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EXHIBIT 1(a)
ERGOBILT, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
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UNDERWRITING AGREEMENT
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January ____, 1997
Cruttenden Xxxx Incorporated
Principal Financial Securities, Inc.
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Cruttenden Xxxx Incorporated
00000 Xxx Xxxxxx
Xxxxxx, XX 00000
Dear Ladies and Gentlemen:
ErgoBilt, Inc., a Texas corporation (the "Company"), proposes, subject
to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
1,500,000 shares and, at the election of the Underwriters, up to 225,000
additional shares of Common Stock, par value $.01 per share ("Stock") of the
Company. The aggregate of 1,500,000 shares to be sold by the Company is herein
called the "Firm Shares" and the aggregate of 225,000 additional shares to be
sold by the Company is herein called the "Optional Shares." The Firm Shares and
the Optional Shares which the Underwriters elect to purchase pursuant to
Section 2 hereof are herein collectively called the "Shares."
1. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission");
such registration statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; no other document with respect
to such registration statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that
purpose has been initiated or to the knowledge of the Company threatened
by the Commission (any preliminary prospectus included in such
registration
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statement or filed with the Commission pursuant to Rule 424(a) of the
rules and regulations of the Commission (the "Rules and Regulations")
under the Securities Act of 1933, as amended (the "Securities Act"),
being hereinafter called a "Preliminary Prospectus"; the various parts
of such registration statement, including all exhibits thereto and
including the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities
Act in accordance with Section 5(a) hereof and deemed by virtue of Rule
430A or Rule 434 under the Securities Act to be part of the registration
statement at the time it was declared effective, each as amended at the
time such part of the registration statement became effective, being
hereinafter called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the
Securities Act, being hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission or the Blue Sky
or securities authority of any jurisdiction, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Securities Act and the Rules and
Regulations, and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through you expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through you
expressly for use therein;
(d) None of the Company, any of its subsidiaries or BodyBilt
Seating, Inc., a Texas corporation ("BodyBilt"), has sustained since the
date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, that is material to the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change
in the capital stock, short-term debt or long-term debt of the Company,
any of its subsidiaries or BodyBilt or any material adverse change, or
any development involving
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a prospective material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results
of operations of the Company, its subsidiaries or BodyBilt, otherwise
than as set forth or contemplated in the Prospectus;
(e) The Company, its subsidiaries and BodyBilt have good and
marketable title in fee simple or, in jurisdictions outside of the
United States, the substantive equivalent thereto, to all material real
property and good and marketable title to all material personal property
owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do
not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company, its subsidiaries and BodyBilt; and any material real property
and buildings held under lease by the Company, its subsidiaries and
BodyBilt are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the
Company, its subsidiaries or BodyBilt;
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Texas, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so qualified
in any such jurisdiction; and each subsidiary of the Company has been
duly incorporated and is validly existing as a corporation and is in
good standing under the laws of its jurisdiction of incorporation;
(g) BodyBilt has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Texas, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so qualified
in any such jurisdiction;
(h) The Agreement and Plan of Merger, by and among the
Company, EB Subsidiary, Inc., a Texas corporation and wholly-owned
subsidiary of the Company ("Newco"), BodyBilt and all of BodyBilt's
shareholders (the "Shareholders") entered into as of August 19, 1996
(the "Merger Agreement"), pursuant to which BodyBilt shall merge with
and into Newco (the "Merger"), and the transactions contemplated
therein, have been duly and validly authorized by the Company, Newco,
BodyBilt and the Shareholders, and the Merger Agreement has been duly
and validly executed and delivered by the Company, Newco, BodyBilt and
the Shareholders;
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(i) The Company has full legal right, corporate power and
authority to enter into this Agreement. This Agreement and the
transactions contemplated herein have been duly and validly authorized
by the Company and this Agreement has been duly and validly executed and
delivered by the Company;
(j) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued and outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable, were not issued in violation
of or subject to any preemptive rights or other rights to subscribe for
or purchase securities and conform to the aggregate number and
description thereof, on a pro forma basis to give effect to the Merger
and on an as adjusted basis to give effect to the issue and sale of the
Shares, as set forth and contained in the Prospectus; all of BodyBilt's
outstanding shares of capital stock have been duly and validly
authorized and issued, are fully paid and non-assessable and were not
issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities; and all of the issued
shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, and are fully paid and
non-assessable, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase
securities and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(k) Except as disclosed in or contemplated by the Prospectus
and the financial statements of the Company and the related notes
thereto included in the Prospectus, neither the Company nor Newco has
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's outstanding
stock options and other stock plans or arrangements and the options or
other rights granted and exercised thereunder set forth in the
Prospectus accurately and fairly presents in all material respects the
information required to be shown with respect to such options, plans,
arrangements, and rights;
(l) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable and
will conform to the description of the Stock contained in the
Prospectus;
(m) All offers and sales of (i) the Common Stock by the
Company (other than the Shares); and (ii) the capital stock of BodyBilt
were at all relevant times exempt from the registration requirements of
the Securities Act and were the subject of an available exemption from
the registration requirements of applicable state securities or Blue Sky
laws;
(n) When duly countersigned by the Company's transfer agent
and registrar and delivered to the Underwriters in accordance with the
provisions of this Agreement, good
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and marketable title to the unissued Shares to be issued and sold by the
Company to the Underwriters hereunder will pass to the Underwriters free
and clear of any liens, security interests, adverse claims, equities or
other encumbrances of any kind or character, except as may be created by
any Underwriter. No preemptive rights or other rights to subscribe for
or purchase exist with respect to the issuance and sale of any of the
Shares by the Company pursuant to this Agreement. No stockholder of the
Company has any right that has not been waived in writing to require the
Company to register the sale of any shares owned by such stockholder
under the Securities Act in the public offering contemplated by this
Agreement;
(o) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein and therein contemplated
will not (i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, sale/leaseback
agreement or other agreement or instrument (collectively, the "Specified
Documents") to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound except for
any such conflict, breach, violation or default, either individually or
in the aggregate, which could not reasonably be expected to have a
material adverse effect on the business, prospects, properties,
operations, condition (financial or otherwise) or results of operations
of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"), or to which any of the property or assets of the
Company or any of its subsidiaries is subject; nor (ii) result in any
violation of the provisions of the Articles of Incorporation, as
amended, or the Bylaws of the Company or any statute or any order, rule
or regulation of any court or government agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, except with respect to the violation of any statute, order,
rule or regulation of any court or government agency or body, which
violation, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue
and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration
under the Securities Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters; except with respect to
those failures to so obtain or make which could not reasonably be
expected, either individually or in the aggregate, to have a Material
Adverse Effect;
(p) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending, or to knowledge
of the Company, threatened to which the Company, any of its subsidiaries
or, to the best of the Company's knowledge, BodyBilt is a party or of
which any property of the Company, any of its subsidiaries or BodyBilt
is the subject, which are required to be disclosed in the Prospectus or
which, if determined adversely to the Company, any of its subsidiaries
or BodyBilt, would individually or in the aggregate have a Material
Adverse Effect (assuming the consummation of the transactions
contemplated by the Merger Agreement); and, to the
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best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(q) Neither the Company nor BodyBilt is in violation of any
law, ordinance, governmental rule or regulation or court decree to which
either of them may be subject, which violation might have a Material
Adverse Effect;
(r) The Company and BodyBilt comply in all material respects
with all Environmental Laws (as defined below), except to the extent
that failure to comply with such Environmental Laws would not have a
Material Adverse Effect. Neither the Company nor BodyBilt (i) is the
subject of any pending or, to the knowledge of the Company, threatened
federal, state or local investigation evaluating whether any remedial
action by the Company or BodyBilt is needed to respond to a release of
any Hazardous Materials (as defined below) into the environment,
resulting from the Company's or BodyBilt's business operations or
ownership or possession of any of the properties or assets, or (ii) is
in contravention of any Environmental Law that could reasonably be
expected to have a Material Adverse Effect. Neither the Company nor
BodyBilt has received any notice or claim, nor are there pending or, to
the knowledge of the Company, threatened lawsuits against them, with
respect to violations of any Environmental Law or in connection with any
release of Hazardous Materials into the environment that, in the
aggregate, if the subject of any unfavorable decision, ruling or
finding, could reasonably be expected to have a Material Adverse Effect.
As used herein, "Environmental Laws" means any federal, state, city or
local law or regulation applicable to the Company's or BodyBilt's
business operations or ownership or possession of any of their
properties or assets relating to environmental matters, and "Hazardous
Materials" means those substances that are regulated by or form the
basis of liability under any Environmental Laws;
(s) The Company and BodyBilt have timely (giving effect to
permitted extensions) filed and properly prepared all necessary federal,
state, local and foreign income, franchise and any other required tax
returns and has paid all taxes shown as due thereon, and the Company has
no knowledge of any tax deficiency which has been or might be asserted
against the Company or BodyBilt which might have a Material Adverse
Effect;
(t) None of the Company, BodyBilt nor any officers, directors,
employees or agents or any other persons associated with or acting on
behalf of the Company or BodyBilt has at any time (i) made any
contributions to any candidate for political office in violation of law,
or failed to disclose fully any contributions to any candidate for
political office in accordance with any applicable statute, rule,
regulation or ordinance requiring such disclosure, (ii) made any payment
to any local, state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or allowed by applicable law, (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended (iv) made any payment outside the ordinary course of business to
any purchasing or selling agent or person charged with similar duties of
any entity to which the Company or BodyBilt sells
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or from which the Company or BodyBilt buys products for the purpose of
influencing such agent or person to buy products from or sell products
to the Company or BodyBilt, (v) made any other bribe, rebate, payoff,
influence payment, kickback or other unlawful payment or (vi) engaged in
any transaction, maintained any bank account or used any corporate funds
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Company or
BodyBilt;
(u) Except for the several Underwriters and the
Representatives, the Company has taken no action that would result in
nor, to the best knowledge of the Company, no claims for services exist
in the nature of and no person has any right to receive a finder's fee,
brokerage fee or similar fee with respect to this offering for which the
Company or any of the several Underwriters may be responsible;
(v) The Company and BodyBilt have their respective properties
adequately insured against loss or damage by fire and maintains such
other insurance as is prudent or customarily maintained by companies in
the same or similar business and in the same or similar locality;
(w) KPMG Peat Marwick LLP and Xxxxxxxx, Xxxxxx & Xxxxxxxx PC
who have certified financial statements of the Company, its subsidiaries
and BodyBilt, are independent public accountants as required by the
Securities Act and the Rules and Regulations;
(x) The historical financial statements, including the notes
thereto, and schedules included in the Registration Statement and the
Prospectus present fairly, on the basis stated therein, the financial
position of the Company and BodyBilt as of the dates of such financial
statements and the results of such operations for the periods specified.
Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis,
except as otherwise disclosed in the Registration Statement; the
schedules included in the Registration Statement present fairly the
information required to be stated therein; and the other historical
financial data of the Company and BodyBilt included in the Registration
Statement and the Prospectus are materially accurate and prepared on a
basis consistent with such financial statements and schedules and the
books and records of the Company and BodyBilt, respectively;
(y) The pro forma financial information included in the
Registration Statement and the Prospectus presents fairly the
information shown therein, has been prepared in accordance with
generally accepted accounting principles and the Rules and Regulations
with respect to pro forma information, has been properly compiled on the
pro forma basis described therein and, in the opinion of the Company,
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate under the circumstances;
(z) The Company owns all of the outstanding capital stock of
Newco. The Company does not own or control any corporation, association
or other entity, other than Newco. Newco has been duly organized and is
validly existing as a corporation in good
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standing under the laws of its respective state of incorporation, with
requisite corporate power and authority to own, lease and operate its
properties, and to conduct the business in which it is engaged as
described in the Prospectus. Newco 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 its business
requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a Material Adverse Effect;
(aa) The Company, its subsidiaries and BodyBilt own, or possess
adequate rights to use, all the patents, trademarks, service marks,
trade names and copyrights ("Intellectual Property") necessary for the
conduct of their business as currently conducted by them and has taken
reasonable security measures to protect the secrecy, confidentiality and
value of its trade secrets and know-how that are valid and protectible
and are not part of the public knowledge or literature ("Trade
Secrets"). The Company has not received any written notice of
infringement of or conflict with, and to the best knowledge of the
Company, none of the activities engaged in by the Company and BodyBilt
infringes or conflicts with Intellectual Property rights of others. Any
of the Company's employees and any other person authorized by the
Company, who, either alone or in concert with others, developed,
invented, discovered, derived, programmed or designed the Trade Secrets
of the Company, or who have knowledge of or access to information
relating to them, have been put on notice that the Trade Secrets of the
Company are proprietary to the Company and are not to be divulged or
misused and the Company's employees have entered into written agreements
with the Company requiring the continued confidentiality of the Trade
Secrets;
(bb) Except as set forth in the Prospectus, no person has any
right to require the Company to register any securities under the
Securities Act;
(cc) The Company has not taken, directly or indirectly, any
action designed to cause or result in, or which constitutes or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Stock to facilitate the sale
or resale of the Shares;
(dd) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as
an "investment company" under the Investment Company Act of 1940;
(ee) There are no Specified Documents of a character required
to be described or referred to in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement by
the Securities Act or by the regulations thereunder that have not been
described or referred to therein or filed as required;
(ff) The Company and BodyBilt each maintains a system of
internal accounting controls that, taken as a whole, are sufficient to
provide reasonable assurance that: (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial
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statements in conformity with generally accepted accounting principles
and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(gg) The Company and BodyBilt have each complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida), relating to doing business with the Government of Cuba or any
person or affiliate located in Cuba;
(hh) There are no outstanding loans or advances or guarantees
of indebtedness by the Company to or for the benefit of any affiliate of
the Company, any of the officers or directors of the Company, or any of
the members of the families of any of them, or any other business
relationships or related-party transaction of the nature described in
Item 404 of Regulation S-K involving the Company or BodyBilt and any
other persons referred to in said Item 404, which are required by the
Rules and Regulations to be described in the Registration Statement and
the Prospectus, except such that are so described; and
(ii) The Company is eligible to use Form S-1 for the
registration of the Shares.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $ , the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares to be sold by the Company as set forth in
Schedule II hereto by a fraction, the numerator of which is the aggregate
number of Firm Shares to be purchased by such Underwriter as set forth opposite
the name of such Underwriter in Schedule I hereto and the denominator of which
is the aggregate number of Firm Shares to be purchased by all the Underwriters
from the Company hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as
provided below, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at the purchase price per share set forth in
clause (a) of this Section 2, that portion of the number of Optional Shares as
to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of the Optional Shares which all of the
Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 225,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 45 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares
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are to be delivered, as determined by you but in no event earlier than the
First Time of Delivery (as defined in Section 4 hereof) or, unless you and the
Company otherwise agree in writing, earlier than two or later than ten business
days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. Certificates in definitive form for the Shares to be purchased by
each Underwriter hereunder, and in such denominations and registered in such
names as Cruttenden Xxxx Incorporated may request upon at least 48 hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to you
for the account of such Underwriter, against payment by such Underwriter or on
its behalf of the purchase price therefor by certified or official bank check
or checks, payable to the order of the Company in same day funds, or by payment
in such other manner as shall be agreed to in writing by the Company and
Cruttenden Xxxx Incorporated, all at the offices of Cruttenden Xxxx
Incorporated, 00000 Xxx Xxxxxx, Xxxxxx, XX 00000, or at such other place as
shall be agreed upon by you and the Company. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:00 a.m.,
Dallas time, on _______________, 1997, or at such other time and date as you
and the Company may agree upon in writing, and, with respect to the Optional
Shares, 9:00 a.m., Dallas time, on the date specified by you in the written
notice given by you of the Underwriters' election to purchase such Optional
Shares, or at such other time and date as you and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called
the "First Time of Delivery," such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery," and each such time and date for delivery is herein called a "Time of
Delivery."
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) or Rule 434 under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to
advise you, promptly after it receives notice thereof, of the time when
the Registration Statement, or any amendment thereto, has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to
advise you, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Shares for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary
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Prospectus or Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as you may from time to time reasonably request, and,
if the delivery of a Prospectus is required at any time prior to the
expiration of nine months after the time of the issue of the Prospectus
in connection with the offering or sale of the Shares and if at such
time any event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such same
period to amend or supplement the Prospectus in order to comply with the
Securities Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which
will correct such statement or omission or effect such compliance, and
in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time nine months or
more after the time of issue of the Prospectus, upon your request but at
the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the
Securities Act;
(d) To make generally available to its security holders as
soon as practicable, but in any event not later than 18 months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including at the
option of the Company Rule 158);
(e) (i) During the period beginning on the date hereof and
continuing to and including the date 180 days after the effective date
of the Registration Statement, not to, directly or indirectly, offer,
sell, contract to sell, grant any option to sell or otherwise dispose of
Stock, or other securities which are substantially similar to the Stock,
or securities which are convertible or exercisable or exchangeable for
any rights to purchase or acquire Stock or other securities which are
substantially similar to the Stock, without your prior written consent
(other than the sale of the Shares pursuant to this Agreement,
securities issued pursuant to the Merger Agreement or upon exercise of
warrants existing
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as of the date of this Agreement, or the grant of options or of
restricted stock awards pursuant to stock option or restricted stock
plans existing on the date of this Agreement provided such options are
not exercisable within the 180 day period); and (ii) that it will use
its reasonable efforts to cause each person who has entered into a
Lock-up Agreement to comply therewith, will not grant any waivers or
consents to non-compliance therewith, and will otherwise enforce its
rights under each such agreement, in each case unless and to the extent
that it shall have obtained your prior written consent;
(f) To furnish to its shareholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, shareholders' equity and cash flow of
the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of five years after the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to shareholders, and
deliver to you (i) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or
any national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to
time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its shareholders
generally or to the Commission);
(h) To use its best efforts to have the Shares accepted timely
for quotation on the Nasdaq National Market;
(i) To take all actions, necessary or appropriate, to validly
consummate the Merger contemporaneously with the closing of the sale of
the Firm Shares;
(j) To apply the net proceeds from the sale of the Shares in
the manner described in "Use of Proceeds" in the Prospectus; and
(k) To give notice of termination of the Business Management
Contract entered into by and between BodyBilt and Agrivest, Inc., dated
January 1, 1996, immediately upon the closing of the sale of the Firm
Shares;
(l) To file with the Commission such reports on Form SR as may
be required pursuant to Rule 463 under the Securities Act; and
(m) To comply with all provisions of all undertakings
contained in the Registration Statement.
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6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid all costs and expenses incident
to the performance of the Company's obligations hereunder including: (i) the
fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, if
any, and any other documents in connection with the offering, purchase, sale
and delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state securities laws
as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters (not to exceed $30,000) in connection with such
qualification and in connection with the Blue Sky survey, if any; (iv) the
filing fees and the fees and disbursements of counsel for the Underwriters
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (v) the cost
of preparing stock certificates; (vi) the cost and charges of any transfer
agent or registrar; (vii) the costs of preparing, printing and distributing
bound volumes for the Representatives and their counsel; and (viii) a
non-accountable expense allowance equal to 2% of the aggregate offering price
to the public of the Firm Shares (less a $15,000 advance previously paid to
Cruttenden Xxxx Incorporated) (the "Non-Accountable Expense Allowance"),
subject to Section 9 and 11 hereof. Except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, stock transfer taxes
on resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of such Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the Rules and Regulations and in accordance with Section
5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by
the Commission; and all requests for additional information on the part
of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Gardere & Xxxxx, L.L.P., counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the incorporation of the Company, this
Agreement, the validity of the Shares being delivered at such Time of
Delivery, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
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(c) Wolin, Fuller, Xxxxxx & Xxxxxx LLP, counsel for the
Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Texas, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus. The Company is not in violation of
its Articles of Incorporation or Bylaws;
(ii) BodyBilt has been incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Texas;
(iii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued and outstanding
shares of capital stock of the Company (including the Shares
being delivered at such Time of Delivery, but with respect to
such Shares to be issued and delivered by the Company, when
issued and delivered by the Company pursuant to this Agreement
against payment therefor) have been duly and validly authorized
and issued and are fully paid and non-assessable; were not issued
in violation of any statutory preemptive rights or, to such
counsel's knowledge, in violation of any other preemptive rights
or other rights to subscribe for or purchase any securities;
neither the Articles of Incorporation nor Bylaws of the Company
contain any restriction upon the voting or transfer of any of the
shares of capital stock of the Company (including the Shares),
except such restrictions as may be imposed by federal or state
securities laws or as may be expressly described in the
Prospectus; and the Shares conform to the description of the
Stock contained in the Prospectus;
(iv) Except as disclosed or specifically described in
the Prospectus, to their knowledge, there are no outstanding
options, warrants or other rights of the Company calling for the
issuance of, and no commitments or obligations to issue, any
shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;
(v) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, except for those failures to be
qualified or in good standing which will not in the aggregate
have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole (such counsel being entitled to
rely in respect of the opinion in this clause upon certificates
of Secretaries of State or other appropriate public officials and
in respect of matters of fact upon certificates of officers of
the Company;
(vi) To their knowledge, no holders of securities of the
Company have rights that have not been waived in writing to the
registration of shares of
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Common Stock or other securities which would be required to be
included in the Registration Statement filed by the Company or
included in the offering contemplated hereby;
(vii) Each subsidiary of the Company listed on Exhibit A
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation; and all of the issued and outstanding shares of
capital stock of each such subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable, and
such shares (except for directors' qualifying shares and except
as otherwise set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims; (such counsel being entitled to
rely in respect of the opinion in this clause upon certificates
of Secretaries of State or other appropriate public officials and
in respect of matters of fact upon certificates of officers of
the Company or its subsidiaries, provided that such counsel shall
state that they believe that both you and they are justified in
relying upon such officers' certificates); and such subsidiaries
are not in violation of their Articles of Incorporation or
Bylaws;
(viii) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, any of its subsidiaries
or BodyBilt is a party or of which any property of the Company,
any of its subsidiaries or BodyBilt is the subject which, if
determined adversely to the Company, any of its subsidiaries or
BodyBilt, would individually or in the aggregate have a Material
Adverse Effect on the Company and its subsidiaries (assuming the
consummation of the transactions contemplated by the Merger
Agreement); and, to such counsel's knowledge, no such proceedings
are threatened by governmental authorities or threatened by
others;
(ix) The Company has requisite corporate power and
authority to enter into this Agreement and to sell and deliver
the Shares to be sold by it to the Underwriters; this Agreement
has been duly authorized, executed and delivered by the Company;
(x) The issue and sale to you of the Shares being
delivered at such Time of Delivery by the Company in accordance
with and upon the terms and conditions set forth herein and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any Specified Document known to such counsel
(based solely on their review of the documents on a list of all
Specified Documents of the Company as certified by the Chief
Executive Officer and the Chief Financial Officer of the Company
and such other Specified Documents, if any, known to members of
such counsel devoting substantive attention to matters as to
which such counsel has been retained by the Company), which
conflict, breach, violation or default, either individually or in
the aggregate,
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would have a Material Adverse Effect, nor will such action result
in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, which violation, either
individually or in the aggregate, would have a Material Adverse
Effect;
(xi) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the
Securities Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters; and
(xii) The Registration Statement has become effective
under the Act, and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or overtly threatened by the Commission; any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been, or will be, made in the
manner and within the time period required by such Rule 424(b);
(xiii) The descriptions in the Registration Statement and
the Prospectus of the statutes, regulations, legal or
governmental proceedings, written contracts and other written
documents therein described, to the extent that such descriptions
constitute summaries of matters of law, documents or proceedings,
or legal conclusions, have been reviewed by such counsel and
fairly present the information disclosed therein in all material
respects;
(xiv) To such counsel's knowledge, the following are
accurate in all material respects and comply with all applicable
requirements of the Rules and Regulations: (i) descriptions in
the Prospectus of written contracts and other written documents
filed as exhibits to the Registration Statement, other than the
Underwriting Agreement, and descriptions in the Prospectus of
trademarks; (ii) statements under the captions "Management--Audit
Committee," "--Compensation Committee," "--Stock Option Plan,"
and "-- Employment and Consulting Agreements," and "Description
of Capital Stock--Common Stock," "--Preferred Stock," --Series A
Preferred Stock," "--Certain Anti-Takeover Provisions," and
"--Limitations on Liability;" (iii) statements in "Certain
Transactions" describing written contracts and other written
documents filed as exhibits to the Registration Statement and
transactions in which the Company is or was a party; and (iv)
summaries of law included in "Shares Eligible for Future Sale."
Notwithstanding anything in the previous sentence to the
contrary, such opinion shall not include
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any matters with respect to any numerical information, including
payments accrued or made or number of shares issued, outstanding,
issuable or eligible for sale, other than the number of
authorized shares of the Company. In addition, such counsel does
not know of any written contracts or other documents of a
character required to be summarized or described in the
Prospectus or required to be filed as exhibits in the
Registration Statement that are not so summarized, described or
filed, as required, nor does such counsel know of any pending or
threatened litigation on any governmental action, suit or
proceeding, statute or regulation required to be described in the
Prospectus that is not so described; and
(xv) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules or financial or statistical data
therein, as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the
laws of the State of Texas (excluding conflict of law rules) and the
federal laws of the United States; such counsel may also state that they
have relied upon the opinion of Xxxxxxxx & Xxxx, LLP, without
independent check or verification, as to matters relating to BodyBilt
set forth in Section 7(c)(viii);
Such counsel shall also state that such counsel has participated
in conferences with directors, officers and other representatives of the
Company, representatives of the independent public accountants of the
Company and your representatives at which the contents of the
Registration Statement and Prospectus and related matters were
discussed, have participated in the preparation of the Registration
Statement and the Prospectus, have reviewed all documents referred to in
the Prospectus or annexed as an exhibit to the Registration Statement,
as well as certain other corporate documents furnished to such counsel
by the Company and, on the basis of the foregoing and without
independent check or verification, no facts have come to the attention
of such counsel to lead such counsel to believe that, as of its
effective date, the Registration Statement or any further amendment
thereto made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules or financial or
statistical data therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading or that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules or financial or statistical data therein, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
(other than
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the financial statements and related schedules or financial or
statistical data therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading; and
although such counsel has not undertaken to determine independently the
accuracy or completeness of the statements contained in the Registration
Statement or Prospectus and takes no responsibility therefor, they do
not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are not
filed or described as required;
(d) Xxxxxxxx & Xxxx, LLP, counsel for BodyBilt, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) All of the issued shares of capital stock of
BodyBilt have been duly and validly authorized and issued and are
fully paid and non-assessable, were not issued in violation of
any statutory preemptive rights or, to such counsel's knowledge,
in violation of any other preemptive rights or other rights to
subscribe for or purchase any securities; neither the Articles of
Incorporation nor Bylaws of BodyBilt contain any restriction upon
the voting or transfer of any of the shares of capital stock of
BodyBilt, except such restrictions as may be imposed by federal
or state securities laws or as may be expressly described in the
Prospectus;
(ii) BodyBilt has all power and authority (corporate and
other) to own its properties and conduct its business as
currently being conducted;
(iii) BodyBilt has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of failure to be so qualified
in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon certificates of
Secretaries of State or other appropriate public officials and in
respect of matters of fact upon certificates of officers of
BodyBilt, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
officers' certificates); and
(iv) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which BodyBilt is a party or
of which any property of BodyBilt is the subject which, if
determined adversely to BodyBilt, would individually or in the
aggregate have a material adverse effect on the business,
prospects, properties, operations, condition (financial or
otherwise) or results of operation of BodyBilt; and, to the best
of such counsel's knowledge, no such proceedings are threatened
by governmental authorities or threatened by others;
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(e) At 9:00 a.m., Dallas time, on the effective date of the
Registration Statement and the effective date of the most recently filed
post-effective amendment to the Registration Statement and also at each
Time of Delivery, KPMG Peat Marwick LLP and Xxxxxxxx, Xxxxxx & Xxxxxxxx
PC shall have furnished to you a letter or letters, dated the respective
date of delivery thereof, in form and substance satisfactory to you, to
the effect set forth in Annex I and Annex II, respectively, hereto;
(f) (i) None of the Company, any of its subsidiaries or, to the
best knowledge of counsel for the Company, BodyBilt shall have sustained
since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus
except for those losses, interferences, disputes, actions, orders, or
decrees which, in the aggregate will not have a Material Adverse Effect
on the Company and its subsidiaries taken as a whole, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock (other than
issuances of securities pursuant to the Merger Agreement, or upon the
exercise of options or warrants which were outstanding on the date of
the latest balance sheet included in the Prospectus or existing as of
the date of this Agreement), short-term or long-term debt of the
Company, any of its subsidiaries or BodyBilt (other than changes in the
ordinary course of business or as described in the Prospectus) or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company, its
subsidiaries or BodyBilt otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in
Clause (i) or (ii), is in your judgment so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Shares being delivered at such Time of Delivery
on the terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York declared by
either federal or New York authorities; or (iii) the outbreak or
escalation of hostilities involving the United States or the declaration
by the United States of a national emergency or war, if the effect of
any such outbreak or escalation of hostilities specified in this Clause
(iii) in your judgment makes it impracticable or inadvisable to proceed
with the public offering or delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated by the
Prospectus;
(h) The Shares to be sold by the Company at such Time of
Delivery shall have been duly accepted, subject to notice of issuance,
for quotation on the Nasdaq National Market;
(i) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery a certificate of officers of the
Company, satisfactory to you as to the
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accuracy of the representations and warranties of the Company herein, at
and as of such Time of Delivery, as to the performance by the Company of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to be
furnished certificates as to the matters set forth in subsections (a)
and (f) of this Section and as to such other matters as you may
reasonably request;
(j) On or prior to the First Time of Delivery, Xxxxxx
XxXxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxxx XxXxxxxx and Xx. Xxxxxxx
Xxxxxxxx shall have entered into Lock-up Agreements with the
Underwriters, during the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus (the "Lock-Up Period"), not to, directly or indirectly,
offer, sell, contract to sell, grant any option to sell or otherwise
dispose of any Stock, or other securities which are substantially
similar to the Stock, or securities which are convertible into or
exercisable or exchangeable for or any rights to purchase or acquire
Stock or other securities which are substantially similar to the Stock,
without your prior written consent and to, for a period of two years
commencing on the expiration of the Lock-Up Period, xxxxx Xxxxxxxxxx
Xxxx Incorporated a right of first refusal to act as the sole
broker/dealer for any sales of stock by such persons made pursuant to
Rule 144 under the Securities Act; and
(k) The Company shall have executed and delivered to
Cruttenden Xxxx Incorporated the Common Stock Purchase Warrant pursuant
to and in the form of the Warrant Agreement executed and delivered
concurrently herewith.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter
in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
you expressly for use therein; provided further, that with respect to
any untrue statement or omission or alleged untrue statement or omission
made in any Preliminary Prospectus, the indemnity contained in this
Section 7(a) shall not inure to the benefit of any such indemnified
Underwriter, and the Company shall not be liable to any such indemnified
Underwriter on account of any such losses, liabilities, claims, damages
or expenses arising from the sale of the Shares by such Underwriter to
any person if there
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was not sent or given to such person, at or prior to the written
confirmation of the sale of such Shares to such person, a copy of the
Prospectus, as the same may be amended or supplemented, within the time
required by the Securities Act (if required thereby), and the untrue
statements or the alleged untrue statement of a material fact or
omission or alleged omission to state a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus, unless such
failure to deliver the Prospectus was a result of noncompliance by the
Company with its obligations hereunder.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the
Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to
the Company by such Underwriter through you expressly for use therein;
and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred. The
Company acknowledges that the statements set forth in the last paragraph
of the cover page and in the first and third paragraphs under the
caption "Underwriting" in the Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for
use in the Registration Statement relating to the Shares as originally
filed or in any amendment thereof, any related Preliminary Prospectus or
the Prospectus or in any amendment thereof or supplement thereto, as the
case may be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection except to the extent that the indemnifying party
has been actually materially prejudiced in any material respect by such
omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with one counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel
to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or
any other expenses,
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in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion
as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the
Shares purchased under this Agreement (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the Shares
purchased under this Agreement, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purposes) or by any other method of allocation
which does not take account of the equitable considerations referred to
above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required
to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person
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who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations and
not joint.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Securities
Act; and the obligations of the Underwriters under this Section 8 shall
be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each officer and director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become
an officer or director of the Company) and to each person, if any, who
controls the Company within the meaning of the Securities Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at the
Time of Delivery, you may in your discretion arrange for you or another
party or other parties to purchase such Shares on the terms contained
herein. If within 36 hours after such default by any Underwriter you do
not arrange for the purchase of such Shares, then the Company shall be
entitled to a further period of 36 hours within which to procure another
party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that they have so
arranged for the purchase of such Shares, you or the Company shall have
the right to postpone such Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly
any amendments to the Registration Statement or the Prospectus which in
your opinion may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a party
to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Shares to be purchased
at such Time of Delivery, then the Company shall have the right to
require each non-defaulting Underwriter to purchase the number of Shares
which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such
defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Underwriter
from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in
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subsection (a) above, the aggregate number of Shares which remains
unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to
the Second Time of Delivery, the obligations of the Underwriters to
purchase and of the Company to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any nondefaulting
Underwriter or the Company, except for the accountable out-of-pocket
expenses to be borne by the Company and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares.
11. (a) If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not be under any liability to any Underwriter
except for accountable out-of-pocket expenses, as provided in Section 6,
and any indemnification and contribution obligations arising under
Section 8 hereof; but, if for any other reason any Shares are not
delivered by on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all accountable
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of the Shares
not so delivered (such out-of-pocket expenses not to exceed $50,000),
less any amounts previously paid by the Company pursuant to Section 6
hereof, but the Company shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except for any
indemnification and contribution obligations arising under Section 8
hereof. Notwithstanding anything to the contrary set forth herein, if
this Agreement is terminated for any reason the Company shall be under
no liability to pay the Non- Accountable Expense Allowance.
(b) If the Underwriters are ready, willing and able to
effectuate the offering of the Shares at a price to the public of not
less than $7.00 per share and the Company defaults in its obligation to
sell the Shares to the Underwriters (an "Aborted Offering"), the Company
covenants and agrees (i) not to sell any of its capital stock to the
public through an underwritten offering at any time on or prior to May
20, 1997 and (ii) if such public sale is consummated, to pay Cruttenden
Xxxx Incorporated a fee of $75,000, less any amounts previously paid by
the Company pursuant to Sections 6 or 11(a), which amount the Company
covenants and agrees is fair compensation for services performed by
Cruttenden Xxxx Incorporated in connection with the Aborted Offering.
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(c) If on or prior to May 20, 1997 the Company is acquired,
merges, sells all or substantially all of its assets or otherwise
effects a corporate reorganization with any other entity and, as a
result thereof, the Company defaults in its obligation to sell the
Shares to the Underwriters (a "Terminated Offering"), the Company
covenants and agrees to pay Cruttenden Xxxx Incorporated a fee of
$150,000, less any amounts previously paid by the Company pursuant to
Sections 6 and 11(a), which amount the Company covenants and agrees is
fair compensation for services performed by Cruttenden Xxxx Incorporated
in connection with the Terminated Offering.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Cruttenden Xxxx Incorporated on behalf of you as the
Representatives.
All statements, requests, notices, and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the Representatives in care of Cruttenden
Xxxx Incorporated, 00000 Xxx Xxxxxx, Xxxxxx, XX 00000; and if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address will be
supplied to the Company by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Section 8 and Section 10 hereof, the officers and directors of the Company and
each person who controls the Company or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA (OTHER THAN ITS CONFLICTS OF LAW
PROVISIONS).
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
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If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
ERGOBILT, INC.
By:
-----------------------------
Name:
Title:
Accepted as of the date hereof:
CRUTTENDEN XXXX INCORPORATED
PRINCIPAL FINANCIAL SECURITIES, INC.
By:
--------------------------------------
(Cruttenden Xxxx Incorporated)
On behalf of each of the Underwriters
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SCHEDULE I
NUMBER OF
OPTIONAL
TOTAL SHARES TO BE
NUMBER OF PURCHASED IF
FIRM MAXIMUM
SHARES TO BE OPTION
UNDERWRITER PURCHASED EXERCISED
----------- --------- ---------
Cruttenden Xxxx Incorporated. . . . . . . . . . . . . . . .
Principal Financial Securities, Inc. . . . . . . . . . . .
[Names of other Underwriters] . . . . . . . . . . . . . . .
--------- --------
Total 1,500,000 225,000
========= ========
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ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, KPMG Peat
Marwick LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Act and the applicable published Rules and Regulations;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules of the Company and
BodyBilt audited (and, if applicable, prospective financial statements
and/or pro forma financial information examined) by them and included in
the Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited
financial statements of the Company and BodyBilt for the periods
specified in such letter, as indicated in their reports thereon, copies
of which have been furnished to the representatives of the Underwriters
(the "Representatives");
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of, in the case of the Company, a reading of the unaudited
financial statements and other information referred to below, a reading
of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of the Company and
its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter
and in the case of BodyBilt, a reading of the latest available interim
financial statements of BodyBilt, inspection of the minute books of
BodyBilt since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of BodyBilt
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) any unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows as of dates or for periods beginning after June 30, 1996
included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the Securities Act and the related published Rules and
Regulations, or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
basis for the audited consolidated statements of income,
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consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus;
(B) any other unaudited income statement data and
balance sheet items for the periods or as of the dates referred
to in Clause (A) above included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were derived,
and any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial
statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements as of dates or for
periods beginning after June 30, 1996 and any unaudited income
statement data and balance sheet items included in the Prospectus
and referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the published Rules and
Regulations or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes in
the consolidated capital stock (other than issuances of capital
stock upon exercise of options and stock appreciation rights,
upon earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated long-term debt of
the Company and its subsidiaries or BodyBilt, or any decreases in
consolidated net current assets or net assets or other items
specified by the Representatives or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus; except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the specified
date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified
by the Representatives, or any increases in any items specified
by the Representatives, in each case as compared with the
comparable period of the preceding year and with
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any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases
which the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(iv) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries and
BodyBilt, which appear in the Prospectus, or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and BodyBilt and have found them to be in agreement.
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ANNEX II
Pursuant to Section 7(e) of the Underwriting Agreement, Xxxxxxxx, Xxxxxx
& Xxxxxxxx PC shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Act and the applicable published Rules and Regulations; and
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules of BodyBilt audited
(and, if applicable, prospective financial statements and/or pro forma
financial information examined) by them and included in the Prospectus
or the Registration Statement comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and
the related published Rules and Regulations; and, if applicable, they
have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial data, pro
forma financial information, prospective financial statements and/or
condensed financial statements derived from audited financial statements
of BodyBilt for the periods specified in such letter, as indicated in
their reports thereon, copies of which have been furnished to the
representatives of the Underwriters (the "Representatives").
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EXHIBIT A
CORPORATE JURISDICTION OF
SUBSIDIARIES INCORPORATION
------------ -------------
1) EB Subsidiary, Inc. Texas
E-1
