QUAKER FABRIC CORPORATION
3,750,000 Shares*
Common Stock
UNDERWRITING AGREEMENT
, 1998
PRUDENTIAL SECURITIES INCORPORATED
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
WHEAT FIRST SECURITIES, INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Quaker Fabric Corporation, a Delaware corporation (the "Company"),
Nortex Holdings, Inc. (the "Selling Securityholder") and Xxxxx X. Xxxxxxxx, J.
Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxx (together, the "Nortex Owners") hereby
confirm their agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
Company proposes to issue and sell to the several Underwriters an aggregate of
3,000,000 shares (the "Company Firm Securities") of the Company's Common Stock,
par value $0.01 per share ("Common Stock") and Nortex Holdings proposes to sell
to the several Underwriters 750,000 authorized and outstanding shares of Common
Stock (the "Selling Securityholder Firm Securities" and together with the
Company Firm Securities, the "Firm Securities"). The Company also proposes to
issue and sell to the several Underwriters not more than 562,500 additional
shares of Common Stock if requested by the Representatives as provided in
Section 3 of this Agreement. Any and all shares of Common Stock to be purchased
by the Underwriters pursuant to such option are referred to herein as the
"Option Securities," and the Firm Securities and any Option Securities are
collectively referred to herein as the "Securities".
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* Plus an option to purchase from the Company up to 562,500 additional shares
to cover over-allotments.
2. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, each of the several Underwriters that:
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"). A registration
statement on such Form (File No. 333- ) with respect to the
Securities, including a prospectus subject to completion, has been filed
by the Company with the Securities and Exchange Commission (the
"Commission") under the Act, and one or more amendments to such
registration statement may have been so filed. After the execution of
this Agreement, the Company will file with the Commission either (A) if
such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (1) if
the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify the
Preliminary Prospectus (as hereinafter defined) that it supplements and,
if required to be filed pursuant to Rules 434(c)(2) or 424(b), an
Integrated Prospectus (as hereinafter defined), in either case,
containing such information as is required or permitted by Rules 434,
430A and 424(b) under the Act or (2) if the Company does not rely on
Rule 434 under the Act, a prospectus in the form most recently included
in an amendment to such registration statement (or, if no such amendment
shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act, and in the case of either clause
(A)(1) or (A)(2) of this sentence as have been provided to and approved
by the Representatives prior to the execution of this Agreement, or (B)
if such registration statement, as it may have been amended, has not
been declared by the Commission to be effective under the Act, an
amendment to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to and approved
by the Representatives prior to the execution of this Agreement. The
Company may also file a related registration statement with the
Commission pursuant to Rule 462(b) under the Act for the purpose of
registering certain additional Securities, which registration shall be
effective upon filing with the Commission. As used in this Agreement,
the term "Original Registration Statement" means the registration
statement initially filed relating to the Securities, as amended at
the time when it was or is declared effective, including (A) all
financial schedules and exhibits thereto, (B) all documents
incorporated by reference therein filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and (C) any information
omitted therefrom pursuant to Rule 430A under the Act and included in
the Prospectus (as hereinafter defined) or if required to be filed
pursuant to Rule 434(c)(2) and 424(b), in the Integrated Prospectus;
the term "Rule 462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b) under the
Act (including the Registration Statement and any Preliminary Prospectus
or Prospectus incorporated therein at the time such Registration
Statement becomes effective); the term "Registration Statement" includes
both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term
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"Preliminary Prospectus" means each prospectus subject to completion
filed with such registration statement or any amendment thereto
(including the prospectus subject to completion, if any, included in the
Registration Statement or any amendment thereto at the time it was or is
declared effective) including all documents incorporated by reference
therein filed under the Exchange Act; the term "Prospectus" means:
(1) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first filed
pursuant to Rule 424(b)(7) under the Act, together with the
Preliminary Prospectus identified therein that such Term Sheet
supplements;
(2) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Act; or
(3) if the Company does not rely on Rule 434 under the Act
and if no prospectus is required to be filed pursuant to Rule
424(b) under the Act, the prospectus included in the Registration
Statement including, in the case of clauses (1), (2) or (3) of
this sentence, all documents incorporated by reference therein
filed under the Exchange Act;
the term "Integrated Prospectus" means a prospectus first filed with the
Commission pursuant to Rules 434(c)(2) and 424(b) under the Act; and the term
"Term Sheet" means any abbreviated term sheet that satisfies the requirements of
Rule 434 under the Act. Any reference in this Agreement to an "amendment or
supplement" to any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or an "amendment" to any registration statement (including the
Registration Statement) shall be deemed to include any document incorporated by
reference therein that is filed with the Commission under the Exchange Act after
the date of such Preliminary Prospectus, Prospectus, Integrated Prospectus or
registration statement, as the case may be; any reference herein to the "date"
of a Prospectus that includes a Term Sheet shall mean the date of such Term
Sheet. For purposes of the preceding sentence, any reference to the "effective
date" of an amendment to a registration statement shall, if such amendment is
effected by means of the filing with the Commission under the Exchange Act of a
document incorporated by reference in such registration statement, be deemed to
refer to the date on which such document was so filed with the Commission.
(ii) The Commission has not issued any order preventing or
suspending use of any Preliminary Prospectus. When any Preliminary
Prospectus and any amendment or supplement thereto was filed with the
Commission it (A) contained all statements required to be stated therein
in accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (B) did not include any untrue statement of a material
fact or omit to state any material
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fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, it (A) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act, the Exchange Act
and the respective rules and regulations of the Commission thereunder
and (B) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading. When the Prospectus or any Term Sheet that is a
part thereof or any Integrated Prospectus or any amendment or supplement
to the Prospectus is filed with the Commission pursuant to Rule 424(b)
(or, if the Prospectus or part thereof or such amendment or supplement
is not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and on the Firm Closing Date
and any Option Closing Date (both as hereinafter defined), each of the
Prospectus, and, if required to be filed pursuant to Rule 434(c)(2) and
424(b) under the Act, the Integrated Prospectus, as amended or
supplemented at any such time, (A) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act, the Exchange Act and the respective rules and regulations
of the Commission thereunder and (B) did not or will not include any
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, not misleading. The foregoing
provisions of this paragraph (ii) do not apply to statements or
omissions made in any Preliminary Prospectus or any amendment or
supplement thereto, the Registration Statement or any amendment thereto,
the Prospectus or, if required to be filed pursuant to Rules 434(c)(2)
and 424(b) under the Act, the Integrated Prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(iii) If the Company has elected to rely on Rule 462(b)
and the Rule 462(b) Registration Statement has not been declared
effective, (A) the Company has filed a Rule 462(b) Registration
Statement in compliance with and that is effective upon filing pursuant
to Rule 462(b) and has received confirmation of its receipt and (B) the
Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under
the Act or the Commission has received payment of such filing fee.
(iv) The Company and each of its subsidiaries have been
duly organized and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation and
are duly qualified to
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transact business as foreign corporations and are in good standing under
the laws of all other jurisdictions where the ownership or leasing of
their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(v) The Company and each of its subsidiaries have full
corporate power to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement
and each of the Prospectus and any Integrated Prospectus or, if the
Prospectus and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus; and the Company has full
corporate power to enter into this Agreement and to carry out all the
terms and provisions hereof to be carried out by it.
(vi) The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and, except as otherwise set forth in each
of the Prospectus and any Integrated Prospectus or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus, are owned beneficially by the Company
free and clear of any security interests, liens, encumbrances, equities
or claims, except for shares of Quaker Fabric Mexico, S.A. de C.V. owned
by directors of such corporation.
(vii) The Company has an authorized, issued and
outstanding capitalization as set forth in each of the Prospectus and
any Integrated Prospectus or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus. All of the issued shares of capital stock of the Company,
including the Selling Securityholder Firm Securities and the Option
Securities, have been duly authorized and validly issued and are fully
paid and nonassessable. The Company Firm Securities have been duly
authorized and at the Firm Closing Date, after payment therefor in
accordance herewith, will be validly issued, fully paid and
nonassessable. No holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to
subscribe for any of the Securities, and no holder of securities of the
Company has any right which has not been fully exercised or waived to
require the Company to register the offer or sale of any securities
owned by such holder under the Act in the public offering contemplated
by this agreement.
(viii) The capital stock of the Company conforms to the
description thereof contained in each of the Prospectus and any
Integrated Prospectus or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus.
(ix) Except as disclosed in each of the Prospectus and
any Integrated Prospectus (or, if the Prospectus and any required
Integrated
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Prospectus are not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities or obligations of
the Company or any of its subsidiaries convertible into or exchangeable
for any capital stock of the Company or any such subsidiary, (B)
warrants, rights or options to subscribe for or purchase from the
Company or any such subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(x) The consolidated financial statements and schedules of
the Company and its consolidated subsidiaries included in the
Registration Statement and each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus
are not in existence, the most recent Preliminary Prospectus) fairly
present the financial position of the Company and its consolidated
subsidiaries and the results of operations and changes in financial
condition as of the dates and periods therein specified. Such financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein). The selected
financial and operating data set forth under the caption "Selected
Consolidated Financial and Operating Data" in each of the Prospectus and
any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus) fairly present, on the basis stated in each of the
Prospectus and any Integrated Prospectus (or such Preliminary
Prospectus), the information included therein.
(xi) Xxxxxx Xxxxxxxx LLP, which has certified the
financial statements of the Company and its consolidated subsidiaries
and delivered its report with respect to the audited consolidated
financial statements and schedules included in the Registration
Statement and each of the Prospectus and any Integrated Prospectus are
(or, if the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus), are independent
public accountants as required by the Act and the applicable rules and
regulations thereunder.
(xii) The execution and delivery of this Agreement have
been duly authorized by the Company and this Agreement has been duly
executed and delivered by the Company, and is the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms.
(xiii) No legal or governmental proceedings are pending to
which the Company or any of its subsidiaries is a party or to which the
property of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or each of the
Prospectus and any Integrated Prospectus and are not described therein
(or, if the Prospectus and any required
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Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus), and no such proceedings have been threatened against the
Company or any of its subsidiaries or with respect to any of their
respective properties; and no contract, other document required to be
described in the Registration Statement or the Prospectus or any
Integrated Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus) or filed as required.
(xiv) The issuance, offering and sale of the Company Firm
Securities to the Underwriters by the Company pursuant to this
Agreement, the compliance by the Company with the other provisions of
this Agreement and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority,
except such as have been obtained, such as may be required under state
securities or blue sky laws and, if the registration statement filed
with respect to the Securities (as amended) is not effective under the
Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (B)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any of their respective properties are bound,
or the charter documents or by-laws of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its subsidiaries.
(xv) Subsequent to the respective dates as of which
information is given in the Registration Statement, the Prospectus or
any Integrated Prospectus, or, if the Prospectus or any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus, neither the Company nor any of its subsidiaries has
sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding and there has not been any
material adverse change, or, to the knowledge of the Company, any
development involving a prospective material adverse change, in the
condition (financial or otherwise), management, business prospects, net
worth, or results of the operations of the Company or any of its
subsidiaries, except in each case as described in or contemplated by
each of the Prospectus and any Integrated Prospectus or, if the
Prospectus and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus.
(xvi) The Company has not, directly or indirectly, (A)
taken any action designed to cause or to result in, or that has
constituted or which might
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reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Securities or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased, or paid anyone any compensation
for soliciting purchases of, the Securities or (2) paid or agreed to pay
to any person any compensation for soliciting another to purchase any
other securities of the Company (except for the sale of Securities under
this Agreement).
(xvii) Subsequent to the respective dates as of which
information is given in the Registration Statement and each of the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus), (A) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or contingent,
other than in the ordinary course of business, nor entered into any
material transaction not in the ordinary course of business; (B) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock; and (C) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company and its consolidated subsidiaries, except in each case as
described in or contemplated by each of the Prospectus and any
Integrated Prospectus are (or, if the Prospectus and any required
Integrated Prospectus not in existence, the most recent Preliminary
Prospectus).
(xviii) The Company and each of its subsidiaries have good
and marketable title in fee simple to all items of real property and
marketable title to all personal property owned by each of them, in each
case free and clear of any security interests, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such properties taken as a whole and do
not materially interfere with the use made or proposed to be made of
such properties by the Company or such subsidiary, and any real property
and buildings held under lease by the Company or any such subsidiary are
held under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not materially interfere with the
use made or proposed to be made of such property and buildings by the
Company or such subsidiary, in each case except as described in or
contemplated by each of the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus).
(xix) No labor dispute with the employees of the Company
or any of its subsidiaries exists or is threatened or imminent that
could reasonably be expected to result in a material adverse change in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, except as
described in or contemplated by each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any
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required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(xx) The Company and its subsidiaries own or possess, or
can acquire on reasonable terms, all material patents, patent
applications, trademarks, service marks, trade names, licenses,
copyrights and proprietary or other confidential information currently
employed by them in connection with their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
infringement of or conflict with asserted rights of any third party with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company
and its subsidiaries, except as described in or contemplated by each of
the Prospectus and any Integrated Prospectus (or, if the Prospectus and
any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus). The Company has received a patent (Serial No.
08-457,757) from the United States Patent and Trademark Office for
patent protection of the proprietary manufacturing process owned and
developed by the Company to produce Ankyra'tm' chenille yarn (the
"Ankyra Patent") and the Ankyra Patent does not conflict with any other
patent or violate the rights of any other person.
(xxi) The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as the Company believes are prudent and
customary in the businesses in which they are engaged; neither the
Company nor any such subsidiary has been refused any insurance coverage
sought or applied for; and neither the Company nor any such subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, except as described in or contemplated by each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(xxii) No subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such subsidiary's capital
stock, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such
subsidiary's property or assets to the Company or any other subsidiary
of the Company, except as described in or contemplated by each of the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
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(xxiii) The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess any
certificate, authorization or permit would not materially and adversely
affect the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company and its subsidiaries,
taken as a whole, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole except as described in or contemplated by each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(xxiv) Each of the Company and its subsidiaries has timely
filed all foreign, federal, state and local tax returns that are
required to be filed or has requested extensions thereof (except in any
case in which the failure so to file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole) and has
paid all taxes required to be paid by it and any other assessment, fine
or penalty levied against it, to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as described in or
contemplated by each of the Prospectus and any required Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus
are not in existence, the most recent Preliminary Prospectus).
(xxv) Neither the Company nor any of its subsidiaries is
in violation of any foreign, federal or state law or regulation relating
to occupational safety and health or to the storage, handling or
transportation of hazardous or toxic materials and the Company and its
subsidiaries have received all permits, licenses or other approvals
required of them under applicable foreign, federal and state
occupational safety and health and environmental laws and regulations to
conduct their respective businesses, and the Company and each such
subsidiary is in compliance in all material respects with all terms and
conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not,
singly or in the aggregate, result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, except as described in or contemplated by each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
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(xxvi) Each certificate signed by any officer of the
Company and delivered to the Representatives or counsel for the
Underwriters shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(xxvii) Except for the shares of capital stock of each of
the subsidiaries owned by the Company and such subsidiaries, neither the
Company nor any such subsidiary owns any shares of stock or any other
equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity, except as described in
or contemplated by each of the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus).
(xxviii) There are no holders of securities of the
Company, who, by reason of the filing of the Registration Statement,
have the right (and have not waived such right) to request the Company
to register under the Act, or to include in the Registration Statement,
securities held by them.
(xxix) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxx) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in the
due performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or any of their
respective properties is bound or may be affected in any material
adverse respect with regard to property, business or operations of the
Company and its subsidiaries.
(xxxi) The Company has made all filings required to be
made by it under the Exchange Act.
(xxxii) The Company has not distributed and, prior to the
later of (A) the Closing Date and (B) the completion of the distribution
of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment
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thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or other materials, if any permitted by the Act.
(xxxiii) The three-for-two stock split of the Common Stock
declared in 1998 and paid on , 1998 (the "Stock Split")
was made in compliance with the provisions of the Company's certificate
of incorporation and by-laws and in compliance with all applicable
federal, state or other governmental securities or other laws and the
requirements of the Nasdaq Stock Market.
(b) The Selling Securityholder represents and warrants to, and
agrees with, each of the several Underwriters that:
(i) The Selling Securityholder has full corporate power to
enter into this Agreement and to sell, assign, transfer and deliver to
the Underwriters the Securities to be sold by the Selling Securityholder
hereunder in accordance with the terms of this Agreement; the execution
and delivery of this Agreement have been duly authorized by all
necessary corporate action of the Selling Securityholder; and this
Agreement has been duly executed and delivered by the Selling
Securityholder.
(ii) The Selling Securityholder is the lawful owner of the
Securities to be sold by the Selling Securityholder hereunder and upon
sale and delivery of, and payment for, such Securities, as provided
herein, the Selling Securityholder will convey good and marketable title
to such Securities, free and clear of any security interests, liens,
encumbrances, equities, claims or other defects.
(iii) The Selling Securityholder has not, directly or
indirectly, (i) taken any action designed to cause or result in, or that
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities or (ii) since
the filing of the Registration Statement (A) sold, bid for, purchased,
or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company
(except for the sale of Securities by the Selling Securityholder under
this Agreement).
(iv) To the extent that any statements or omissions are
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by the
Selling Securityholder specifically for use therein, such Preliminary
Prospectus did, and the Registration Statement and the Prospectus and
any amendments or supplements thereto, when they become effective or are
filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act, the
-12-
Exchange Act and the respective rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Selling
Securityholder has reviewed the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) and the
Registration Statement, and the information regarding the Selling
Securityholder set forth therein under the caption "Principal and
Selling Stockholders" is complete and accurate.
(v) The sale by the Selling Securityholder of Securities
pursuant hereto is not prompted by any adverse information concerning
the Company that is not set forth in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(vi) The sale of the Securities to the Underwriters by the
Selling Securityholder pursuant to this Agreement, the compliance by the
Selling Securityholder with the other provisions of this Agreement and
the consummation of the other transactions herein contemplated do not
(i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have
been obtained, such as may be required under state securities or blue
sky laws and, if the registration statement filed with respect to the
Securities (as amended) is not effective under the Act as of the time of
execution hereof, such as may be required (and shall be obtained as
provided in this Agreement) under the Act, or (ii) conflict with or
result in a breach or violation of any of the terms and provisions of,
or constitute a default under any indenture, mortgage, deed of trust,
lease or other agreement or instrument to which the Selling
Securityholder or any of its subsidiaries is a party or by which the
Selling Securityholder or any of its subsidiaries or any of their
respective properties are bound, or the charter documents or by-laws of
the Selling Securityholder or any of its subsidiaries or any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Selling
Securityholder or any of its subsidiaries.
(vii) The Selling Securityholder has not distributed and,
prior to the later of (A) the Closing Date and (B) the completion of the
distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the Securities
other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or other materials, if any permitted by the Act.
(c) Each Nortex Owner represents and warrants to, and agrees
with, each of the several Underwriters that the representations and warranties
of Nortex Holdings in Section 2(b) hereof are true and correct in all respects.
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3. Purchase, Sale and Delivery of the Securities. (a) On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Company Firm Securities, and the Selling Securityholder
agrees to sell the Selling Securityholder Firm Securities to the Underwriters
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company and the Selling Securityholder, at a purchase price of $ per
share, the number of Firm Securities set forth opposite the name of such
Underwriter in Schedule 1 hereto. The number of Firm Securities to be purchased
from the Company and the Selling Securityholder, respectively (as adjusted by
the Representatives to avoid fractions), by each of the Underwriters shall be
determined by multiplying the aggregate number of such Firm Securities to be
sold by the Company or the Selling Securityholder, as the case may be, as set
forth opposite the name of such Underwriter on Schedule 1 hereto and the
denominator of which is the total number of Firm Securities set forth on
Schedule 1 hereto. One or more certificates in definitive form for the Firm
Securities that the several Underwriters have agreed to purchase hereunder, and
in such denomination or denominations and registered in such name or names as
the Representatives request upon notice to the Company and the Selling
Securityholder at least 48 hours prior to the Firm Closing Date, shall be
delivered by or on behalf of the Company and the Selling Securityholder to the
Representatives for the respective accounts of the Underwriters, against payment
by or on behalf of the Underwriters of the purchase price therefor by wire
transfer in same-day funds to the respective accounts of the Company and the
Selling Securityholder. Such delivery of and payment for the Firm Securities
shall be made at the offices of Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 at [9:30 A.M.], New York time, on , 1998, or at
such other place, time or date as the Representatives, the Company and the
Selling Securityholder may agree upon or as the Representatives may determine
pursuant to Section 9 hereof, such time and date of delivery against payment
being herein referred to as the "Firm Closing Date." Each of the Company and
the Selling Securityholder severally will make such certificate or certificates
for the Firm Securities to be sold by it available for checking and packaging
by the Representatives at the offices in New York, New York of the Company's
transfer agent or registrar or of Prudential Securities Incorporated at least
24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of this
Section 3. The option granted hereby may be exercised as to all or any part of
the Option Securities from time to time within thirty days after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange is open for
trading). The Underwriters shall not be under any obligation to purchase any of
the Option Securities prior to the exercise of such option. The Representatives
may from time to time exercise the option granted hereby by giving
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notice in writing or by telephone (confirmed in writing) to the Company setting
forth the aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two business
days or later than five business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Upon exercise of the option as
provided herein, the Company shall become obligated to issue and sell to each of
the several Underwriters, and, subject to the terms and conditions herein set
forth, each of the Underwriters (severally and not jointly) shall become
obligated to purchase from the Company, the same percentage of the total number
of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 3,
except that reference therein to the Firm Securities and the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) Each of the Company and the Selling Securityholder hereby
acknowledges that the wire transfer by or on behalf of the Underwriters of the
purchase price for any Shares does not constitute closing of a purchase and sale
of the Shares. Only execution and delivery of a receipt for Shares by the
Underwriters indicates completion of the closing of a purchase of the Shares
from the Company and the Selling Securityholder. Furthermore, in the event that
the Underwriters wire funds to the Company and the Selling Securityholder prior
to the completion of the closing of a purchase of Shares, each of the Company
and the Selling Securityholder hereby acknowledges that until the Underwriters
execute and deliver a receipt for the Shares, by facsimile or otherwise, the
Company and the Selling Securityholder will not be entitled to the wired funds
and shall return the wired funds to the Underwriters as soon as practicable (by
wire transfer of same-day funds) upon demand. In the event that the closing of a
purchase of Shares is not completed and the wire funds are not returned by the
Company or the Selling Securityholder to the Underwriters on the same day the
wired funds were received by the Company and the Selling Securityholder, each of
the Company and the Selling Securityholder severally agree to pay to the
Underwriters in respect of each day the wire funds are not returned by it, in
same-day funds, interest on the amount of such wire funds in an amount
representing the Underwriters' cost of financing as reasonably determined by
Prudential Securities Incorporated.
-15-
(d) It is understood that any of you, individually and not as one
of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of the release
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants. (a) The Company covenants and agrees with each of the
Underwriters that:
(i) The Company will use its reasonable best efforts to
cause the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto to become
effective as promptly as possible. If required, the Company will file
the Prospectus or any Term Sheet that constitutes a part thereof and any
amendment or supplement thereto with the Commission in the manner and
within the time period required by Rules 434 and 424(b) under the Act.
During any time when a prospectus relating to the Securities is required
to be delivered under the Act, the Company (A) will comply with all
requirements imposed upon it by the Act and the Exchange Act and the
respective rules and regulations of the Commission thereunder to the
extent necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and of each of
the Prospectus and any Integrated Prospectus, as then amended or
supplemented, and (B) will not file with the Commission the Prospectus,
Term Sheet or the amendment referred to in the third sentence of Section
2(a) hereof, any amendment or supplement to such Prospectus, Term Sheet
or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement of which the Representatives shall not previously
have been advised and furnished with a copy for a reasonable period of
time prior to the proposed filing and as to which filing the
Representatives shall not have given their consent, which consent will
not be unreasonably withheld. The Company will prepare and file with the
Commission, in accordance with the rules and regulations of the
Commission, promptly upon reasonable request by the Representatives or
counsel for the Underwriters, any amendments to the Registration
Statement or amendments or supplements to the Prospectus and any
Integrated Prospectus that may be necessary or advisable in connection
with the distribution of the Securities by the several Underwriters, and
will use its reasonable best efforts to cause any such amendment to the
Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus and any Integrated Prospectus or
any amendment or
-16-
supplement thereto has been filed and will provide evidence satisfactory
to the Representatives of each such filing or effectiveness.
(ii) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (A) the
issuance by the Commission of any stop order suspending the
effectiveness of the Original Registration Statement or any Rule 462(b)
Registration Statement or any amendment thereto or any order directed at
any document incorporated by reference in the Registration Statement or
any order preventing or suspending the use of any Preliminary
Prospectus, the Prospectus or any Integrated Prospectus or any amendment
or supplement thereto, (B) the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, (C) the
institution, threatening or contemplation of any proceeding for any such
purpose or (D) any request made by the Commission for amending the
Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or for additional information.
The Company will use its best efforts to prevent the issuance of any
such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iii) The Company will arrange for the qualification of
the Securities for offering and sale under the securities or blue sky
laws of such jurisdictions as the Representatives may reasonably
designate and to continue such qualifications in effect for as long as
may be necessary to complete the distribution of the Securities,
provided, however, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(iv) If, at any time prior to the later of (A) the final
date when a prospectus relating to the Securities is required to be
delivered under the Act or (B) the Option Closing Date, any event occurs
as a result of which each of the Prospectus or any Integrated
Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the
Prospectus or any Integrated Prospectus to comply with the Act, the
Exchange Act or the respective rules or regulations of the Commission
thereunder, the Company will promptly notify the Representatives thereof
and, subject to Section 5(a)(i) hereof, will prepare and file with the
Commission, at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus or any
Integrated Prospectus that corrects such statement or omission or
effects such compliance.
(v) The Company will, without charge, provide (A) to the
Representatives and to counsel for the Underwriters a conformed copy of
the
-17-
registration statement originally filed with respect to the Securities
and each amendment thereto (in each case including exhibits thereto) or
any Rule 462(b) Registration Statement, certified by the Secretary or an
Assistant Secretary of the Company to be true and complete copies
thereof as filed with the Commission by electronic transmission, (B) to
each other Underwriter, a conformed copy of such registration statement
or any Rule 462(b) Registration Statement and each amendment thereto (in
each case without exhibits thereto) and (C) so long as a prospectus
relating to the Securities is required to be delivered under the Act, as
many copies of each Preliminary Prospectus, the Prospectus or any
Integrated Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request; without limiting the application
of clause (C) of this sentence, the Company, not later than (A) 6:00 PM,
New York City time, on the date of determination of the public offering
price, if such determination occurred at or prior to 10:00 A.M., New
York City time, on such date or (B) 2:00 PM, New York City time, on the
business day following the date of determination of the public offering
price, if such determination occurred after 10:00 A.M., New York City
time, on such date, will deliver in New York City to the Underwriters,
without charge, as many copies of the Prospectus and any amendment or
supplement thereto as the Representatives may reasonably request for
purposes of confirming orders that are expected to settle on the Firm
Closing Date.
(vi) The Company, as soon as practicable, will make
generally available to its securityholders and to the Representatives a
consolidated earnings statement of the Company and its subsidiaries that
satisfies the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(vii) The Company will apply the net proceeds from the
sale of the Company Firm Securities as set forth under "Use of Proceeds"
in the Prospectus or any Integrated Prospectus.
(viii) The Company will not, directly or indirectly,
without the prior written consent of Prudential Securities Incorporated,
on behalf of the Underwriters, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose
(or announce any offer, sale, offer of sale, contract of sale, pledge,
grant of any option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of
180 days after the date hereof, except pursuant to this Agreement and
except for issuances pursuant to the exercise of outstanding employee
stock options, pursuant to options granted under the Company's stock
option plans, or pursuant to the existing option to Nortex Holdings.
(ix) The Company will not, directly or indirectly, (A)
take any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the
-18-
price of any security of the Company to facilitate the sale or resale of
the Securities or (B) (1) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities or (2) pay or
agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Company other than as provided by
this Agreement.
(x) The Company will obtain the agreements described in
Section 7(h) hereof prior to the Firm Closing Date.
(xi) If at any time during the 25-day period after the
Registration Statement becomes effective or the period prior to the
Option Closing Date, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion
the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus and
any Integrated Prospectus), the Company will, after notice from you
advising the Company to the effect set forth above, forthwith prepare,
consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
(xii) If the Company elects to rely on Rule 462(b), the
Company shall both file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable fees in
accordance with Rule 111 promulgated under the Act by the earlier of (A)
10:00 P.M. Eastern time on the date of this Agreement and (B) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
(xiii) The Company will ensure that the Securities remain
included for quotation on the Nasdaq National Market or a national
securities exchange following the Firm Closing Date.
(b) Each of the Selling Securityholder and the Nortex Owners
severally covenants and agrees with each of the Underwriters that:
(i) Such person will not, directly or indirectly, (A) take
any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities or (B) (1) sell, bid for, purchase,
or pay anyone any compensation for soliciting purchases of, the
Securities or (2) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company other
than as provided by this Agreement.
(ii) Such person will not, directly or indirectly, without
the prior written consent of Prudential Securities Incorporated, offer,
sell, offer to sell,
-19-
contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose (or announce any offer, sale, offer of sale, contract of
sale, pledge, grant of any option to purchase or other sale or
disposition) of any Securities legally or beneficially owned by such
person or any securities convertible into, or exchangeable or
exercisable for, Securities for a period of 180 days after the date
hereof, except for (a) up to 33,701 shares that may be sold by Nortex
Holdings pursuant to the Holdings Option (as defined in the Company's
1998 Proxy Statement as filed with the Commission on April 15, 1998 (the
"1998 Proxy Statement")) and (b) 150,000 shares subject to a pledge
granted by Nortex Holdings.
(iii) As soon as such person is advised thereof, such
person will advise the Representatives (and immediately thereafter
confirm such advise in writing), (i) of receipt by such person or by any
representative or agent of such person, of any communication from the
Commission relating to the Registration Statement, the Prospectus or any
Preliminary Prospectus, or any notice or order of the Commission
relating to the Company or such person in connection with the
transactions contemplated by this Agreement and (ii) of the happening of
any event which makes or may make any statement of a material fact made
in the Registration Statement, the Prospectus or any Preliminary
Prospectus relating to such person untrue or that requires the making of
any change in the Registration Statement, Prospectus or Preliminary
Prospectus, as the case may be, in order to make such statement, in
light of the circumstances in which it was made, not misleading.
6. Expenses. The Company will pay all costs and expenses incident to the
performance of its obligations and those of the Selling Securityholder under
this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 11 hereof,
including all costs and expenses incident to (i) the printing or other
production of documents with respect to the transactions, including any costs of
printing the registration statement originally filed with respect to the
Securities and any amendment thereto, any Rule 462(b) Registration Statement,
any Preliminary Prospectus, the Prospectus and any Integrated Prospectus and any
amendment or supplement thereto, this Agreement and any blue sky memoranda, (ii)
all arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the Underwriters
relating thereto, (vi) the filing fees of the Commission and the National
Association of Securities Dealers, Inc. relating to the Securities, (vii) the
quotation of the Securities on the Nasdaq National Market, (viii) any meetings
with prospective investors in the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the Underwriters)
and (ix) advertising relating to the offering of the Securities approved by the
Company
-20-
(other than as shall have been specifically approved by the Representatives to
be paid for by the Underwriters). If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 11 hereof or because of any failure,
refusal or inability on the part of the Company, the Selling Securityholder or
any Nortex Owner to perform all obligations and satisfy all conditions on its
part to be performed or satisfied hereunder other than by reason of a default by
any of the Underwriters, the Company will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. The Company shall not in any event
be liable to any of the Underwriters for the loss of anticipated profits from
the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company, the Selling Securityholder and
the Nortex Owners contained herein as of the date hereof and as of the Firm
Closing Date, as if made on and as of the Firm Closing Date, to the accuracy of
the statements of the Company's officers made pursuant to the provisions hereof,
to the performance by the Company, the Selling Securityholder and the Nortex
Owners of their respective covenants and agreements hereunder and to the
following additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective as
of the time of execution hereof, the Original Registration Statement or such
amendment and, if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have been declared effective not later than
the earlier of (i) 11:00 A.M., New York time, on the date on which the amendment
to the registration statement originally filed with respect to the Securities or
to the Registration Statement, as the case may be, containing information
regarding the initial public offering price of the Securities has been filed
with the Commission and (ii) the time confirmations are sent or given as
specified by Rule 462(b)(2), or with respect to the Original Registration
Statement, or such later time and date as shall have been consented to by the
Representatives; if required, the Prospectus or any Term Sheet that constitutes
a part thereof and any Integrated Prospectus and any amendment or supplement
thereto shall have been filed with the Commission in the manner and within the
time period required by Rules 434 and 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement, the Prospectus or any Integrated
Prospectus shall have been issued, and no proceedings for that purpose shall
have been instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included
-21-
in the Registration Statement, the Prospectus or any Integrated Prospectus or
otherwise).
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP, counsel for the
Company, to the effect that:
(i) the Company and each of its subsidiaries listed in
[Exhibit 22] to the Registration Statement (the "Subsidiaries") have
been duly organized and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation and are duly qualified to transact business as foreign
corporations and are in good standing under the laws of the
jurisdictions listed on Schedule 2 to this Agreement;
(ii) the Company and each of the Subsidiaries have
corporate power to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement
and the Prospectus or any Integrated Prospectus, and the Company has
corporate power to enter into this Agreement and to carry out all the
terms and provisions hereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are held of record by the Company or another
Subsidiary and, to such counsel's knowledge, beneficially by the
Company, to such counsel's knowledge free and clear of any adverse
claims (within the meaning of Section 8-302 of the New York Uniform
Commercial Code);
(iv) the Company has authorized, issued and outstanding
capital stock as set forth in the Prospectus or any Integrated
Prospectus; all of the issued shares of capital stock of the Company,
including the Selling Securityholder Firm Securities and the Option
Securities, have been duly authorized and validly issued and are fully
paid and nonassessable, have been issued in compliance with all
applicable federal and state securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities created by statute or the Company's
certificate of incorporation; the Company Firm Securities have been duly
authorized by all necessary corporate action of the Company and, when
issued and delivered to and paid for by the Underwriters pursuant to
this Agreement, will be validly issued, fully paid and nonassessable;
the Securities have been duly included for trading on the Nasdaq
National Market; no holders of outstanding shares of capital stock of
the Company are entitled under statute or the Company's certificate of
incorporation as such to any preemptive or other rights to subscribe for
any of the Securities; and, to such counsel's knowledge, no holders of
securities of the Company are entitled to have such securities
registered under the Registration Statement;
-22-
(v) the statements set forth in the Company's registration
statement on Form 8-A, insofar as such statements purport to summarize
certain provisions of the capital stock of the Company, provide a fair
summary of such provisions; and the statements set forth under the
headings "Business -- Trademarks, Patents, Copyrights", "Business --
Environmental Matters" and "Business -- Legal Proceedings" in the
Prospectus and any Integrated Prospectus, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, provide a fair summary of such legal matters,
documents and proceedings;
(vi) the execution and delivery of this Agreement have
been duly authorized by all necessary corporate action of the Company
and this Agreement has been duly executed and delivered by the Company;
(vii) to the knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company or any of the
Subsidiaries is a party or to which the property of the Company or any
of the Subsidiaries is subject that are required to be described in the
Registration Statement, the Prospectus and any Integrated Prospectus and
are not described therein, and, to the best knowledge of such counsel,
no such proceedings have been threatened against the Company or any of
the Subsidiaries or with respect to any of their respective properties
and (B) no contract or other document is required to be described in the
Registration Statement, the Prospectus and any Integrated Prospectus to
be filed as an exhibit to the Registration Statement or incorporated
therein by reference that is not described therein or filed or
incorporated as required;
(viii) the issuance, offering and sale of the Securities
to the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the consummation of the other transactions herein contemplated do
not (A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have
been obtained and such as may be required under state securities or blue
sky laws, or (B) conflict with or result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or
instrument, filed as an exhibit to the Registration Statement or
incorporated by reference therein, or the charter documents or by-laws
of the Company or any of the Subsidiaries, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel and
applicable to the Company or any of the Subsidiaries;
(ix) the records of the United States Patent and Trademark
office indicate that the Company is the owner of U.S. Patent application
serial no. 08-457,757 and that the United States Patent and Trademark
Office has approved such application; such counsel has no knowledge of
asserted or
-23-
unasserted claims of any person relating to the scope or ownership of
such patent, nor liens which have been filed against the patent; and in
the course of such counsel's review such counsel noted no material
defect of form in the preparation or filing of the application for such
patent;
(x) the Registration Statement is effective under the Act;
any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof and any Integrated Prospectus, pursuant to
Rules 434 and 424(b) has been made in the manner and within the time
period required by Rules 434 and 424(b); and to the best knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement, the Prospectus and any Integrated Prospectus has
been issued, and no proceedings for that purpose have been instituted or
threatened by the Commission;
(xi) the Registration Statement originally filed with
respect to the Securities and each amendment thereto, any Rule 462(b)
Registration Statement, the Prospectus and any Integrated Prospectus (in
each case, other than the financial statements and other financial
information contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder;
(xii) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different", as such term is used in Rule
434, from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective amendment
thereto (including such information that is permitted to be omitted
pursuant to Rule 430A); and
(xiii) the Stock Split was made in compliance with the
provisions of the Company's certificate of incorporation and by-laws and
in compliance with all applicable federal, state or other governmental
securities or other laws and the requirements of the Nasdaq Stock
Market.
Such counsel shall also deliver a separate letter to the effect that
they have no reason to believe that the Registration Statement, as of its
effective date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus and any Integrated
Prospectus, as of its date or the date of such opinion, included or includes any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the
-24-
Company and public officials and, as to matters involving the application of
laws of any jurisdiction other than the State of New York, the General
Corporation Law of the State of Delaware or the United States, to the extent
satisfactory in form and scope to counsel for the Underwriters, upon the
opinions of Xxxxxxx X. Xxxxxx, Xxxxx Xxxxxxx-Xxxxxxx, and Xxxxxx Colianny Xxxx
& Xxxxxx and the opinion of Xxxxxxxx Xxxxxxx & Xxxxxxx as to patent matters. The
foregoing opinion shall also state that the Underwriters are justified in
relying upon such opinions, and copies of such opinions shall be delivered to
the Representatives and counsel for the Underwriters.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (b) shall include any amendment or
supplement thereto at the date of such opinion.
(c) The Selling Securityholder and the Nortex Owners shall have
furnished to the Representatives the opinion of Proskauer Xxxx Xxxxx &
Xxxxxxxxxx LLP, counsel for the Selling Securityholder and the Nortex Owners,
dated the Closing Date, to the effect that:
(i) The Selling Securityholder has full corporate power
and authority to enter into this Agreement and to sell, transfer and
deliver the Securities being sold by the Selling Securityholder
hereunder in the manner provided in this Agreement; the execution and
delivery of this Agreement have been duly authorized by all necessary
corporate action of the Selling Securityholder; this Agreement has been
duly executed and delivered by the Selling Securityholder and Nortex
Owner;
(ii) the delivery by the Selling Securityholder to the
several Underwriters of certificates for the Securities being sold
hereunder by the Selling Securityholder against payment therefor as
provided herein, will convey good and marketable title to such
Securities to the several Underwriters, free and clear of any adverse
claims (within the meaning of Section 8-302 of the New York Uniform
Commercial Code); and
(iii) the sale of the Securities to the Underwriters by
the Selling Securityholder pursuant to this Agreement, the compliance by
the Selling Securityholder and Nortex Owner with the other provisions of
this Agreement and the consummation of the other transactions herein
contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority,
except such as have been obtained and such as may be required under
state securities or blue sky laws, or (ii) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute
a default under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which the Selling Securityholder or any of
its subsidiaries is a party or by which the Selling Securityholder or
any of its subsidiaries or any of their respective properties are bound,
or the charter documents, by-laws or partnership agreement of the
Selling Securityholder or
-25-
any of its subsidiaries or any statute or, to the knowledge of such
counsel, any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Selling
Securityholder or any of its subsidiaries or any Nortex Owner.
In rendering such opinion, such counsel may rely, as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible officers
of the Company and public officials.
References to the Registration Statement, the Prospectus or any
Integrated Prospectus in this paragraph (c) shall include any amendment or
supplement thereto at the date of such opinion.
(d) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Fulbright & Xxxxxxxx L.L.P., New York, New York, counsel
for the Underwriters, with respect to the issuance and sale of the Firm
Securities, the Registration Statement, the Prospectus or any Integrated
Prospectus, and such other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(e) The Representatives shall have received from Xxxxxx Xxxxxxxx
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the Act,
the Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations;
(iii) on the basis of a reading of the latest available
interim unaudited financial statements of the Company, carrying out
certain specified procedures (which do not constitute an examination
made in accordance with generally accepted auditing standards) that
would not necessarily reveal matters of significance with respect to the
comments set forth in this paragraph (iii), a reading of the minute
books of the shareholders, the board of directors and any committees
thereof of the Company and each of its consolidated subsidiaries, and
inquiries of certain officials of the Company and its consolidated
subsidiaries who have responsibility for financial and accounting
matters, nothing came to their attention that caused them to believe
that (A) at a specific date not more than five days prior to the date of
such letter, there were any changes in the
-26-
capital stock or long-term debt of the Company and its consolidated
subsidiaries or any decreases in net current assets or stockholders'
equity of the Company and its consolidated subsidiaries, in each case
compared with amounts shown on the April 4, 1998 consolidated balance
sheet included in the Registration Statement and the Prospectus, or (B)
for the period from April 5, 1998 to such specified date net sales, net
income and earnings per share of the Company and its consolidated
subsidiaries were not at least %, % and %, respectively, of the
comparable amounts for the comparable period in the prior year, except
in all instances for changes, decreases or increases set forth in such
letter; and
(iv) they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general accounting
records of the Company and its consolidated subsidiaries and are
included in (A) the Registration Statement, the Prospectus and any
Integrated Prospectus under the captions "Prospectus Summary," "Risk
Factors," "The Company," "Use of Proceeds," "Capitalization," "Selected
Consolidated Financial and Operating Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business,"
"Management" and "Principal and Selling Stockholders," (B) the Company's
Annual Report on Form 10-K for the fiscal year ended January 3, 1998 and
(C) the 1998 Proxy Statement and have compared such amounts, percentages
and financial information with such records of the Company and its
consolidated subsidiaries and with information derived from such records
and have found them to be in agreement, excluding any questions of legal
interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (e) with respect to either letter
referred to above shall include any amendment or supplement thereto at the date
of such letter.
(f) The Representatives shall have received a certificate, dated
the Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of the Company, on behalf of the Company, to the
effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not
-27-
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading,
and the Prospectus and any Integrated Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any 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, not misleading; and the
Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to
the best of the Company's knowledge, are contemplated by the Commission;
and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement, the Prospectus and
any Integrated Prospectus, neither the Company nor any of its
subsidiaries has sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or, to the knowledge of the
Company, any development involving a prospective material adverse
change, in the condition (financial or otherwise), management, business
prospects, net worth or results of operations of the Company or any of
its subsidiaries, except in each case as described in or contemplated by
the Prospectus and any Integrated Prospectus (exclusive of any amendment
or supplement thereto).
(g) The Representatives shall have received a certificate from
the Selling Securityholder, signed by the principal executive officer and the
principal financial or accounting officer of the Selling Securityholder, and
each Nortex Owner, dated the Closing Date, to the effect that:
(i) the representations and warranties of the Selling
Securityholder or Nortex Owner in this Agreement are true and correct as
if made on and as of the Closing Date;
(ii) to the extent that any statements or omissions are
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information
furnished to the Company by the Selling Securityholder or Nortex Owner
specifically for use therein, the Registration Statement, as amended as
of the Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus or any Integrated Prospectus,
as amended or supplemented as of the Closing Date, does
-28-
not include any 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, not misleading;
and
(iii) the Selling Securityholder or Nortex Owner has
performed all covenants and agreements on its or his part to be
performed or satisfied at or prior to the Closing Date.
(h) The Representatives shall have received from each person who
is a director or officer of the Company an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of an option to purchase or other sale or disposition) of
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 180 days after the
date of this Agreement; provided, however, that the period for any officer of
the Company who is not a Nortex Owner shall be 90 days.
(i) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company, the Selling Securityholder and the Nortex Owners.
(j) Prior to the commencement of the offering of the Securities,
the Securities shall have been included for trading on the Nasdaq National
Market.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company, the Selling Securityholder and the
Nortex Owners shall furnish to the Representatives such conformed copies of such
opinions, certificates, letters and documents in such quantities as the
Representatives and counsel for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
8. Indemnification and Contribution.
(a) The Company and Xxxxx X. Xxxxxxxx ("Xxxxxxxx"), jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or
-29-
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus, or any
Integrated Prospectus or any amendment or supplement thereto or (B) any
application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the securities or blue sky laws thereof or
filed with the Commission or any securities association or securities
exchange (each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus, or any Integrated Prospectus or any
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading or
(iv) any untrue statement or alleged untrue statement of
any material fact provided by the Company in writing or relating
specifically to the Company and contained in any audio or visual
materials used in connection with the marketing of the Securities,
including without limitation, slides, videos, films, tape recordings,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and Xxxxxxxx
will 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 any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or any amendment or supplement thereto
or any Application in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and provided, further, that the Company and
Xxxxxxxx will not be liable to any Underwriter or any person controlling such
Underwriter with respect to any such untrue statement or omission made in any
Preliminary Prospectus that is corrected in the Prospectus (or any amendment or
supplement thereto) if the person asserting any such loss, claim, damage or
liability
-30-
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 4(a)(iv) and (v) of
this Agreement. Notwithstanding anything to the contrary in this paragraph (a),
including the joint and several nature of the obligations of the Company and
Xxxxxxxx, each Underwriter and each person who controls such Underwriter agrees
not to assert its rights to indemnity under this paragraph (a) against Xxxxxxxx
for losses, claims, damages or liabilities (or actions in respect thereof)
unless and until (i) such Underwriter or controlling person has requested
indemnification and reimbursement from the Company for such losses, claims,
damages or liabilities (including any legal or other expenses reasonably
incurred) and (ii) the Company does not within 30 days of such request (A) agree
to so indemnify such Underwriter or controlling person and (B) reimburse in full
such Underwriter or controlling person for any such losses, damages or
liabilities (including legal and other expenses) incurred. In the event that
litigation between the parties with respect to this paragraph (a) results in a
joint or joint and several judgment against the Company and Xxxxxxxx, each
Underwriter, and each person who controls such Underwriter, agrees that it will
not attempt to enforce such judgment against Xxxxxxxx unless and until any part
of such judgment shall remain unsatisfied by the Company for more than 30 days.
This indemnity agreement will be in addition to any liability which the Company
or Xxxxxxxx may otherwise have. The Company will not, without the prior written
consent of the Underwriter or Underwriters purchasing, in the aggregate, more
than fifty percent (50%) of the Securities, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Underwriter or any person who controls any such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) The Selling Securityholder and the Nortex Owners severally
agree to indemnify and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, each Underwriter and each
person who controls the Company or any Underwriter within the meaning of the Act
or the Exchange Act and each other Nortex Owner against any losses, claims,
damages or liabilities to which the Company, any such director, officer, such
Underwriter or any such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement made by the Selling
Securityholder or such Nortex Owner in Section 2 of this Agreement, (ii) any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any Integrated Prospectus or any amendment or supplement
thereto, or
-31-
any Application or (iii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading, provided, that, with
respect to clauses (ii) and (iii), 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 reliance upon and in conformity with written
information furnished to the Company by the Selling Securityholder or Nortex
Owner for use therein; and, subject to the limitation set forth immediately
preceding this clause, will reimburse, as incurred, any legal or other expenses
reasonably incurred by the Company, any such director, officer, such Underwriter
or any such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which the Selling
Securityholder or Nortex Owner may otherwise have. The Selling Securityholder or
Nortex Owner will not, without the prior written consent of the Underwriter or
Underwriters purchasing, in the aggregate, more than fifty percent (50%) of the
Securities, settle or comprise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter or
any person who controls any such Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act is a party to such claim, action, suit
or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(c) Each Underwriter will, severally and not jointly, indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, the Selling Securityholder, each Nortex Owner
and each person, if any, who controls the Company, the Selling Securityholder or
Nortex Owner within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company, any such director or officer of the Company, the Selling
Securityholder, such Nortex Owner or any such controlling person of the Company,
the Selling Securityholder or such Nortex Owner may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any Integrated Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or any amendment or supplement thereto,
or any Application 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 reliance
upon and in conformity with written information
-32-
furnished to the Company by any Underwriter through the Representatives
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company, any such director, officer or
controlling person, the Selling Securityholder or such Nortex Owner in
connection with investigating or defending any such loss, claim, damage,
liability or any action in respect thereof. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. Notwithstanding anything to the contrary in this paragraph (d),
failure by an indemnified party to give notice of the commencement of any action
to any indemnifying party shall not relieve the indemnifying party from any
liability under this Section 8 unless such failure causes actual material
prejudice to such indemnifying party. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section
8, representing the indemnified parties under such paragraph (a) who are parties
to such action or actions) or (ii) the indemnifying party does not promptly
retain counsel satisfactory to the indemnified party or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the
-33-
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party.
(e) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
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 (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that 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, the Selling
Securityholder and the Nortex Owners on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company and the Selling
Securityholder bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault of the parties 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, the Selling Securityholder, the
Nortex Owners or the Underwriters, the parties' relative intents, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company, the Selling Securityholder, the Nortex Owners and
the Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations
referred to above in this paragraph (e). Notwithstanding any other provision of
this paragraph (e), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total public offering price of the
Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Prudential Securities Incorporated Master
Agreement Among Underwriters. For purposes of this paragraph
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(e), each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company or any Selling Securityholder within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company or the Selling
Securityholder, as the case may be.
(f) The liability of the Selling Securityholder under this
Section 8 shall not exceed an amount equal to the public offering price of the
Securities sold by the Selling Securityholder to the Underwriters (after
deducting underwriting discounts and commissions) and the aggregate liability of
Nortex Owners under this Section 8 shall not exceed an amount equal to the
public offering price of the Securities sold by Nortex Holdings; provided,
however, that if Nortex Holdings shall distribute all of the proceeds of the
sale of Securities pursuant to this Agreement to the Nortex Owners, Nortex
Holdings shall have no liability under this Section 8 and the liability of each
Nortex Owner shall be equal to the amount of such proceeds distributed to him.
9. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
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"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers, the
Selling Securityholder, the Nortex Owners and the several Underwriters 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 (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Selling Securityholder, the Nortex Owners, any Underwriter or any
controlling person referred to in Section 8 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6 and 8 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated with respect to
the Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company and the Selling Securityholder given
prior to the Firm Closing Date or the related Option Closing Date, respectively,
in the event that the Company or the Selling Securityholder shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
their part to be performed or satisfied hereunder at or prior thereto or, if at
or prior to the Firm Closing Date or such Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall have, in
the sole judgment of the Representatives, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Company), in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market
shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market system;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
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(iv) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The stabilization legends on
the inside front cover page of the Preliminary Prospectus and the statements set
forth in the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by any Underwriter through the Representatives to the Company for the
purposes of Sections 2(b) and 8 hereof. The Underwriters confirm that such
statements (to such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Transactions Group; if sent to the Company, Nortex Holdings or the Nortex
Owners, shall be delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to the Company, Nortex Holdings or the Nortex Owners at 000
Xxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxxxxx 00000; with a copy to Proskauer Xxxx
Xxxxx & Xxxxxxxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Xxxxxx X. Xxxxxx, Esq.
14. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company, the Selling
Securityholder, the Nortex Owners and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company, the Selling Securityholder and the Nortex Owners contained in Section 8
of this Agreement shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company or the Selling
Securityholder within the meaning of Section
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15 of the Act or Section 20 of the Exchange Act, the Selling Securityholder and
the Nortex Owners. No purchaser of Securities from any Underwriter shall be
deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, the Company, the Selling
Securityholder and each Nortex Owner accepts for itself and in connection with
its properties, generally and unconditionally, the nonexclusive jurisdiction of
the aforesaid courts and waives any defense of forum non conveniens and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Nortex Holdings and each Nortex Owner designates and
appoints Xxxxx X. Xxxxxxxx and such other persons as may hereafter be selected
by the Selling Securityholder or Nortex Owner irrevocably agreeing in writing to
so serve, as its agent to receive on its behalf service of all process in any
such proceedings in any such court, such service being hereby acknowledged by
the Selling Securityholder and Nortex Owner to be effective and binding service
in every respect. A copy of any such process so served shall be mailed by
registered mail to the Selling Securityholder or Nortex Owner at its or his
address provided in Section 13 hereof; provided, however, that, unless otherwise
provided by applicable law, any failure to mail such copy shall not affect the
validity of service of such process. If any agent appointed by the Selling
Securityholder or Nortex Owner refuses to accept service, the Selling
Securityholder or Nortex Owner hereby agrees that service of process sufficient
for personal jurisdiction in any action against the Selling Securityholder or
Nortex Owner in the State of New York may be made by registered or certified
mail, return receipt requested, to the Selling Securityholder or Nortex Owner at
its or his address provided in Section 13 hereof, and the Selling Securityholder
or Nortex Owner hereby acknowledges that such service shall be effective and
binding in every respect. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of any Underwriter
to bring proceedings against any Selling Securityholder or Nortex Owner in the
courts of any other jurisdiction.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter
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shall constitute an agreement binding the Company, the Selling Securityholder,
the Nortex Owners and each of the several Underwriters.
Very truly yours,
QUAKER FABRIC CORPORATION
By ________________________
President
NORTEX HOLDINGS, INC.
By ________________________
President
___________________________
Xxxxx X. Xxxxxxxx
___________________________
Xxxxxxx Xxxxxxx
___________________________
J. Xxxxxx Xxxxxxxxx
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
WHEAT FIRST SECURITIES, INC.
By PRUDENTIAL SECURITIES INCORPORATED
By _____________________
Xxxx-Xxxxxx Canfin
Managing Director
For itself and on behalf of the Representatives.
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SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- -------------
Prudential Securities Incorporated......................................
The Xxxxxxxx-Xxxxxxxx Company, Inc......................................
Wheat First Securities, Inc.............................................
Total.................................... 3,750,000
=========
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Schedule 2
Subsidiaries
Quaker Fabric Corporation of Fall River (qualified in California,
Florida, Illinois,
Mississippi, New York,
North Carolina,
Pennsylvania and Texas)
Quaker Textile Corporation
Quaker Fabric Mexico, S.A. de C.V.
Quaker Fabric Foreign Sales Corporation
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