prospectus and as proposed
to be conducted; and neither the Company nor its Subsidiary has received
any notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or its
Subsidiary therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
individually or in the aggregate, would result in a Material Adverse
Effect.
(17) Absence of Further Requirements. (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
domestic or foreign, (B) no authorization, approval, vote or other consent
of any stockholder or creditor of the Company or its Subsidiary, (C) no
waiver or consent under any Company Documents, and (D) no authorization,
approval, vote or other consent of any other person or entity, is
necessary or required for the performance by the Company of its
obligations under this Agreement, for the offering, issuance, sale or
delivery of the Securities hereunder, or for the consummation of any of
the other transactions contemplated by this Agreement, in each case on the
terms contemplated by the Prospectus, except such as have been already
obtained under the 1933 Act or the 1933 Act Regulations or such as may be
required under state securities laws.
(18) Possession of Licenses and Permits. The Company and its
Subsidiary possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and
its Subsidiary are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
individually or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor its Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(19) Title to Property. The Company and its Subsidiary have good and
marketable title in fee simple to all real property owned by any of them
and good title to all other properties owned by any of them, in each case,
free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, individually or in the
aggregate, 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 or its Subsidiary; all real property,
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buildings and other improvements, and equipment and other property held
under lease or sublease by the Company or its Subsidiary is held by them
under valid, subsisting and enforceable leases or subleases, as the case
may be, with, solely in the case of leases or subleases relating to real
property and buildings or other improvements, such exceptions as are not
material and do not interfere with the use made or proposed to be made of
such property and buildings or other improvements by the Company and its
Subsidiary, and all such leases and subleases are in full force and
effect; and neither the Company nor its Subsidiary has any notice of any
claim of any sort that has been asserted by anyone adverse to the rights
of the Company or its Subsidiary under any of the leases or subleases
mentioned above or affecting or questioning the rights of the Company or
its Subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease except for such claims which, if
successfully asserted against the Company or its Subsidiary, would not,
individually or in the aggregate, have a Material Adverse Effect.
(20) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus,
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the 1940 Act.
(21) Environmental Laws. Except as described in the Registration
Statement and except as would not, individually or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor its
Subsidiary is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and its
Subsidiary have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or its Subsidiary,
(D) there are no events or circumstances that might reasonably be expected
to form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or its Subsidiary relating to Hazardous
Materials or any Environmental Laws and (E) there are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related
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constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a Material Adverse
Effect.
(22) Absence of Registration Rights. There are no persons with
registration rights or other similar rights to have any securities (debt
or equity) (A) registered pursuant to the Registration Statement or
included in the offering contemplated by this Agreement or (B) otherwise
registered by the Company under the 1933 Act. There are no persons with
tag-along rights or other similar rights to have any securities (debt or
equity) included in the offering contemplated by this Agreement or sold in
connection with the sale of Securities by the Company pursuant to this
Agreement.
(23) Parties to Lock-Up Agreements. Each of the Company's directors
and officers, each holder of one percent (1%) or greater of the
outstanding Common Stock or Preferred Stock and each holder of convertible
securities, warrants or stock options issued by the Company that convert
into one percent (1%) or greater of the outstanding Common Stock or
Preferred Stock has executed and delivered to the Representatives a
lock-up agreement in the form of Exhibit C hereto. Exhibit B hereto
contains a true, complete and correct list of all directors and officers
of the Company. No stock options or other stock awards that may be issued
by the Company at any time during the period commencing on and including
the date of the Prospectus through and including the date which is 180
days after the date of the Prospectus (which date may be extended for an
additional 18 days upon the occurrence of an earnings release, material
news or a material event) will vest or become exercisable for any shares
of Common Stock or Preferred Stock during such 180-day period (which
period may be extended for an additional 18 days upon the occurrence of an
earnings release, material news or a material event); and, during such
180-day period (or longer, if extended), the Company will not cause or
permit any waiver, release, modification or amendment of any such
restriction without the prior written consent of Wachovia on behalf of the
Underwriters; provided, however, that such restriction shall not apply to
up to 360,000 shares of Common Stock underlying all such stock options or
other stock awards that may be issued during such period.
(24) Nasdaq National Market. The outstanding shares of Common Stock
(including the Securities to be sold by the Selling Stockholders to the
Underwriters under this Agreement) and the Securities being sold hereunder
by the Company have been approved for listing, subject only to official
notice of issuance, on the Nasdaq National Market.
(25) NASD Matters. All of the information provided to the
Underwriters or to counsel for the Underwriters by the Company in
connection with letters, filings or other supplemental information
provided to NASD Regulation, Inc. pursuant to NASD Conduct Rule 2710 or
2720 is true, complete and correct; and all such information provided by
the Company's officers and directors and the holders of any securities
(debt or equity) or options to acquire any securities of the Company is,
to the Company's knowledge, true, complete and correct.
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(26) Tax Returns. The Company and the Subsidiary have filed all
foreign, federal, state and local tax returns that are required to be
filed or have requested extensions thereof, except where the failure so to
file would not, individually or in the aggregate, have a Material Adverse
Effect, and have paid all taxes required to be paid by them and any other
assessment, fine or penalty levied against them, to the extent that any of
the foregoing is due and payable, except for any such tax, assessment,
fine or penalty that is currently being contested in good faith by
appropriate actions and except for such taxes, assessments, fines or
penalties the nonpayment of which would not, individually or in the
aggregate, have a Material Adverse Effect. To the best of the Company's
knowledge, all material consequences, if any, resulting from the Company's
conversion from a Subchapter S corporation to a Subchapter C corporation
under the Code, and the Subsidiary's conversion from a Qualified
Subchapter S Subsidiary to a Subchapter C corporation under the Code, are
described in the Registration Statement and the Prospectus.
(27) Insurance. The Company and its Subsidiary are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which they
are engaged; all policies of insurance and any fidelity or surety bonds
insuring the Company or its Subsidiary or their respective businesses,
assets, employees, officers and directors are in full force and effect;
the Company and its Subsidiary are in compliance with the terms of such
policies and instruments in all material respects; there are no claims by
the Company or its Subsidiary under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor such Subsidiary has
been refused any insurance coverage sought or applied for; and neither the
Company nor such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect.
(28) Accounting Controls. The Company and its Subsidiary maintain a
system of internal accounting controls and procedures sufficient to
provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(29) Disclosure Controls. The Company and its Subsidiary have
established and maintain disclosure controls and procedures (as such term
is defined in Rule 13a-15(e) under the 1934 Act), which (i) are designed
to ensure that material information relating to the Company and its
Subsidiary is made known to the Company's principal executive officer and
its principal financial officer by others within those entities during the
periods in which the periodic reports required under the 1934 Act are
being prepared; and (ii) are effective in all material respects to perform
the functions for which they were
11
established. The Company is not aware of (x) any significant deficiency in
the design or operation of internal controls which could adversely affect
the Company's ability to record, process, summarize and report financial
data or any material weaknesses in internal controls; or (y) any fraud,
whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls.
(30) Absence of Manipulation. The Company has not taken and will not
take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Securities; provided that the foregoing shall
not prohibit transactions effected in compliance with Regulation M under
the 1933 Act.
(31) No Right of First Refusal. Neither the Company nor its
Subsidiary has any preemptive right, right of first refusal or other
similar right to purchase or otherwise acquire any of the Securities to be
sold by the Selling Stockholders to the Underwriters pursuant to this
Agreement.
(32) Tax Matters. To the best of the Company's knowledge,
immediately prior to the termination of its Subchapter S corporation
election on ___________, 2005, the Company meets, and at all times since
January 1, 2002 the Company has met, the requirements under Section
1361(b)(1) of the Code, including: (i) the Company is a domestic
corporation; (ii) the Company is not an ineligible corporation (as
described in Section 1361(b)(2) of the Code); (iii) the Company does not
have more than 75 stockholders; (iv) only individuals, decedents' estates,
estates of individuals in bankruptcy, and trusts qualifying under Section
1361(c)(2) of the Code are stockholders; (v) no stockholder is a
nonresident alien; (vi) the Company has only one class of stock; and (vii)
a valid election under Section 1362 of the Code was properly and timely
filed. The Subsidiary is a "Qualified Subchapter S Subsidiary" under
Section 1361(b)(3) of the Code, and a valid election to be taxed as a
Qualified Subchapter S Subsidiary was properly and timely filed. The
transactions pursuant to which the Company was reincorporated in the State
of Delaware in April 2005 constituted a tax-free reorganization pursuant
to Section 368(a)(1)(F) of the Code, and did not, nor will it, terminate
or otherwise adversely affect the Company's elections under Subchapter S
of the Code to be treated as a Subchapter S corporation or to treat its
Subsidiary as a Qualified Subchapter S Subsidiary.
(33) Xxxxxxxx-Xxxxx Act. The Company is in compliance with all of
the provisions of the Xxxxxxxx-Xxxxx Act of 2002 that are currently
applicable to it and all of the provisions of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations promulgated
pursuant to such Act that are currently applicable to the Company.
(34) Reserved Securities Program. No consent, approval,
authorization or order of, or qualification with, any governmental body or
agency, other than those obtained, is required in connection with the
offering of the Reserved Securities in any jurisdiction where the Reserved
Securities are being offered. The Company has not
12
offered, or caused the Underwriters to offer, Reserved Securities to any
person with the intent to unlawfully influence (i) a customer or supplier
of the Company to alter the customer's or supplier's level or type of
business with the Company, or (ii) a trade journalist or publication to
write or publish favorable information about the Company or its products.
(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder, severally and not jointly, represents and warrants to each
Underwriter as of the date hereof, as of the Closing Date and as of each Option
Closing Date (if any), and agrees with each Underwriter, as follows:
(1) Accurate Disclosure. At the respective times the Initial
Registration Statement, any Rule 462(b) Registration Statement or any
post-effective amendment thereto became or becomes effective, at the
Closing Date (and, if any Option Securities are purchased, at the
applicable Option Closing Date), and at any time when a prospectus is
required by applicable law to be delivered in connection with sales of
Securities, the information relating to such Selling Stockholder
(including the information with respect to such Selling Stockholder's
Securities and any other shares of Common Stock or other securities of the
Company which are owned or held by such Selling Stockholder) that is set
forth in the Initial Registration Statement or any Rule 462(b)
Registration Statement (or in any amendments thereto) or in any
preliminary prospectus or the Prospectus (or in any amendments or
supplements thereto) did not and will not contain an untrue statement of a
material fact and did not and will not omit to state a material fact
necessary in order to make such information not misleading; all
information relating to such Selling Stockholder furnished or confirmed
(orally or in writing) by or on behalf of such Selling Stockholder for use
in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) is and will be true, complete and correct; and such Selling
Stockholder is not prompted to sell the Securities to be sold by such
Selling Stockholder under this Agreement by any information concerning the
Company or its Subsidiary which is not set forth in the Prospectus.
(2) Underwriting Agreement. This Agreement has been duly authorized
(if applicable), executed and delivered by such Selling Stockholder.
(3) Power of Attorney; Custody Agreement. Such Selling Stockholder
has duly authorized (if applicable), executed and delivered a Power of
Attorney (a "Power of Attorney" and, with respect to such Selling
Stockholder, "its Power of Attorney") appointing each of
__________________ and ________________ as such Selling Stockholder's
attorney-in-fact (with respect to such Selling Stockholder, collectively,
the "Attorneys-in-Fact" and, individually, an "Attorney-in-Fact"), and a
Letter of Transmittal and Custody Agreement (a "Custody Agreement" and,
with respect to such Selling Stockholder, "its Custody Agreement") with
U.S. Stock Transfer Corporation, as custodian (the "Custodian"); each of
its Power of Attorney and its Custody Agreement constitutes a valid and
binding obligation of such Selling Stockholder, enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to creditors' rights
generally or by general
13
equitable principles; each of such Selling Stockholder's
Attorneys-in-Fact, acting alone, is authorized to execute and deliver this
Agreement and the certificates referred to in Sections 5(k) and 5(n)
hereof on behalf of such Selling Stockholder, to determine the purchase
price to be paid by the Underwriters to such Selling Stockholder for the
Securities to be sold by such Selling Stockholder under this Agreement, to
authorize the delivery to the Underwriters of the Securities to be sold by
such Selling Stockholder under this Agreement and to accept payment
therefor, to duly endorse (in blank or otherwise) the certificate or
certificates representing such Securities or a stock power or powers with
respect thereto and otherwise to act on behalf of such Selling Stockholder
in connection with this Agreement and the transactions contemplated
hereby.
(4) Good Standing. If such Selling Stockholder is not a natural
person, such Selling Stockholder has been duly organized and is validly
existing and (if required) in good standing under the laws of the
jurisdiction of its organization and such Selling Stockholder (if
required) is duly qualified to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(5) Power and Authority. Such Selling Stockholder has full right,
power and authority to execute, deliver and perform its obligations under
this Agreement, its Power of Attorney and its Custody Agreement and to
sell, transfer and deliver the Securities to be sold by such Selling
Stockholder under this Agreement.
(6) Non-Contravention. The execution, delivery and performance of
this Agreement, its Power of Attorney and its Custody Agreement by such
Selling Stockholder and the consummation of the transactions contemplated
by this Agreement, its Power of Attorney and its Custody Agreement
(including the sale and delivery of the Securities to be sold by such
Selling Stockholder pursuant to this Agreement), and compliance by such
Selling Stockholder with its obligations under this Agreement, its Power
of Attorney and its Custody Agreement, do not and will not, whether with
or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event under, or result
in the creation or imposition of any Lien upon any of the Securities to be
sold by such Selling Stockholder under this Agreement or any other
property or assets of such Selling Stockholder or any of its subsidiaries
(if any) pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, bond, note, debenture, evidence of indebtedness,
lease or other agreement or instrument to which such Selling Stockholder
or any of its subsidiaries (if any) is a party or by which such Selling
Stockholder or any of its subsidiaries (if any) is bound or to which any
of the property or assets of such Selling Stockholder or any of its
subsidiaries (if any) is subject, nor will such action result in any
violation of the provisions of the Organizational Documents of such
Selling Stockholder or any of its subsidiaries (if any) or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over such Selling Stockholder or any of its
subsidiaries (if any) or any of their respective assets, properties or
operations.
14
(7) Good and Marketable Title. Such Selling Stockholder is the sole
legal, record and beneficial owner of the Securities to be sold by such
Selling Stockholder under this Agreement and will remain the sole legal,
record and beneficial owner of such Securities until the delivery of such
Securities to the Underwriters on the Closing Date or the applicable
Option Closing Date, as the case may be; provided, however, that if such
Selling Stockholder is a trust, the trustees and beneficiaries of such
Selling Stockholder may be deemed to beneficially own the Securities to be
sold by such Selling Stockholder under this Agreement. The Securities to
be sold by such Selling Stockholder under this Agreement are and, until
delivery thereof to the Underwriters on the Closing Date or the applicable
Option Closing Date, as the case may be, will be free and clear of all
Liens other than pursuant to this Agreement; upon payment of the
consideration for the Securities to be sold by such Selling Stockholder as
provided in this Agreement and the crediting of such Securities to the
security account or accounts of the Underwriters maintained with The
Depository Trust Company, each of the Underwriters will become the legal
owner of the Securities purchased by it from such Selling Stockholder,
free and clear of all Liens, and, assuming that none of the Underwriters
has "notice of an adverse claim" (within the meaning of Section 8-105 of
the Uniform Commercial Code of the State of New York (the "UCC")) with
respect to such Securities, each of the Underwriters will acquire a
"security entitlement" (within the meaning of UCC Section 8-102(a)(17)) to
the Securities purchased by such Underwriter from such Selling
Stockholder, and no action based on any "adverse claim" (within the
meaning of UCC Section 8-102(a)(1)) may be asserted successfully against
such Underwriter with respect to such Securities.
(8) Absence of Rights of First Refusal. The Securities to be sold by
such Selling Stockholder under this Agreement are not subject to any
option, warrant, put, call, right of first refusal or other right to
purchase or otherwise acquire any such Securities other than pursuant to
this Agreement.
(9) Absence of Manipulation. Such Selling Stockholder has not taken
and will not take, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result
in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities; provided that
the foregoing shall not prohibit transactions effected in compliance with
Regulation M under the 1933 Act.
(10) Absence of Further Requirements. (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
domestic or foreign, (B) no authorization, approval, vote or other consent
of any stockholder (or other equity owner), if any, or creditor of such
Selling Stockholder, and (C) no authorization, approval, vote or other
consent of any other person or entity, is necessary or required for the
execution or delivery by such Selling Stockholder of, or the performance
by such Selling Stockholder of its obligations under, this Agreement, its
Custody Agreement or its Power of Attorney, for the sale and delivery by
such Selling Stockholder of the Securities to be sold by it under this
Agreement, or for the consummation by such Selling Stockholder of the
other transactions contemplated by this Agreement, its Custody Agreement
or its Power of
15
Attorney, except such as (i) have already been obtained, (ii) may be
required under the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
1934 Act Regulations or state securities sky laws, (iii) may be required
by the NASD or (iv) may be required under the laws of any foreign
jurisdiction in which the Securities may be offered or sold.
(11) Restriction on Sale of Securities. Such Selling Stockholder
will not, without the prior written consent of Wachovia on behalf of the
Underwriters, offer, sell, contract to sell, pledge or otherwise dispose
of (or enter into any transaction that is designed to, or might reasonably
be expected to, result in the disposition of (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the such Selling Stockholder), directly or indirectly,
including the filing (or participation in the filing) of a registration
statement with the Commission in respect of, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the 1934 Act and the 1934 Act
Regulations with respect to, any shares of Common Stock, Preferred Stock
or other capital stock of the Company or any securities convertible into
or exercisable or exchangeable for such Common Stock, Preferred Stock or
other capital stock (whether owned by such Selling Stockholder at the date
of this Agreement or subsequently acquired by such Selling Stockholder)
(collectively, the "Capital Stock"), or publicly announce an intention to
effect any such transaction, for a period beginning on and including the
date of the Prospectus through and including the date which is 180 days
after the date of the Prospectus. If (1) during the last 17 days of the
180-day restricted period, the Company issues an earnings release or
discloses material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 180-day restricted period,
the Company announces that it will release earnings results during the
16-day period beginning on the last day of the 180-day period, then the
restrictions imposed by this subsection shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release, the disclosure of material news or the occurrence of the material
event, as applicable. The foregoing restrictions shall not apply to (a)
the Securities to be sold pursuant to this Agreement, or (b) transactions
relating to shares of Capital Stock acquired in open market transactions
after the Closing Date, or (c) the establishment of a Capital Stock
trading plan pursuant to Rule 10b5-1 under the 1934 Act, provided that
such plan is approved in advance by Wachovia and provided further that no
transfers occur under such plan during the restricted period referred to
in this subsection, or (d) transfers of shares of Capital Stock as a bona
fide gift or gifts, or by will or intestacy, to any member of the Selling
Stockholder's immediate family, to a trust the beneficiaries of which are
exclusively the Selling Stockholder or members of the Selling
Stockholder's immediate family, or to charitable or educational
organizations, or (e) distributions of shares of Capital Stock to limited
partners, limited liability company members or stockholders of the Selling
Stockholder, or (f) distributions by a trust to its beneficiaries of
shares of Capital Stock; provided, however, that in the case of any
transfer pursuant to clauses (d), (e) or (f), (i) the Selling Stockholder
provides written notice of such transfer to Wachovia no later than three
business days prior to such transfer, (ii) the transferee executes and
delivers to Wachovia, not later than one business day prior to such
transfer, an agreement, in form and substance reasonably satisfactory to
Wachovia, substantially to the effect set forth in this subsection (it
being understood that any references to "immediate family" in the
agreement executed by such transferee shall
16
expressly refer only to the immediate family of such Selling Stockholder),
(iii) neither the Selling Stockholder nor the transferee shall publicly
disclose the transfer, except to the extent required by law and (iv) the
Selling Stockholder shall not be required to, and shall not voluntarily,
file a report under Section 16(a) of the 1934 Act, reporting a reduction
in beneficial ownership of shares of Common Stock during the restricted
period referred to in this subsection. For purposes of this paragraph,
"immediate family" shall mean a spouse, lineal descendent, father, mother,
brother or sister of such Selling Stockholder.
(12) Certificates Suitable for Transfer. Certificates for all of the
Securities to be sold by such Selling Stockholder pursuant to this
Agreement, in form suitable for transfer by delivery and accompanied by
duly executed stock powers endorsed in blank by such Selling Stockholder
with signatures guaranteed, have been placed in custody with the Custodian
for the purpose of effecting delivery hereunder and thereunder.
(13) Absence of Preemptive Rights. Such Selling Stockholder does not
have any preemptive rights, rights of first refusal or other similar
rights to purchase or otherwise acquire any of the Securities that are to
be sold by the Company or any of the other Selling Stockholders pursuant
to this Agreement.
(14) Accuracy of Other Representations. Such Selling Stockholder has
no reason to believe that the representations and warranties of the
Company set forth in Section 1(a) of this Agreement are not true and
correct and has no knowledge of any fact, condition or information not
disclosed in the Prospectus which has had or may have a Material Adverse
Effect.
(c) Certificates. Any certificate signed by any officer of the Company or
its Subsidiary and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby; and any certificate signed
by or on behalf of any Selling Stockholder and delivered to the Representatives
or counsel for the Underwriters shall be deemed a representation and warranty by
such Selling Stockholder to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and each of the Selling Stockholders, severally and not jointly, agrees
to sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company and each Selling
Stockholder, at the price of $______ per share (the "Purchase Price"), that
proportion of the number of Initial Securities set forth in Exhibit D opposite
the name of the Company or such Selling Stockholder, as the case may be, which
the number of Initial Securities set forth in Exhibit A opposite the name of
such Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject in
each case to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional Securities. The price at which the Securities shall initially be
offered to the public is $_____ per share.
17
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company and each of the Selling Stockholders, severally and not
jointly, hereby grants an option to the Underwriters, severally and not jointly,
to purchase up to the respective numbers of Option Securities set forth in
Exhibit E opposite the names of the Company and the Selling Stockholders at a
price per share equal to the Purchase Price referred to in Section 2(a) above;
provided that the price per share for any Option Securities shall be reduced by
an amount per share equal to any dividends or distributions (other than the
Existing Stockholder Dividend) declared by the Company and payable on the
Initial Securities but not payable on such Option Securities. The option hereby
granted will expire at the close of business on the 30th day after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by the
Representatives to the Company and the Selling Stockholders setting forth the
number of Option Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Securities. Any such time and date of delivery (an "Option Closing Date")
shall be determined by the Representatives, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Date, as hereinafter defined. If the option is exercised as to all
or any portion of the Option Securities, the Company and each of the Selling
Stockholders, severally and not jointly, will sell to the Underwriters that
proportion of the total number of Option Securities then being purchased which
the number of Option Securities set forth in Exhibit E opposite the name of the
Company or such Selling Stockholder, as the case may be, bears to the total
number of Option Securities set forth in Exhibit E, and each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Exhibit A opposite the name of such Underwriter,
plus any additional number of Initial Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof,
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Xxxxxx
& Xxxxxxx LLP, 00 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, or at such other
place as shall be agreed upon by the Representatives and the Company, at 9:00
A.M. (Eastern time) on ____________, 2005 (unless postponed in accordance with
the provisions of Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Representatives and the
Company (such time and date of payment and delivery being herein called "Closing
Date").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Option Closing Date as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Selling Stockholders by wire transfer of
immediately available funds to a single bank account at the Custodian, which
account shall be designated by
18
the Custodian, and payment shall be made to the Company by wire transfer of
immediately available funds to a single bank account designated by the Company,
in each case against delivery to the Representatives through the facilities of
The Depository Trust Company for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Wachovia, individually and not as representative of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Date or the
relevant Option Closing Date, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Date or the relevant Option Closing Date, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives not later than noon (Eastern time) on the business day prior to
the Closing Date or the relevant Option Closing Date, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A and will notify the Representatives immediately, and confirm the
notice in writing, (i) when the Initial Registration Statement, any Rule
462(b) Registration Statement or any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information,
and (iv) 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 of the suspension
of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the document transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in
the event that it was not, it will promptly file such document. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)) or any
amendment, supplement or revision to either the
19
prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act or
otherwise, will furnish the Representatives with copies of any such
documents within a reasonable amount of time prior to such proposed filing
or use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith)
and signed copies of all consents and certificates of experts. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the
period when the Prospectus is required to be delivered under the 1933 Act
or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus
and any amendments or supplements thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of
the Securities as contemplated in this Agreement and in the Prospectus. If
at any time when a prospectus is required by the 1933 Act to be delivered
in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion
of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b) hereof, such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to
the Underwriters such number of copies of such amendment or supplement as
the Underwriters may reasonably request.
20
(f) Blue Sky Qualifications. The Company will use its commercially
reasonable best efforts, in cooperation with the Underwriters, to qualify
the Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Representatives may reasonably designate and to maintain such
qualifications in effect for a period of not less than one year from the
date of this Agreement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the date of this
Agreement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the Nasdaq National Market.
(j) Restriction on Sale of Securities. The Company will not, without
the prior written consent of Wachovia on behalf of the Underwriters,
offer, sell, contract to sell, pledge or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be expected
to, result in the disposition of (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by the
Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company), directly or indirectly,
including the filing (or participation in the filing) of a registration
statement with the Commission in respect of, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the 1934 Act and the 1934 Act
Regulations with respect to, any shares of the Company's Common Stock,
Preferred Stock or other capital stock or any securities convertible into,
or exercisable or exchangeable for, shares of the Company's Common Stock,
Preferred Stock or other capital stock, or publicly announce an intention
to effect any such transaction, for a period beginning on and including
the date of the Prospectus through and including the date which is 180
days after the date of the Prospectus. If (1) during the last 17 days of
the 180-day restricted period, the Company issues an earnings release or
discloses material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 180-day restricted period,
the Company announces that it will release earnings results during the
16-day period beginning on the last day of the 180-day period, then the
restrictions imposed by this subsection shall continue to apply until the
expiration of the 18-day period beginning
21
on the issuance of the earnings release, the disclosure of material news
or the occurrence of the material event, as applicable. The foregoing
restrictions notwithstanding, the Company may (A) issue and sell
Securities pursuant to this Agreement, (B) issue and sell Common Stock and
options to purchase Common Stock pursuant to any employee or director
stock option or stock purchase plans as in effect on the date of this
Agreement (so long as each such plan is described in the Prospectus), and
(C) issue Common Stock upon the exercise of stock options outstanding on
the date of this Agreement and referred to in the Prospectus or stock
options issued after the date of this Agreement pursuant to any such plan
referred to in clause (B) of this sentence.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time periods required by the 1934 Act and the
1934 Act Regulations.
(l) Preparation of Prospectus. Immediately following the execution
of this Agreement, the Company will, subject to Section 3(b) hereof,
prepare the Prospectus containing the Rule 430A Information and other
selling terms of the Securities, the plan of distribution thereof and such
other information as may be required by the 1933 Act or the 1933 Act
Regulations or as the Representatives and the Company may deem
appropriate, and will file or transmit for filing with the Commission, in
accordance with Rule 424(b), copies of the Prospectus.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations and the obligations of the Selling Stockholders
under this Agreement (except for expenses payable by the Selling Stockholders
pursuant to Section 4(b) hereof), including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the word
processing, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the counsel,
accountants and other advisors to the Company and of one legal counsel to
represent the interests of all of the Selling Stockholders, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplements
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplements thereto, (viii) the fees and
expenses of the Custodian and the transfer agent and registrar for the
Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the NASD of the terms of the sale of the Securities, (x) the fees and expenses
incurred in connection with the
22
listing of the Securities on the Nasdaq National Market, and (xi) the
disbursements of counsel for the Underwriters in connection with the copying and
delivery of closing documents delivered by the Company or the Company's
accountants or counsel (including any local counsel).
(b) Expenses of the Selling Stockholders. Each Selling Stockholder,
severally and not jointly, will pay the following expenses incident to the
performance of its obligations under this Agreement: (i) any stock transfer
taxes, stamp duties, capital duties or other similar duties, taxes or charges,
if any, payable in connection with the sale or delivery of its Securities to the
Underwriters (and such Selling Stockholder hereby authorizes the payment of any
such amounts by deduction from either the proceeds of the Securities to be sold
by such Selling Stockholder under this Agreement or from any funds from time to
time held for the account of such Selling Stockholder by the Custodian), (ii)
the fees and disbursements of its accountants, and (iii) underwriting discounts
and commissions with respect to the Securities sold by it to the Underwriters.
(c) Allocation of Expenses. Anything herein to the contrary
notwithstanding, the provisions of this Section 4 shall not affect any agreement
that the Company and the Selling Stockholders have made or may make for the
allocation or sharing of such expenses and costs.
(d) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) or (v) hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder on the Closing Date and on each Option Closing
Date are subject to the accuracy of the representations and warranties of the
Company and the Selling Stockholders contained in this Agreement or in
certificates of any officer of the Company or its Subsidiary or signed by or on
behalf of any Selling Stockholder delivered pursuant to the provisions hereof,
to the performance by the Company and the Selling Stockholders of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Date (or the applicable Option Closing Date, as
the case may be) no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or, to the knowledge of the Company,
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. The Prospectus
shall have been filed with the Commission pursuant to Rule 424(b) within
the time period prescribed by such Rule, and prior to Closing Date, the
Company shall have provided evidence satisfactory to the Representatives
of such timely filing.
(b) Opinion and Negative Assurance Letter of Counsel for Company. At
the Closing Date, the Representative shall have received the favorable
opinion and a negative assurance letter, dated as of Closing Date, of
Xxxxxx & Xxxxxxx LLP, counsel for the
23
Company ("Company Counsel"), in form and substance satisfactory to counsel
for the Underwriters, together with signed or reproduced copies of such
letter for each of the other Underwriters, to such effect as counsel to
the Underwriters may reasonably request.
(c) Opinion of Counsel for Underwriters. At the Closing Date, the
Representatives shall have received the favorable opinion, dated as of the
Closing Date, of Xxxxxx & Whitney LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the
other Underwriters, in form and substance reasonably satisfactory to the
Underwriters. In giving such opinion such counsel may rely without
investigation, as to all matters arising under or governed by the laws of
the State of Delaware, on the opinion of Company Counsel referred to in
Section 5(b) above, and as to all matters governed by the laws of any
jurisdictions other than the federal law of the United States and the
Delaware General Corporation Law, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
its Subsidiary and of public officials.
(d) Officers' Certificate. At the Closing Date or the applicable
Option Closing Date, as the case may be, there shall not have been, since
the date hereof or since the respective dates as of which information is
given in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement), any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its Subsidiary
considered as one enterprise, whether or not arising in the ordinary
course of business, and, at the Closing Date, the Representatives shall
have received a certificate of the President or the Chief Executive
Officer of the Company and of the Chief Financial Officer of the Company,
dated as of Closing Date, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties of the
Company in this Agreement are true and correct with the same force and
effect as though expressly made at and as of Closing Date, (iii) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Date under or
pursuant to this Agreement, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or, to
their knowledge, are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Representatives shall have received from each of
Deloitte & Touche LLP and Xxxx Xxxxx LLP a letter, dated the date of this
Agreement and in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter for each of the
other Underwriters, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information of
the Company and its Subsidiary contained in the Registration Statement or
the Prospectus.
(f) Bring-down Comfort Letter. At the Closing Date, the
Representatives shall have received from each of Deloitte & Touche LLP and
Xxxx Xxxxx LLP a letter, dated as of Closing Date and in form and
substance satisfactory to the Representatives, to
24
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Date.
(g) Approval of Listing. At the Closing Date and each Option Closing
Date, if any, the Securities to be purchased by the Underwriters at such
time shall have been approved for listing on the Nasdaq National Market,
subject only to official notice of issuance.
(h) Lock-up Agreements. Prior to the date of this Agreement, the
Representatives shall have received an agreement substantially in the form
of Exhibit C hereto signed by each person referred to in the first
sentence of Section 1(a)(23).
(i) No Objection. Prior to the date of this Agreement, NASD
Regulation, Inc. shall have confirmed in writing that it has no objection
with respect to the fairness and reasonableness of the underwriting terms
and arrangements.
(j) Opinion of Counsel for the Selling Stockholders. At the Closing
Date, the Representatives shall have received the favorable opinion, dated
as of the Closing Date, of Bainbridge Law Group, P.C., counsel for the
Selling Stockholders, in form and substance satisfactory to counsel for
the Underwriters, together with signed or reproduced copies of such letter
for each of the other Underwriters, to such effect as counsel to the
Underwriters may reasonably request.
(k) Certificate of Selling Stockholders. At the Closing Date, the
Representatives shall have received a certificate signed by an
Attorney-in-Fact on behalf of the Selling Stockholders, dated as of the
Closing Date, to the effect that (i) the representations and warranties of
each Selling Stockholder in this Agreement are true and correct with the
same force and effect as though expressly made at and as of the Closing
Date, (ii) each such Selling Stockholder has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied at
or prior to the Closing Date under or pursuant to this Agreement, and
(iii) each Selling Stockholder has reviewed and is familiar with the
Prospectus and any amendments or supplements thereto and the information
relating to such Selling Stockholder (including the information with
respect to such Selling Stockholder's Securities and any other shares of
Common Stock or other securities of the Company which are owned or held by
such Selling Stockholder) that is set forth in the Prospectus (or any
amendment or supplement thereto) does not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to
make such information not misleading.
(l) Tax Forms. Prior to the Closing Date, the Representatives shall
have received a properly completed and executed United States Treasury
Department Form W-9 or W-8 (or other applicable form) from each of the
Selling Stockholders.
(m) Pre-Closing Transactions. Prior to the purchase of the Initial
Securities on the Closing Date, the Pre-Closing Transactions shall have
been duly consummated on the terms contemplated by this Agreement and the
Prospectus and the Representatives
25
shall have received a copy of the amended and restated certificate of
incorporation of the Company certified by the Secretary of State of the
State of Delaware and such other evidence that the Pre-Closing
Transactions have been consummated as the Representatives may reasonably
request.
(n) Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities on any Option Closing
Date that is after the Closing Date, the obligations of the several
Underwriters to purchase the applicable Option Securities shall be subject
to the conditions specified in the introductory paragraph of this Section
5 and to the further condition that, at the applicable Option Closing
Date, the Representatives shall have received:
(1) Officers' Certificate. A certificate, dated such Option Closing
Date, to the effect set forth in, and signed by two of the officers
specified in, Section 5(d) hereof, except that the references in
such certificate to the Closing Date shall be changed to refer to
such Option Closing Date.
(2) Opinion of Counsel for Company. The favorable opinion of Xxxxxx
& Xxxxxxx LLP, Company Counsel, in form and substance satisfactory
to counsel for the Underwriters, dated such Option Closing Date,
relating to the Option Securities to be purchased on such Option
Closing Date and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(3) Opinion of Counsel for Underwriters. The favorable opinion of
Xxxxxx & Xxxxxxx LLP, counsel for the Underwriters, dated such
Option Closing Date, relating to the Option Securities to be
purchased on such Option Closing Date and otherwise to the same
effect as the opinion required by Section 5(c) hereof.
(4) Bring-down Comfort Letter. A letter from each of Deloitte &
Touche LLP and Xxxx Xxxxx LLP, in form and substance satisfactory to
the Representatives and dated such Option Closing Date,
substantially in the same form and substance as the respective
letters furnished to the Representatives pursuant to Section 5(f)
hereof, except that the "specified date" in the respective letters
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Option Closing Date.
(5) Opinion of Counsel for Selling Stockholders. The favorable
opinion of Bainbridge Law Group, P.C., counsel for the Selling
Stockholders, dated such Option Closing Date, relating to the Option
Securities to be purchased on such Option Closing Date and otherwise
to the same effect as the opinion required by Section 5(j) hereof.
(6) Certificate of Selling Stockholders. A certificate, dated such
Option Closing Date, signed by an Attorney-in-Fact on behalf of the
Selling Stockholders, to the effect set forth in Section 5(k)
hereof, except that the
26
references in such certificate to the Closing Date shall be changed
to refer to such Option Closing Date.
(o) Additional Documents. At the Closing Date and at each Option
Closing Date, counsel for the Underwriters shall have been furnished with
such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, contained in this Agreement; and all proceedings taken by the
Company and the Selling Stockholders in connection with the issuance and
sale of the Securities as herein contemplated and in connection with the
other transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Representatives and counsel for
the Underwriters.
(p) Termination of Agreement. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on an Option Closing Date which is after the
Closing Date, the obligations of the several Underwriters to purchase the
relevant Option Securities, may be terminated by the Representatives by
notice to the Company and the Selling Stockholders at any time on or prior
to Closing Date or such Option Closing Date, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 hereof and except that Sections 1, 6, 7
and 8 hereof shall survive any such termination and remain in full force
and effect.
SECTION 6. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, (A) arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (B) arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any material prepared by or with the consent of the Company for
distribution to Reserved Security Offerees in connection with the offer
and sale of the Reserved Securities, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (C) arising out of any
untrue statement or alleged untrue statement of a material fact included
in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
27
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(d) below, the fees and disbursements of
counsel chosen by Wachovia), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above,
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Wachovia expressly for use in the Registration Statement (or
any amendment thereto), or in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and provided, further, that this indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
liabilities, claims, damages or expenses purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any such amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if such is required by the 1933 Act or the 1933 Act Regulations,
at or prior to the written confirmation of the sale of such Securities to such
person and if the Prospectus (as so amended or supplemented, if applicable)
would have corrected the defect giving rise to such loss, liability, claim,
damage or expense.
(b) Indemnification by Selling Stockholders. Each Selling Stockholder,
severally and not jointly, agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, the
Company, its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section 6, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with information relating to such Selling
Stockholder furnished or confirmed (in each case orally or in writing) to the
Company by or on behalf of such Selling Stockholder expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); provided, however,
that this indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any
28
Underwriter from whom the person asserting any such losses, liabilities, claims,
damages or expenses purchased Securities, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any such amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if such is
required by the 1933 Act or the 1933 Act Regulations, at or prior to the written
confirmation of the sale of such Securities to such person and if the Prospectus
(as so amended or supplemented, if applicable) would have corrected the defect
giving rise to such loss, liability, claim, damage or expense; and provided,
further, that the liability under this subsection (b) of any Selling Stockholder
shall be limited to an amount equal to the sum of (i) the aggregate gross
proceeds after underwriting commissions and discounts, but before expenses, to
such Selling Stockholder from the sale of Securities sold by such Selling
Stockholder hereunder and (ii) the amount that such Selling Stockholder receives
pursuant to the Existing Stockholder Dividend.
(c) Indemnification by Underwriters. Each Underwriter severally agrees to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section 6, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Wachovia
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. Counsel to the indemnified parties shall be selected as follows:
counsel to the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall be selected by Wachovia; counsel to the Selling Stockholders
shall be selected by those Selling Stockholders who agreed to sell a majority of
the Initial Securities to be sold by all of the Selling Stockholders in this
offering; and, counsel to the Company, its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall
the indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
the Underwriters and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, the
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for the
29
Selling Stockholders, and the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for the Company,
its directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, in each case in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(f) Other Agreements with Respect to Indemnification and Contribution. The
provisions of this Section 6 and in Section 7 hereof shall not affect any
agreements among the Company and the Selling Stockholders with respect to
indemnification of each other or contribution between themselves.
(g) Additional Indemnification for Reserved Securities. The Company agrees
to indemnify and hold harmless each Underwriter, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage,
settlement amount and expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by Wachovia reasonably incurred in any such
claim or action), arising out of the failure of any Reserved Security Offeree to
pay for and accept delivery of Reserved Securities which such Reserved Security
Offeree agreed (orally or in writing) to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand from
the offering of the Securities (or the Reserved
30
Securities, as the case may be) pursuant to this Agreement or (ii) if the
allocation provided by clause (i) 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 the
Selling Stockholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling Stockholders
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities (or the Reserved Securities, as the case may be)
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities (or
the Reserved Securities, as the case may be) pursuant to this Agreement (before
deducting expenses) received by the Company and the Selling Stockholders and the
total underwriting discounts and commissions received by the Underwriters for
the Securities (or the Reserved Securities, as the case may be), in each case as
set forth on the cover of the Prospectus, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholders on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company 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, the Selling Stockholders 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 purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities (or the Reserved Securities, as the case may be)
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
31
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Exhibit A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or its Subsidiary or signed by or on
behalf of any Selling Stockholder submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, or by or on behalf of any Selling Stockholder, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time on
or prior to Closing Date (and, if any Option Securities are to be purchased on
an Option Closing Date which occurs after the Closing Date, the Representatives
may terminate the obligations of the several Underwriters to purchase such
Option Securities, by notice to the Company and the Selling Stockholders set
forth in Exhibit E, at any time on or prior to such Option Closing Date) (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiary considered as one enterprise, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any material adverse change in
the financial markets in the United States or the international financial
markets, any outbreak of hostilities or escalation thereof or other calamity or
crisis or any change or development involving a prospective change in national
or international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the Nasdaq
National Market, or if trading generally on the American Stock Exchange or the
NYSE or in the Nasdaq National Market has been suspended or materially limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States or in Europe, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities or (v) if
there shall have occurred, since the time of execution of this Agreement, any
downgrading in the rating of any debt securities or preferred stock of the
Company, or of the securities of any subsidiary trust of the Company, by any
"nationally recognized statistical rating organization" (as defined by the
Commission for purposes of Rule 436 under the 0000 Xxx) or any public
announcement that any
32
such organization has under surveillance or review its ratings on any such debt
securities, preferred stock or securities of a subsidiary trust (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating) or any announcement by
any such organization that the Company has been placed on negative outlook.
(b) Liabilities. If this Agreement is terminated pursuant to this Section
9, such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 hereof shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Date or an Option Closing Date to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with
respect to any Option Closing Date which occurs after the Closing Date,
the obligation of the Underwriters to purchase and of the Company and the
Selling Stockholders to sell the Option Securities that were to have been
purchased and sold on such Option Closing Date, shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of an Option Closing Date which is after the
Closing Date, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company and the Selling Stockholders to sell
the relevant Option Securities, as the case may be, the Representatives shall
have the right to postpone Closing Date or the relevant Option Closing Date, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
33
SECTION 11. Notices. 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 directed to the Representatives at Wachovia Capital
Markets, LLC, 0 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention of
_____________; notices to the Company shall be directed to it at 0000 Xxxxxxxx
Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention of the Chief Financial Officer;
and notices to the Selling Stockholders shall be directed to them in care of
____________, as Attorney-in-Fact at c/o.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Underwriters, the Company and the Selling Stockholders and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and the Selling Stockholders and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Section and Exhibit headings herein
are for convenience only and shall not affect the construction hereof.
SECTION 15. Definitions. As used in this Agreement, the following terms
have the respective meanings set forth below:
"Commission" means the Securities and Exchange Commission.
"Company Documents" means any contracts, indentures, mortgages, deeds of
trust, loan or credit agreements, bonds, notes, debentures, evidences of
indebtedness, leases or other instruments or agreements to which the Company or
its Subsidiary is a party or by which the Company or its Subsidiary is bound or
to which any of the property or assets of the Company or its Subsidiary is
subject.
"XXXXX" means the Commission's Electronic Data Gathering, Analysis and
Retrieval System.
"GAAP" means generally accepted accounting principles.
34
"Initial Registration Statement" means the Company's registration
statement on Form S-1 (Registration No. 333-124498), as amended (if applicable),
at the time it became effective, including the Rule 430A Information.
"Lien" means any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
"NASD" means the National Association of Securities Dealers, Inc.
"Organizational Documents" means (a) in the case of a corporation, its
charter and bylaws; (b) in the case of a limited or general partnership, its
partnership certificate, certificate of formation or similar organizational
document and its partnership agreement; (c) in the case of a limited liability
company, its articles of organization, certificate of formation or similar
organizational documents and its operating agreement, limited liability company
agreement, membership agreement or other similar agreement; (d) in the case of a
trust, its certificate of trust, certificate of formation or similar
organizational document and its trust agreement or other similar agreement; and
(e) in the case of any other entity, the organizational and governing documents
of such entity.
"Preferred Stock" means the Company's preferred stock, par value $0.001
per share.
"preliminary prospectus" means any prospectus used in connection with the
offering of the Securities that was used before the Initial Registration
Statement became effective, or that was used after such effectiveness and prior
to the execution and delivery of this Agreement, or that omitted the Rule 430A
Information or that was captioned "Subject to Completion".
"Registration Statement" means the Initial Registration Statement;
provided that, if a Rule 462(b) Registration Statement is filed with the
Commission, then the term "Registration Statement" shall also include such Rule
462(b) Registration Statement.
"Repayment Event" means any event or condition which gives the holder of
any bond, note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or its
Subsidiary.
"Rule 424(b)" "Rule 430A" and "Rule 462(b)" refer to such rules under the
1933 Act.
"Rule 430A Information" means the information included in the Prospectus
that was omitted from the Initial Registration Statement at the time it became
effective but that is deemed to be a part of the Initial Registration Statement
at the time it became effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" means a registration statement filed
by the Company pursuant to Rule 462(b) for the purpose of registering any of the
Securities under the 1933 Act, including the Rule 430A Information.
"Subject Instruments" means any Company Documents that are filed as
exhibits to the Registration Statement, or any amendment thereto, pursuant to
Item 601(b)(10) of Regulation S-K of the Commission.
35
"1933 Act" means the Securities Act of 1933, as amended.
"1933 Act Regulations" means the rules and regulations of the Commission
under the 1933 Act.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1934 Act Regulations" means the rules and regulations of the Commission
under the 1934 Act.
"1940 Act" means the Investment Company Act of 1940, as amended.
All references to the Registration Statement, the Initial Registration
Statement, any Rule 462(b) Registration Statement, any preliminary prospectus,
the Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to XXXXX.
[SIGNATURE PAGE FOLLOWS]
36
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
VOLCOM, INC.,
A DELAWARE CORPORATION
By
--------------------------------
Name:
Title:
[NAMES OF SELLING STOCKHOLDERS]
By
--------------------------------
Name:
Attorney-in-Fact
CONFIRMED AND ACCEPTED, as of the
date first above written:
WACHOVIA CAPITAL MARKETS, LLC
X.X. XXXXXXXX & CO.
XXXXX XXXXXXX & CO.
By: WACHOVIA CAPITAL MARKETS, LLC
By
--------------------------------
Authorized Signatory
For themselves and as Representative of the Underwriters named in Exhibit A
hereto.
37
EXHIBIT A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Wachovia Capital Markets, LLC...............................
X.X. Xxxxxxxx & Co..........................................
Xxxxx Xxxxxxx & Co..........................................
.............................................................
----------
Total......................................
==========
A-1
EXHIBIT B
LIST OF DIRECTORS AND OFFICERS
Xxxxxxx X. Xxxxxxxx President, Chief Executive Officer and Director
Xxxxxxx X. Xxxxxxx Chief Financial Officer, Secretary and Treasurer
Xxxxx X. Steris Chief Operating Officer
Xxx X. Xxxx Vice President of Sales
Xxxx X. Xxxxxx Vice President of Marketing
Xxxx X. Xxxxxxxx Chairman
Xxxxxxx X. Xxxxxx Director
Xxxxxxx X. Xxxxx Director
Xxxxxx X. Xxxxx Director
Xxxx X. Xxxxxx Director
Xxxxx X. Xxxxx Director
B-1
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
VOLCOM, INC.
Public Offering of Common Stock
__________, 2005
Wachovia Capital Markets, LLC
As Representative of the several Underwriters
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
This agreement (this "Agreement") is being delivered to you in connection
with the proposed Underwriting Agreement (the "Underwriting Agreement") between
Volcom, Inc. (prior to the proposed merger with Volcom, Inc., Stone Boardwear,
Inc.) (together, the "Company"), and Wachovia Capital Markets, LLC, as
representative or one of the representatives of a group of underwriters (the
"Underwriters"), and the other parties thereto (if any), to be named therein,
relating to an underwritten public offering (the "Public Offering") of common
stock, par value $0.001 per share (the "Common Stock"), of the Company.
In order to induce the Underwriters to enter into the Underwriting
Agreement, the undersigned agrees that the undersigned will not, without the
prior written consent of Wachovia Capital Markets, LLC on behalf of the
Underwriters, offer, sell, contract to sell, pledge or otherwise dispose of (or
enter into any transaction that is designed to, or might reasonably be expected
to, result in the disposition of (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the undersigned),
directly or indirectly, including the filing (or participation in the filing) of
a registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of Common Stock, preferred stock, par value $0.001 per share ("Preferred
Stock"), or other capital stock of the Company or any securities convertible
into or exercisable or exchangeable for any such Common Stock, Preferred Stock
or other capital stock (whether owned by the undersigned at the date of this
Agreement or subsequently acquired by the undersigned) (collectively,
"Securities"), or publicly announce an intention to effect any such transaction,
for a period beginning on and including the
C-1
date of the final prospectus relating the Public Offering (the "Prospectus")
through and including the date which is 180 days after the date of the
Prospectus.
If (1) during the last 17 days of the 180-day restricted period, the
Company issues an earnings release or discloses material news or a material
event relating to the Company occurs; or (2) prior to the expiration of the
180-day restricted period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the 180-day
period, then the restrictions imposed by this Agreement shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the
earnings release, the disclosure of material news or the occurrence of the
material event, as applicable.
The foregoing restrictions shall not apply to (a) the shares of Securities
proposed to be sold pursuant to the Underwriting Agreement, or (b) transactions
relating to shares of Securities acquired in open market transactions after the
completion of the Public Offering, or (c) the establishment of a Securities
trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934,
as amended, provided that such plan is approved in advance by Wachovia Capital
Markets, LLC and provided further that no transfers occur under such plan during
the restricted period referred to herein, or (d) transfers of shares of
Securities as a bona fide gift or gifts, or by will or intestacy, to any member
of the undersigned's immediate family, to a trust the beneficiaries of which are
exclusively the undersigned or members of the undersigned's immediate family, or
to charitable or educational organizations, or (e) distributions of shares of
Securities to limited partners, limited liability company members or
stockholders of the undersigned, or (f) distributions by a trust to its
beneficiaries of shares of Securities; provided, however, that in the case of
any transfer pursuant to clauses (d), (e) or (f), (i) the undersigned provides
written notice of such transfer to Wachovia Capital Markets, LLC no later than
three business days prior to such transfer, (ii) the transferee executes and
delivers to Wachovia Capital Markets, LLC, not later than one business day prior
to such transfer, an agreement, in form and substance reasonably satisfactory to
Wachovia Capital Markets, LLC and in substantially the form of this Agreement
(it being understood that any references to "immediate family" in the agreement
executed by such transferee shall expressly refer only to the immediate family
of the undersigned), (iii) neither the undersigned nor the transferee shall
publicly disclose the transfer, except to the extent required by law and (iv)
the undersigned shall not be required to, and shall not voluntarily, file a
report under Section 16(a) of the Securities Exchange Act of 1934, reporting a
reduction in beneficial ownership of shares of Common Stock during the
restricted period referred to herein. For purposes of this paragraph, "immediate
family" shall mean a spouse, lineal descendent, father, mother, brother or
sister of the undersigned.
In addition, the undersigned agrees that, without the prior written
consent of Wachovia Capital Markets, LLC on behalf of the Underwriters, it will
not, during the period beginning on and including the date hereof through and
including the date which is 180 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Securities. The undersigned hereby waives any and all notice requirements and
rights with respect to the registration of any securities pursuant to any
agreement, instrument, understanding or otherwise, including any registration
rights agreement or similar agreement, to which the undersigned is a party or
under which the undersigned is entitled to any right or benefit, provided that
such waiver shall apply only to the public offering of Common Stock pursuant to
the Underwriting Agreement and the registration statement filed under the
Securities
C-2
Act of 1933, as amended, in connection therewith. The undersigned hereby agrees
that, to the extent that the terms of this Agreement conflict with or are in any
way inconsistent with any investor or registration rights agreement or warrant
to which the undersigned may be a party, this Agreement supersedes such
registration rights agreement.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of the undersigned's shares of Securities unless transferred in
compliance with the restrictions set forth in this Agreement. Without limiting
the restrictions herein, any transfer of the undersigned's shares of Securities
shall remain at all times subject to applicable securities laws, including
without limitation, the resale restrictions imposed by Rule 144 promulgated
under the Securities Act of 1933, as amended.
The undersigned understands that the Company and the Underwriters are
relying upon this Agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. This Agreement shall
automatically terminate upon the earliest to occur, if any, of: (a) the date
that the Company advises Wachovia Capital Markets, LLC in writing, prior to the
execution of the Underwriting Agreement, that it has determined not to proceed
with the Public Offering; or (b) termination of the Underwriting Agreement prior
to the Closing Date (as defined in the Underwriting Agreement).
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
C-3
In witness whereof, the undersigned has executed and delivered this
Agreement as of the date first set forth above.
Very truly yours,
_________________________________________
Signature
_________________________________________
Print Name
C-4
EXHIBIT D
Number of Initial
Securities to be Sold
---------------------
Company......................................
Selling Stockholders:
[Name of Selling Stockholder]............
[Name of Selling Stockholder]............
-------------
Total........................................
=============
D-1
EXHIBIT E
Number of Option
Securities Which May
Be Sold
--------------------
Company......................................
Selling Stockholders:
[Name of Selling Stockholder]............
[Name of Selling Stockholder]............
-------------
Total........................................
=============
E-1
