1
EXHIBIT 1
ROCKFORD CORPORATION
3,387,824 Shares
Common Stock
Par Value $.01 Per Share
UNDERWRITING AGREEMENT
August ____, 1999
Xxxx Xxxxxxxx Incorporated
Xxxxxxx & Company, Inc.
As Representatives of the several Underwriters
x/x Xxxx Xxxxxxxx Xxxxxxx
Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Rockford Corporation, an Arizona corporation (the "Company"), and the
shareholders of the Company named in Schedule B hereto (the "Selling
Shareholders") propose, subject to the terms and conditions stated herein, to
issue and sell, or to sell, as the case may be, to the several underwriters
named in Schedule A hereto (the "Underwriters"), for which you are acting as
representatives (the "Representatives"), an aggregate of 3,387,824 shares (the
"Firm Shares") of common stock, par value $.01 per share, of the Company (the
"Common Stock"), including 2,500,000 shares to be sold by the Company and
887,824 shares to be sold by the Selling Shareholders. The Company also
proposes, subject to the terms and conditions stated herein, to sell to the
Underwriters, at the Underwriters' election, up to an aggregate of 508,174
additional shares of Common Stock (the "Option Shares"). The Firm Shares and the
Option Shares are herein collectively called the "Shares."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-79285) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Act"). The registration statement, as
amended at the time it was declared effective, including the information (if
any) deemed to be part thereof pursuant to Rule 430A under the Act is herein
referred to as the "Registration Statement." The form of prospectus first filed
by the Company with the Commission pursuant to Rules 424(b) and 430A under the
Act is referred to herein as the "Prospectus." Each preliminary prospectus
included in the Registration Statement prior to the time it became effective or
filed with the Commission pursuant to Rule 424(a) under the Act is referred to
herein as a "Preliminary Prospectus." Copies of the Registration Statement,
including all exhibits and schedules thereto, any amendments thereto and all
Preliminary Prospectuses have been delivered to you.
2
The Company and the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Shares by the
Underwriters as follows:
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:
(i) The Registration Statement has been declared
effective under the Act, and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or threatened by the
Commission.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, nor, to the best of
the Company's knowledge have proceedings for such purpose been instituted, and
each Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and regulations
of the Commission promulgated thereunder (collectively, the "Regulations"), and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, the Company makes no representation or warranty
as to information contained in or omitted in reliance upon, and in conformity
with, written information furnished to the Company by or on behalf of any
Underwriter through the Representatives expressly for use in the preparation
thereof.
(iii) The Registration Statement conforms, and the
Prospectus and any amendments or supplements thereto will conform, in all
material respects to the requirements of the Act and Regulations. Neither the
Registration Statement nor any amendment thereto, and neither the Prospectus nor
any supplement thereto, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to information
contained in or omitted from the Registration Statement or the Prospectus, or
any such amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any Underwriter
through the Representatives, expressly for use in the preparation thereof.
(iv) The Company has been duly organized, is validly
existing as a corporation under the laws of the state of Arizona, has the
corporate power and authority to own, lease, license and use its properties and
conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in all jurisdictions in which the
conduct of its business or its ownership, leasing, licensing or using of
property requires such qualification and the failure so to qualify would have a
material adverse effect on the business, properties, condition,
2
3
financial or otherwise, or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(v) The Company has no subsidiaries other than those
disclosed in Exhibit 21 of the Registration Statement (hereinafter referred to
as its "subsidiaries"). Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease, license and use its properties and conduct its business
as described in the Prospectus, and is duly qualified to transact business in
all jurisdictions in which the conduct of its business or its ownership, lease,
license or use of property requires such qualification and the failure so to
qualify would have a Material Adverse Effect. Other than the Company's
subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity. All outstanding shares of capital stock of each of the
subsidiaries of the Company have been duly authorized and validly issued, are
fully paid and non-assessable, and are owned, directly or indirectly, by the
Company free and clear of all liens, encumbrances and security interests, except
for the security interest created pursuant to the Company's credit agreement
with FINOVA Capital Corporation. No options, warrants or other rights to
purchase, agreements or other obligations to issue, or other rights to convert
any obligations into, shares of capital stock or ownership interests in any of
the subsidiaries of the Company are outstanding.
(vi) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. All offers and sales by the Company of outstanding shares of
capital stock and other securities of the Company, prior to the date hereof,
were made in compliance with the Act and all applicable state securities or blue
sky laws and were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right. The Shares to be issued and sold by the
Company to the Underwriters pursuant to this Agreement have been duly authorized
and, when issued and paid for as contemplated herein, will be validly issued,
fully paid and nonassessable. Each of the Underwriters will receive good and
marketable title to the Shares purchased by it, free and clear of any and all
liens, encumbrances, pledges, security interests, charges, claims, equitable
interests, restrictions and defects. Except as otherwise stated in the
Prospectus, there are no preemptive rights or other rights to subscribe for or
to purchase, or any restriction upon the voting or transfer of, any shares of
capital stock of the Company pursuant to the Company's Articles of
Incorporation, Bylaws or any agreement or other instrument to which the Company
is a party or by which the Company is bound. Neither the filing of the
Registration Statement nor the offering or the sale of the Shares as
contemplated by this Agreement gives rise to any rights for, or relating to, the
registration of any shares of capital stock or other securities of the Company,
except such rights which have been validly waived or satisfied. Except as
described in the Prospectus, there are no outstanding options, warrants,
agreements or contracts to purchase or preemptive or other rights to purchase,
subscribe for or acquire from the Company any shares of its capital stock or any
securities or obligations convertible into or exercisable for shares of the
Company's capital stock. The Company has the authorized and outstanding capital
stock as set forth under the heading "Capitalization" in the Prospectus as of
the date set forth therein. The outstanding capital stock of the Company,
including the Shares,
3
4
conforms, and the Shares to be issued by the Company to the Underwriters will
conform, to the description thereof contained in the Prospectus.
(vii) The financial statements, together with the
related notes and schedules as set forth in the Registration Statement and
Prospectus, present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its subsidiaries
on the basis stated in the Registration Statement at the indicated dates and for
the indicated periods. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made, except as otherwise
stated therein and are in accordance with the books and records of the Company.
The summary and selected financial and statistical data included in the
Registration Statement present fairly the information shown therein on the basis
stated in the Registration Statement and have been compiled on a basis
consistent with the financial statements presented therein. The books, records
and accounts of the Company and its subsidiaries accurately and fairly reflect
in all material respects, in reasonable detail, the transactions in and
dispositions of the assets of, and the results of operations of, the Company and
its subsidiaries.
(viii) There is no action, suit, claim, proceeding or
investigation pending or, to the knowledge of the Company, threatened or
contemplated against the Company or any of its subsidiaries or any of their
respective officers, directors, properties, assets or rights before any court or
administrative or regulatory agency which, if determined adversely to the
Company or any of its subsidiaries, would, individually or in the aggregate,
result in a Material Adverse Effect except as set forth in the Registration
Statement.
(ix) The Company has good and marketable title to all
properties and assets reflected in the financial statements hereinabove
described as owned by the Company (or as described in the Prospectus as owned by
the Company), in each case free and clear of all liens, encumbrances, pledges,
security interests, charges, claims, equitable interests, restrictions and
defects, except such as have been granted pursuant to the Company's credit
agreement with FINOVA Capital Corporation or the Company's master lease
agreement with Banc One Leasing Corporation or are described in the Prospectus
or do not materially affect the value of such properties and assets and do not
materially interfere with the use made and proposed to be made of such
properties and assets by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries are held by
them under valid and enforceable leases with such exceptions set forth in the
Prospectus or as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries.
(x) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, as they may
be amended or supplemented, (A) there has not been any material adverse change,
or any development that could reasonably be expected to result in a material
adverse change, in or affecting the condition, financial or otherwise, of the
Company and its subsidiaries, taken as a whole, or the business affairs,
management, financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole, whether or not occurring in
the ordinary course of business, (B) there has not been any transaction
4
5
not in the ordinary course of business entered into by the Company or any of its
subsidiaries which is material to the Company and its subsidiaries, taken as a
whole, other than transactions described or contemplated in the Registration
Statement, (C) the Company and its subsidiaries have not incurred any material
liabilities or obligations, direct or indirect or contingent or non-contingent,
which are not in the ordinary course of business or which could result in a
material reduction in the future earnings of the Company and its subsidiaries,
(D) the Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance, (E)
there has not been any change in the capital stock of the Company (other than
upon the exercise of options and warrants and the conversion of debentures
described in the Registration Statement), or any material increase in the
short-term or long-term debt (including capitalized lease obligations) of the
Company and its subsidiaries, taken as a whole, (F) there has not been any
declaration or payment of any dividends or any distributions of any kind with
respect to the capital stock of the Company, other than any dividends or
distributions described or contemplated in the Registration Statement, or (G)
there has not been any issuance of warrants, options, convertible securities or
other rights to purchase or acquire capital stock of the Company (other than
options granted under the Company's 1994 and 1997 Stock Option Plans and under
this Agreement).
(xi) Neither the Company nor any of its subsidiaries
is in violation of, or in default under, its Articles of Incorporation or
Bylaws, or any statute, or any law, rule, regulation, order, judgment,
injunction, decree or authorization of any court or governmental or
administrative agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, or any indenture, mortgage, deed of
trust, loan agreement, lease, franchise, license or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them are bound or to which any property or assets of the
Company or any of its subsidiaries is subject, which violation or default would
have a Material Adverse Effect.
(xii) The issuance and sale of the Shares by the
Company and the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated herein will not
violate any provision of the Articles of Incorporation or Bylaws of the Company
or any of its subsidiaries or any statute or any order, judgment, decree, rule,
regulation or authorization of any court or governmental or administrative
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties, and will not conflict with, result in a breach or
violation of, or constitute, either by itself or upon notice or passage of time
or both, a default under any indenture, mortgage, deed of trust, loan agreement,
lease, franchise, license or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any property or assets of the Company or any
of its subsidiaries is subject. No approval, consent, order, authorization,
designation, declaration or filing by or with any court or governmental agency
or body is required for the execution and delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated, except
as may be required under the Act or any state securities or blue sky laws or
under the rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD"). No further approval or authorization of any
securityholder, the Company's Board of Directors or any duly appointed committee
thereof or others is required for
5
6
the issuance and sale or transfer of the Shares, except as may be required under
the Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
by the NASD or under state securities or blue sky laws.
(xiii) The Company and each of its subsidiaries holds
and is operating in compliance with all licenses, approvals, certificates and
permits from governmental and regulatory authorities, foreign and domestic,
which are necessary or material to the conduct of its business as described in
the Prospectus (except where the failure to so hold or operate in compliance
with such a license, approval, certificate or permit would not have a Material
Adverse Effect) and there are no proceedings pending or, to the knowledge of the
Company, threatened, which may cause any such license, approval, certificate or
permit to be withdrawn, cancelled, suspended or not renewed.
(xiv) The Company has the power and authority to
enter into this Agreement and to authorize, issue and sell the Shares it will
sell hereunder as contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(xv) Ernst & Young LLP, which has certified certain
of the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required by the
Act and Regulations.
(xvi) The Company has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Common Stock.
(xvii) The Company's registration statement pursuant
to Section 12(g) of the Exchange Act of 1934, has been declared effective by the
Commission; and the Shares have been approved for designation upon notice of
issuance on The Nasdaq National Market under the symbol "ROFO."
(xviii) The Company has obtained and delivered to
the Representatives written agreements (the "Lock-Up Agreements"), in form and
substance satisfactory to the Representatives, of each of its shareholders
listed on Schedule C that such shareholders shall not (A) offer, pledge, sell,
offer to sell, contract to sell, sell any option or contract to purchase,
purchase any option to sell, grant any option right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any of the shares of
Common Stock or any securities convertible into, or exercisable or exchangeable
for, Common Stock, or (B) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the shares
of Common Stock or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock (whether any such transaction described
in clause (A) or (B) above is to be settled by delivery of the shares of Common
Stock or such other securities, in cash or otherwise), in each case,
beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) or
otherwise controlled by such shareholder on the date hereof or hereafter
acquired, for a period beginning from the date of execution of this Agreement
and continuing to and including the date 180 days after the date of the
Prospectus (the "Lock-Up Period"); provided, however, that, if such shareholder
is an individual, such shareholder may, without the prior written
6
7
consent of Xxxx Xxxxxxxx Xxxxxxx on behalf of the Underwriters, transfer shares
of Common Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock either during his or her lifetime or, on death,
by will or intestacy to members of such shareholder's immediate family or to
trusts exclusively for the benefit of members of such shareholder's immediate
family or in connection with bona fide gifts, provided that, prior to any such
transfer, such transferee executes an agreement, satisfactory to Xxxx Xxxxxxxx
Xxxxxxx, pursuant to which such transferee agrees to receive and hold such
shares subject to the provisions of the Lock-Up Agreement and that there shall
be no further transfer except in accordance with the provisions of the Lock-Up
Agreement. For purposes of this paragraph, "immediate family" shall mean such
shareholder's spouse, lineal descendant, father, mother, brother or sister. The
restrictions on transfers described in the Lock-Up Agreements shall not apply to
(1) the sale of any shares of Common Stock to the Underwriters pursuant to this
Agreement or (2) transactions in shares of Common Stock acquired in open-market
transactions after completion of the Offering. In addition, each such
shareholder agrees that, without the prior written consent of Xxxx Xxxxxxxx
Xxxxxxx on behalf of the Underwriters, he, she or it will not, during the period
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
(xix) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Act to be distributed by the
Company.
(xx) The Company is in compliance with all provisions
of Florida Statutes Section 517.075 (Chapter
92-198, laws of Florida). The Company does not do any business, directly or
indirectly, with the government of Cuba or with any person or entity located in
Cuba.
(xxi) The Company and its subsidiaries have timely
filed all federal, state, local and foreign tax returns or reports required to
be filed, and have paid in full all taxes indicated by said returns or reports
and all assessments received by it or any of them to the extent that such taxes
have become due and payable, except where the Company and its subsidiaries are
contesting in good faith such taxes and assessments and there is no tax
deficiency that has been or, to the Company's knowledge, might be asserted
against the Company or any of its subsidiaries which might have a Material
Adverse Effect and all material tax liabilities, whether or not disputed, are
adequately provided for on the books of the Company and its subsidiaries. Except
as set forth in the Registration Statement and the Prospectus, neither the
Company nor any subsidiary has executed or filed with any taxing authority,
foreign or domestic, any agreement extending the period for assessment or
collection of any income taxes or is a party to any pending action or proceeding
by any foreign or domestic governmental agency for assessment or collection of
taxes, and no claims for assessment or collection of taxes have been asserted
against the Company or any of its subsidiaries.
7
8
(xxii) The Company and each of its subsidiaries owns
or possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service xxxx registrations, copyrights, licenses, inventions, trade secrets
know-how, technology and other similar rights necessary for or material to the
conduct of its business as described in the Prospectus (except for failures to
own or possess such rights that would not have a Material Adverse Effect). The
Company has no knowledge of any facts which would preclude it from having rights
to its patent applications described in the Prospectus. Other than as disclosed
in the Prospectus, (A) the Company has no knowledge of any infringement by it or
its subsidiaries of, or conflicts with, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service xxxx
registrations, copyrights, licenses, inventions, trade secrets, know-how,
technology or other similar rights of others, and (B) neither the Company nor
any of its subsidiaries has any knowledge of or has received any notice or claim
of conflict with the asserted rights of others with respect to any of the
foregoing.
(xxiii) The Company is not, and upon completion of
the sale of Shares contemplated hereby will not be, required to register as an
"investment company" under the Investment Company Act of 1940, as amended.
(xxiv) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to records is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxv) Other than as contemplated by this Agreement,
neither the Company nor any of its subsidiaries has incurred any liability for
any finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xxvi) The Company and its subsidiaries maintain
insurance with insurers of recognized financial responsibility of the types and
in the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company or its subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect; 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 have a
Material Adverse Effect.
8
9
(xxvii) To the Company's knowledge, no labor
disturbance by the employees of the Company or any of its subsidiaries exists or
is imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, subassemblers,
subcontractors or international distributors that might be expected to result in
a material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise. No collective bargaining agreement exists with any
of the Company's employees and, to the Company's knowledge, no such agreement is
imminent.
(xxviii) The Company has not distributed and will not
distribute prior to the later of (A) the Closing Date, or any date on which
Option Shares are to be purchased, as the case may be, and (B) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted by
the Act.
(xxix) Neither the Company nor any of its
subsidiaries has at any time during the last five years (A) made any unlawful
contribution to any candidate for foreign office or failed to disclose fully any
contribution in violation of law, or (B) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(xxx) Except as set forth in the Registration
Statement and Prospectus, (i) the Company and each of its subsidiaries is in
compliance with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment ("Environmental Laws") which are applicable to its business, except
for such instances of non-compliance as would not individually or in the
aggregate have a Material Adverse Effect (ii) neither the Company nor any of its
subsidiaries has received notice from any governmental authority or third party
of an asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus and is not so
disclosed, (iii) to the knowledge of the Company, neither the Company nor any of
its subsidiaries will be required to make future material capital expenditures
to comply with Environmental Laws and (iv) to the knowledge of the Company, no
property which is owned, leased or occupied by the Company or any of its
subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(xxxi) There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of the members of the
families of any of them, except as disclosed in the Registration Statement and
the Prospectus.
9
10
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel to the Underwriters shall be deemed
to be a representation and warranty of the Company to each Underwriter as to the
matters covered thereby.
2. Representations, Warranties and Covenants of the Selling
Shareholders.
(a) Each Selling Shareholder severally represents and warrants
to, and covenants and agrees with, each of the Underwriters and the Company
that:
(i) Such Selling Shareholder has duly executed and
delivered a Power of Attorney (the "Power of Attorney"), appointing W. Xxxx
Xxxxxx and Xxxxx X. Xxxxxxx and each of them, as attorney-in-fact (the
"Attorneys-In-Fact") with full power and authority to execute and deliver this
Agreement on behalf of such Selling Shareholder, to authorize the delivery of
the Shares to be sold by the Selling Shareholder hereunder, and otherwise to act
on behalf of such Selling Shareholder in connection with the transactions
contemplated by this Agreement.
(ii) Such Selling Shareholder has duly executed and
delivered a Custody Agreement (the "Custody Agreement") with the Company, as
Custodian, pursuant to which certificates in negotiable form for the Shares to
be sold by such Selling Shareholder hereunder have been placed in custody for
delivery under this Agreement.
(iii) Such Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement, and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder; and all consents, approvals,
authorizations and orders necessary for the execution and delivery by such
Selling Shareholder of this Agreement, the Power of Attorney and the Custody
Agreement, and for the sale and delivery of the Shares to be sold by such
Selling Shareholder hereunder, have been obtained, except such as may be
required by any state securities or blue sky laws.
(iv) Such Selling Shareholder has, and at the Closing
Date (as such date is hereinafter defined) will have, good and valid title to
the Firm Shares to be sold by such Selling Shareholder hereunder, free of any
liens, encumbrances, security interests, equities or claims whatsoever; and upon
delivery of and payment for such Firm Shares pursuant to this Agreement, good
and valid title thereto, free of any liens, encumbrances, security interests,
equities or claims whatsoever, will be transferred to the several Underwriters.
(v) The execution and delivery by each Selling
Shareholder of this Agreement, the Power of Attorney and the Custody Agreement
and the consummation by such Selling Shareholder of the transactions herein and
therein contemplated and the fulfillment by such Selling Shareholder of the
terms hereof and thereof will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any will, mortgage, deed of trust, loan agreement or other agreement, instrument
or obligation to which such Selling Shareholder is a party or to which any of
the property or assets of such Selling Shareholder is subject, except for such
agreements, instruments or obligations for which consents have been
10
11
obtained, nor will such actions result in any violations of the provisions of
the charter or by-laws if such Selling Shareholder is a corporation, the
partnership agreement, certificate or articles if the Selling Shareholder is a
partnership, or any statute, rule, regulation or order applicable to such
Selling Shareholder of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction over such Selling
Shareholder.
(vi) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(vii) To the extent that any statements or omissions
made in the Registration Statement, any Preliminary Prospectus thereof, the
Prospectus or any amendment or supplement thereto are made in reliance upon and
in conformity with written information with respect to such Selling Shareholder
furnished to the Company by such Selling Shareholder expressly for use therein,
such Preliminary Prospectus and the Registration Statement did not, and the
Prospectus and any further amendments or supplements to the Registration
Statement and the Prospectus will not, when they become effective or are filed
with the Commission, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(viii) Such Selling Shareholder will not offer to
sell, sell, transfer, assign or otherwise dispose of any Common Stock or other
capital stock of the Company, directly or indirectly, for a period of 180 days
after the date of the Prospectus, otherwise than as expressly permitted
hereunder, under the Lock-Up Agreement between such Selling Shareholder and the
Representatives, or with the written consent of the Representatives.
(ix) Such Selling Shareholder has reviewed the
information contained in the Registration Statement and, based on such review
and such Selling Shareholder's knowledge of the industry, the Company and its
business (but without further investigation), such Selling Shareholder does not
have knowledge that, and nothing has come to such Selling Shareholder's
attention that would give such Selling Shareholder reason to believe that, at
the time the Registration Statement became or becomes, as the case may be,
effective and at all times subsequent thereto up to and on the Closing Date and
on any Option Closing Date, (i) the Registration Statement and the Prospectus,
and any amendments or supplements thereto, contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, and any amendments or supplements thereto
effective on or prior to the Closing Date or any Option Closing Date, contained
or will contain any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
11
12
(x) This Agreement, the Custody Agreement and the
Power of Attorney have been duly authorized, executed and delivered by such
Selling Shareholder and are valid and binding agreements of such Selling
Shareholder.
(xi) Assuming the Underwriters purchase the Shares to
be sold by each Selling Shareholder for value, in good faith and without notice
of any adverse claim within the meaning of Article VIII of the Arizona Uniform
Commercial Code, delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will be free and clear of any security interests,
claims, liens, equities and other encumbrances.
(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, each of the
Selling Shareholders agrees to deliver to you prior to or at the Closing Date a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(c) Each of the Selling Shareholders specifically agrees that
the Shares represented by the certificates held in custody for such Selling
Shareholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder, and that the arrangements made by such Selling
Shareholder for such custody and the appointment by such Selling Shareholder of
the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable.
Each of the Selling Shareholders specifically agrees that the obligations of the
Selling Shareholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling Shareholder or, in
the case of an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of a
corporation or partnership, by the dissolution of such corporation or
partnership, or by the occurrence of any other event. If any individual Selling
Shareholder or any such executor or trustee should die or become incapacitated,
or if any such estate or trust should be terminated, or if any such corporation
or partnership should be dissolved, or if any other such event should occur
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Shareholders in
accordance with the terms and conditions of this Agreement and of the Custody
Agreement, and actions taken by the Attorneys-in-Fact pursuant to the Powers of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or not the
Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of
such death, incapacity, termination, dissolution or other event.
(d) Any certificate signed by or on behalf of any Selling
Shareholder and delivered to the Representatives or to counsel to the
Underwriters shall be deemed to be a
12
13
representation and warranty of such Selling Shareholder to each Underwriter as
to the matters covered thereby.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and covenants contained herein, and subject to the
terms and conditions herein set forth, the Company and each Selling Shareholder
agrees, severally and not jointly, to sell to each Underwriter and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Shareholder, at a price of $___________ per share, the number of
Firm Shares (to be adjusted by you to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company and
each of the Selling Shareholders, as set forth opposite their respective names
in Schedule B hereto, by a fraction, the numerator of which is the aggregate
number of Firm Shares to be purchased by such Underwriter as set forth opposite
the name of such Underwriter in Schedule A hereto and the denominator of which
is the aggregate number of Firm Shares to be purchased by all the Underwriters
from the Company and the Selling Shareholders hereunder.
In addition, on the basis of the representations, warranties and
covenants contained herein and subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters an option to
purchase at the Underwriters' election up to 508,174 Option Shares at the same
price per share as set forth for the Firm Shares in the paragraph above, for the
sole purpose of covering over-allotments in the sale of the Firm Shares. The
option granted hereby may be exercised in whole or in part, but only once, and
at any time upon written notice given within 30 days after the date of this
Agreement, by you, as Representatives of the several Underwriters, to the
Company setting forth the number of Option Shares as to which the several
Underwriters are exercising the option and the time and date at which
certificates are to be delivered. If any Option Shares are purchased, each
Underwriter agrees, severally and not jointly, to purchase that portion of the
number of Option Shares as to which such election shall have been exercised
(subject to adjustment to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction the numerator of which is the maximum
number of Option Shares which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule A hereto and the
denominator of which is the maximum number of Option Shares which all of the
Underwriters are entitled to purchase hereunder. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than two or later than ten full
business days after the exercise of such option, and shall not in any event be
prior to the Closing Date. If the date of exercise of the option is three or
more full days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date.
Certificates in definitive form for the Shares to be purchased by each
Underwriter hereunder, and in such denominations and registered in such names as
Xxxx Xxxxxxxx Xxxxxxx may request upon at least 48 hours' prior notice to the
Company, shall be delivered by or on behalf of the Company or the Selling
Shareholders, as applicable, to you for the account of such Underwriter at such
time and place as shall hereafter be designated by the Representatives, against
payment by such Underwriter or on its behalf of the purchase price therefor by
wire transfer of Federal or other funds immediately available in Minneapolis,
Minnesota. The time and date of such delivery and payment shall be, with respect
to
13
14
the Firm Shares, 8:30 a.m. Minneapolis, Minnesota time, at the offices of
Steptoe & Xxxxxxx LLP, 00 X. Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, xx
_________________, 1999, or such other time and date as you and the Company may
agree upon in writing, such time and date being herein referred to as the
"Closing Date," and, with respect to the Option Shares, at the time and on the
date specified by you in the written notice given by you of the Underwriters'
election to purchase the Option Shares, or such other time and date as you and
the Company may agree upon in writing, such time and date being referred to
herein as the "Option Closing Date." Such certificates will be made available
for checking and packaging at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be, at a location as may be designated by
you.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price and terms set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 3 hereof, the
Underwriters will offer such Option Shares to the public on the foregoing terms.
5. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will prepare and timely file with the
Commission under Rule 424(b) under the Act a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A under the Act, and will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
and as to which the Representatives shall have reasonably objected in writing
promptly after reasonable notice thereof or which is not in compliance with the
Act or the Regulations.
(b) The Company will advise the Representatives promptly of
any request of the Commission for amendment of the Registration Statement or for
any supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for that purpose, and the Company
will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus or suspending such
qualification and to obtain as soon as possible the lifting thereof, if issued.
(c) To the extent required of issuers listed on The Nasdaq
National Market, the Company will endeavor to qualify the Shares for sale under
the securities laws of such jurisdictions as the Representatives may reasonably
have designated in writing and will, or will cause counsel to, make such
applications, file such documents, and furnish such information as may be
reasonably requested by the Representatives, provided that the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not
14
15
now so qualified or required to file such a consent. The Company will, from time
to time, prepare and file such statements, reports and other documents as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(d) The Company will furnish the Underwriters with as many
copies of any Preliminary Prospectus as the Representatives may reasonably
request and, during the period when delivery of a prospectus is required under
the Act, the Company will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may, from time to time, reasonably request. The Company will
deliver to the Representatives, at or before the Closing Date, three signed
copies of the Registration Statement and all amendments thereto including all
exhibits filed therewith, and will deliver to the Representatives such number of
copies of the Registration Statement, without exhibits, and of all amendments
thereto, as the Representatives may reasonably request.
(e) If, during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or if
for any other reason it shall be necessary at any time to amend or supplement
the Prospectus to comply with any law, the Company promptly will prepare and
file with the Commission an appropriate amendment to the Registration Statement
or supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein in
light of the circumstances existing when it is so delivered, not misleading, or
so that the Prospectus will comply with law. In case any Underwriter is required
to deliver a prospectus in connection with sales of any Shares at any time nine
months or more after the effective date of the Registration Statement, upon the
request of the Representatives but at the expense of such Underwriter, the
Company will prepare and deliver to such Underwriter as many copies as the
Representatives may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the Registration Statement, an earnings
Statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 thereunder and will advise you in
writing when such statement has been so made available.
(g) During a period of five years after the date hereof, or
such shorter period that the Company remains subject to the periodic reporting
requirements of the Exchange Act, the Company, as soon as practicable after the
end of each respective financial quarter or year, as applicable, will furnish to
its shareholders annual reports (including financial statements audited by
15
16
independent certified public accountants) and will furnish to its shareholders
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and will, upon request, furnish to you and the other several
Underwriters hereunder (i) concurrently with making such reports available to
its shareholders, statements of operations of the Company for each of the first
three quarters in the form made available to the Company's shareholders; (ii)
concurrently with the furnishing thereof to its shareholders, a balance sheet of
the Company as of the end of such fiscal year, together with statements of
operations, of shareholders' equity and of cash flow of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
nationally recognized independent certified public accountants; and (iii)
concurrently with the furnishing of such reports to its shareholders, copies of
all reports (financial or other) mailed to shareholders; and (iv) as soon as
they are available, copies of all reports and financial statements furnished to
or filed with the Commission, any securities exchange or The Nasdaq National
Market by the Company (except for documents for which confidential treatment is
requested).
(h) No offering, sale or other disposition of any Common Stock
or other capital stock of the Company, or warrants, options, convertible
securities or other rights to acquire such Common Stock or other capital stock
(other than pursuant to employee stock option plans, employee stock purchase
plans, outstanding options or on the conversion of convertible securities
outstanding on the date of this Agreement; provided, that any employee stock
options issued pursuant to employee stock option plans during the Lock-Up Period
shall not vest and become exercisable to any extent prior to the expiration of
the Lock-Up Period; and, provided further, that any shares of Common Stock
issued during the Lock-Up Period pursuant to the exercise of stock options shall
bear a restrictive legend restricting the transfer of such shares during the
Lock-Up Period) will be made from the date of this Agreement until the end of
the Lock-Up Period, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of the Representatives.
(i) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
purposes set forth under "Use of Proceeds" in the Prospectus. The Company will
invest such proceeds pending their use in such a manner that, upon completion of
such investment, the Company will not be an 'investment company' as defined in
the Investment Company Act of 1940, as amended.
(j) The Company will use its best efforts to maintain the
designation of the Common Stock on The Nasdaq National Market.
(k) The Company will file with the Commission such information
with respect to the use of proceeds from the sale of the Shares as may be
required pursuant to Rule 463 under the Act.
(l) From the date of this Agreement until the termination of
the Lock-Up Period, the Company will not, without the prior written consent of
Xxxx Xxxxxxxx Xxxxxxx on behalf of the Underwriters, alter or amend in any
manner the vesting schedule of any option, warrant or other security of the
Company or its subsidiaries.
16
17
(m) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
6. Costs and Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, the Company will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of the
obligations of the Company and the Selling Shareholders under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of preparing, printing and filing of the Registration
Statement, Preliminary Prospectuses and the Prospectus and any amendments and
supplements thereto and the printing, mailing and delivery to the Underwriters
and dealers of copies thereof and of this Agreement, the Agreement Among
Underwriters, any Selected Dealers Agreement, the Underwriters' Selling
Memorandum, the Invitation Letter, the Power of Attorney, the Blue Sky
Memorandum and any supplements or amendments thereto (excluding, except as
provided below, fees and expenses of counsel to the Underwriters); the filing
fees of the Commission; the filing fees and expenses (including reasonable legal
fees and disbursements of counsel for the Underwriters) incident to securing any
required review by the NASD of the terms of the sale of the Shares; listing
fees, if any, transfer taxes and the expenses, including the reasonable fees and
disbursements of counsel for the Underwriters incurred in connection with the
qualification of the Shares under state securities or Blue Sky laws; the fees
and expenses incurred in connection with the designation of the Shares on The
Nasdaq National Market; the costs of preparing stock certificates; the costs and
fees of any registrar or transfer agent and all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 6. In addition, the Company will pay
all travel and lodging expenses incurred by management of the Company in
connection with any informational "road show" meetings held in connection with
the offering and will also pay for the preparation of all materials used in
connection with such meetings. The Selling Shareholders will pay the fees and
expenses of any separate counsel retained by them in connection with the
transactions contemplated hereby. The Company and the Selling Shareholders shall
not, however, be required to pay for any of the Underwriters' expenses (other
than those related to qualification of the Shares under state securities or Blue
Sky laws and those incident to securing any required review by the NASD of the
terms of the sale of the shares but including, without limitation, the
Underwriter expenses specified in Section 5(e) of this Agreement) except that,
if this Agreement shall not be consummated because the conditions in Section 7
hereof (other than the condition in Section 7(d)) are not satisfied or because
this Agreement is terminated by the Representatives pursuant to clause (i) of
Section 11(a) hereof, or by reason of any failure, refusal or inability on the
part of the Company or the Selling Shareholders to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on their respective parts to be performed, unless such failure to satisfy
said condition or to comply with said terms shall be due to the default or
omission of any Underwriter, then the Company shall promptly upon request by the
Representatives reimburse the several Underwriters for
17
18
all appropriately itemized out-of-pocket accountable expenses, including fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Shares or in contemplation
of performing their obligations hereunder; but the Company and the Selling
Shareholders shall not in any event be liable to any of the several Underwriters
for damages on account of loss of anticipated profits from the sale by them of
the Shares.
7. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date, are subject to the
condition that all representations and warranties of the Company and the Selling
Shareholders contained herein are true and correct, at and as of the Closing
Date or the Option Closing Date, as the case may be, the condition that the
Company and the Selling Shareholders shall have performed all of their
respective covenants and obligations hereunder (to the extent performance of
such covenants and obligations are due at such times) and to the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the Regulations and in accordance with Section 4(a) hereof; no stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, or any part thereof shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the Commission; and
all requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representatives.
(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of Steptoe &
Xxxxxxx LLP, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters, to the effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation under the laws of the state of Arizona, with
corporate power and authority to own, lease, license and use its properties and
conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in all jurisdictions in which the
conduct of its business or its ownership, lease, license or use of property
requires such qualification and the failure so to qualify would have a Material
Adverse Effect.
(ii) The Company has authorized and outstanding
capital stock as described in the Prospectus as of the date set forth therein.
The outstanding shares of the Company's capital stock have been duly authorized
and validly issued and are fully paid and nonassessable. The form of certificate
for the Shares is in due and proper form and complies with the requirements of
the Arizona Business Corporations Act. The Shares to be issued and sold by the
Company pursuant to this Agreement have been duly authorized and, when issued
and paid for as contemplated herein, will be validly issued, delivered, fully
paid and nonassessable. No preemptive right, co-sale right, registration right,
right of first refusal or other similar right of shareholders of the Company, or
of holders of warrants, options, convertible securities or other rights to
acquire shares of capital stock of
18
19
the Company, exist with respect to any of the Shares or the issue and sale
thereof (except for registration rights that have been waived) (i) pursuant to
the terms of the Company's Articles of Incorporation or Bylaws or (ii) to the
knowledge of such counsel, pursuant to the terms of any agreement or instrument
to which the Company is a party or by which the Company is bound. To the
knowledge of such counsel, no rights to register outstanding shares of the
Company's capital stock, or shares issuable upon the exercise of outstanding
warrants, options, convertible securities or other rights to acquire shares of
such capital stock, exist which have not been exercised or waived with respect
to the offering contemplated by the Registration Statement. The capital stock of
the Company, including the Shares, conforms in all material respects as to legal
matters to the description thereof contained in the Prospectus.
(iii) The Registration Statement has become effective
under the Act and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued under the Act
and no proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(iv) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all material respects
with the requirements of the Act and the rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and the notes thereto and related schedules and other financial and statistical
data included therein or omitted therefrom).
(v) The statements (A) in the Prospectus under the
captions "Business -- Legal Proceedings," "Certain Relationships and Related
Transactions," "Description of Capital Stock," and "Shares Eligible for Future
Sale" and (B) in the Registration Statement in Items 14 and 15 insofar as such
statements constitute a summary of documents, proceedings or matters of law, are
in all material respects, accurate summaries and fairly present the information
called for with respect to such matters.
(vi) Such counsel does not know of any contracts,
agreements, documents or instruments required to be filed as exhibits to the
Registration Statement, or described in the Registration Statement or the
Prospectus which are not so filed, or described as required; and insofar as any
statements in the Registration Statement or the Prospectus constitute summaries
of any contract, agreement, document or instrument to which the Company is a
party, such statements are, in all material respects, accurate summaries and
fairly present the information called for with respect to such matters to the
extent required under the Act.
(vii) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or administrative body or
regulatory agency, to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
Prospectus and are not so described, or statutes or regulations that are
required to be described in the Registration Statement or the Prospectus that
are not so described.
19
20
(viii) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will not
conflict with or result in a violation of or default under the charter or bylaws
of the Company, or under any statute, permit, judgment, decree, order, rule or
regulation known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its properties (other than the
state securities and blue sky laws, as to which such counsel need express no
opinion) and do not and will not conflict with or result in a violation of or
default under (except for such conflicts, violations or defaults as would not
have a Material Adverse Effect) under any lease, license, contract, indenture,
mortgage, loan agreement or other agreement or other instrument or obligation
known to such counsel to which the Company is a party or by which the Company is
bound or to which any property or assets of the Company is subject, except such
agreements, instruments or obligations with respect to which valid consents or
waivers have been obtained by the Company.
(ix) The Company has the corporate power and
authority to enter into this Agreement and to authorize, issue, sell and deliver
the Shares as contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(x) No approval, consent, order, authorization,
designation, declaration, qualification or filing by or with any judicial,
regulatory, administrative or other governmental body is necessary in connection
with the execution and delivery of this Agreement and the consummation of the
transactions herein contemplated (other than as may be required by state
securities and blue sky laws, as to which such counsel need express no opinion)
except such as have been obtained or made.
(xi) The Company is not, and immediately upon
completion of the sale of Shares contemplated hereby will not be, required to
register as an "investment company" under the Investment Company Act of 1940, as
amended.
(xii) Although such counsel assumes no responsibility
for the factual accuracy or completeness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in the
opinion in subsections (ii) and (v) of this Section 7(b) and on the basis of the
procedures undertaken by such counsel (and relying as to materiality to the
extent such counsel deems appropriate upon opinions of officers and other
representatives of the Company), no facts have come to the attention of such
counsel that cause it to believe that the Registration Statement and any
amendments and supplements thereto, at the time they became effective and as of
the Closing Date or the Option Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or that the Prospectus or any further
amendment or supplement thereto, at the time it was mailed or otherwise
delivered to the Commission for filing pursuant to Rule 424(b) and as of the
Closing Date and the Option Closing Date, included an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that such counsel need not express any opinion with
respect to the financial statements and supporting schedules and other financial
and statistical data included in the
20
21
Registration Statement and the Prospectus. Such counsel may indicate that it has
not undertaken any independent investigation to verify the completeness or
accuracy of the statements in the Registration Statement or the Prospectus.
Counsel rendering the foregoing opinions may rely as to
questions of fact upon representations or certificates of officers of the
Company and of government officials. Copies of any representation or
certificate so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(c) The Representatives shall have received on the Closing
Date the opinion of counsel for each of the Selling Shareholders, which counsel
shall be reasonably acceptable to the Representative, dated the Closing Date,
addressed to the Underwriters, to the effect that:
(i) A Power of Attorney and a Custody Agreement have
been duly executed and delivered by such Selling Shareholder and are the valid
and binding agreements of such Selling Shareholder.
(ii) This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder.
(iii) The sale of the Shares to be sold by such
Selling Shareholder hereunder and the compliance by such Selling Shareholder
with all of the provisions of this Agreement, the Power of Attorney and the
Custody Agreement, and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach or violation of any
terms or provisions of, or constitute a default under, any statute, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which such Selling Shareholder is a party or
by which such Selling Shareholder is bound or to which any of the property or
assets of such Selling Shareholder is subject, nor will such action result in
any violation of any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over such Selling
Shareholder or the property of such Selling Shareholder.
(iv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the Shares to be
sold by such Selling Shareholder hereunder, except such consents, approvals,
authorizations or orders as have been validly obtained and are in full force and
effect, such as have been obtained under the Act, and such as may be required
under the state securities or blue sky laws in connection with the purchase and
distribution of such Shares by the Underwriters, as to which such counsel need
express no opinion.
(v) Such Selling Shareholder has full right, power
and authority to sell, assign, transfer and deliver the Shares to be sold by
such Selling Shareholder hereunder.
(vi) Upon delivery of the Shares being sold by such
Selling Shareholder and payment therefor, good and valid title to the Shares
being sold by such Selling Shareholder, free and clear of any claims, liens,
encumbrances, security interests or other adverse claims, will be transferred to
each of the several Underwriters who have purchased such Shares in good faith
and without notice of any such claim, lien, encumbrance, security interest or
other adverse claim within the meaning of the Arizona Uniform Commercial Code.
21
22
In rendering the opinions described above, counsel for each of the
Selling Shareholders may rely, as to matters of fact with respect to such
Selling Shareholder, upon the representations of such Selling Shareholder
contained in this Agreement, the Power of Attorney and the Custody Agreement or
any certificates required or permitted to be delivered by such Selling
Shareholder pursuant to this Agreement.
(d) The Representatives shall have received from Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares, the Registration
Statement, the Prospectus, and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
(e) The Representatives shall have received on each of the
date hereof, the Closing Date and the Option Closing Date, as the case may be, a
signed letter, dated as of the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance reasonably satisfactory
to the Representatives, from Ernst & Young LLP, to the effect that they are
independent public accountants with respect to the Company and its subsidiaries
within the meaning of the Act and the related rules and regulations and
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Option Closing Date, as the case may be,
there shall not have been any change or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in your judgment, is material and adverse to the Company and
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at the Closing Date or the Option Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
(g) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the Company, signed by the chief executive officer and the chief
financial officer of the Company to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be:
(i) The Prospectus was filed with the Commission pursuant to
Rule 424(b) within the applicable period prescribed for such filing by the
Regulations and in accordance with Section 4 of this Agreement; no stop order
suspending the effectiveness of the Registration Statement has been issued, and
no proceedings for such purpose have been initiated or are, to his knowledge,
threatened by the Commission.
(ii) The representations and warranties of the
Company set forth in Section 1 of this Agreement are true and correct at and as
of the Closing Date or the Option Closing
22
23
Date, as the case may be, and the Company has performed all of its obligations
under this Agreement to be performed at or prior to the Closing Date or the
Option Closing Date, as the case may be.
(h) The Representatives shall have received on the Closing
Date a certificate of the Selling Shareholders pursuant to which the Selling
Shareholders certify that their representations and warranties set forth in this
Agreement are true and correct at and as of the Closing Date and that they have
performed all of their obligations under this Agreement to be performed at or
prior to the Closing Date.
(i) The Company and the Selling Shareholders shall have
furnished to the Representatives such further certificates and documents as the
Representatives may reasonably have requested.
(j) The Lock-Up Agreements shall have been delivered to the
Representatives prior to the date hereof and are, as of the Closing Date or the
Option Closing Date, as the case may be, in full force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Representatives and to Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 7
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be. In such event, the Company and the Underwriters shall not be under
any obligation to each other (except to the extent provided in Sections 6 and 8
hereof).
8. Indemnification.
(a) The Company and the Selling Shareholder listed in Part A
of Schedule B jointly and severally agree to indemnify and hold harmless each
Underwriter, each officer and director thereof, and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) to which such Underwriter or such persons may became
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings 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, any Preliminary Prospectus or the
Prospectus, including any amendments or supplements thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Common Stock or the offering
contemplated hereby, and which is included as part of or referred to
23
24
in any losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arising out of or based upon matters covered by clause (i) or
(ii) above, and will reimburse 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 or defending any such action
or claim as such expenses are incurred; provided however, that the Company and
the Selling Shareholder listed in Part A of Schedule B shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement,
or omission or alleged omission, made in the Registration Statement, any
Preliminary Prospectus or the Prospectus, including any amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein; provided further, that the Company and the Selling
Shareholder listed in Part A of Schedule B shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission, made in a Preliminary Prospectus, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of the
Underwriters to the person asserting such loss, claim, damage or liability, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of Shares to such person, and if the Prospectus (as
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability, unless the failure to so deliver the Prospectus (as
amended or supplemented) is the result of noncompliance by the Company with the
first sentence of paragraph 5(d) of this Agreement; provided further that the
Company and the Selling Shareholder listed in Part A of Schedule B shall not be
liable in the case of any matter covered by clause (iii) above to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such losses, claims, damages or liabilities resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct; and, provided further, that
in no event shall any Selling Shareholder be liable for an amount in excess of
the net proceeds received by such Selling Shareholder from the sale of the
Shares.
(b) Each Selling Shareholder listed in Part B of Schedule B
severally agrees to indemnify and hold harmless each Underwriter, each officer
and director thereof, and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) to which such Underwriter or such persons may became subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings 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, any Preliminary Prospectus or the
Prospectus, including any amendments or supplements thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, in each case to the
extent, but only to the
24
25
extent, that such untrue statement or alleged untrue statement in clause (i)
above or such omission or alleged omission in clause (ii) above was made in the
Registration Statement, any Preliminary Prospectus or the Prospectus, including
any amendments or supplements thereto, in reliance upon and in conformity with
written information furnished to the Company by such Selling Shareholder
expressly for use therein, and will reimburse 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 or
defending any such action or claim as such expenses are incurred; provided
however, that in no event shall any Selling Shareholder listed in Part B of
Schedule B be liable for an amount in excess of the net proceeds received by
such Selling Shareholder from the sale of the Shares offered by such Selling
Shareholder.
(c) Each Underwriter agrees severally and not jointly to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, each Selling Shareholder
and each person, if any, who controls the Company or any Selling Shareholder
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, Selling
Shareholder or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer,
Selling Shareholder or controlling
25
26
person in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that each Underwriter will be
liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 8, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a), (b) or (c) or contribution
provided for in Section 8(e) shall be available with respect to a proceeding to
any party who shall fail to give notice of such proceeding as provided in this
Section 8(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party otherwise than on account of the provisions of
Section 8(a), (b), (c) or (e). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay promptly as incurred the reasonable fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties which are different from
or additional to those available to the indemnifying party. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate counsel at any time for all such indemnified
parties. Such counsel shall be designated in writing by the Representatives and
shall be reasonably satisfactory to the Company in the case of parties
indemnified pursuant to Section 8(a) or (b) and shall be designated in writing
by the Company and shall be reasonably satisfactory to the Representatives in
the case of parties indemnified pursuant to Section 8(c). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
26
27
(e) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a), (b) or (c) above in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other from the offering
of the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Shareholders bears
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 8(e) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereto) referred to above in this Section 8(e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, no Selling
Shareholder shall be required to contribute any amount in excess of the proceeds
received by such Selling Shareholder, 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 in this Section 8(e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling
Shareholders under this Section 8 shall be in addition to any liability which
the Company and the Selling Shareholders may otherwise have, and the obligations
of the Underwriters under this Section 8 shall be in addition to any liability
which the Underwriters may otherwise have.
27
28
9. Default by Underwriters. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Shares which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of the
Company or a Selling Shareholder), you, as Representatives of the Underwriters,
shall use your best efforts to procure within 36 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Selling Shareholders such amounts as may be agreed upon, and upon the terms set
forth herein, of the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If the aggregate
number of Shares that the defaulting Underwriter or Underwriters agreed to
purchase shall not be purchased in accordance with the preceding sentence, the
Company shall have the right, within 36 hours next succeeding the 36-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such remaining Shares on the terms herein
set forth. If during such two 36-hour periods you, as Representatives, and the
Company shall not have procured such other Underwriters, or any others, to
purchase the Firm Shares or Option Shares, as the case may be, agreed to be
purchased by the defaulting Underwriter or Underwriters, then (a) if the
aggregate number of Shares with respect to which such default shall occur does
not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may be,
which they are obligated to purchase hereunder, to purchase the Firm Shares or
Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of shares of
Firm Shares or Option Shares, as the case may be, with respect to which such
default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case
may be, covered hereby, the Company and the Selling Shareholders or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 36-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting Underwriters
or of the Company and the Selling Shareholders except for expenses to be borne
by the Company, the Selling Shareholders and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9 (and assuming that this Agreement is not terminated
pursuant to the immediately preceding sentences), the Closing Date or Option
Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
10. Notices. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered or telegraphed
and confirmed as follows: if to the Underwriters, to Xxxx Xxxxxxxx Incorporated,
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, fax: (000) 000-0000,
Attention: Xxxxx X. Xxxx, with copies to Xxxxxxx, Phleger & Xxxxxxxx LLP, 000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, fax: (000) 000-0000,
Attention: Xxxxxx X. Xxxxxx; if to the Company or Selling Shareholders, to
Rockford Corporation, 546 South
28
00
Xxxxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000, fax: (000) 000-0000, Attention: W. Xxxx
Xxxxxx, with copies to Steptoe & Xxxxxxx LLP, 00 X. Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000, fax: (000) 000-0000, Attention: Xxxxx X. Xxxxx.
11. Termination. This Agreement may be terminated by you by notice to
the Company and the Selling Shareholders as follows:
(a) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change in or affecting the condition, financial or otherwise, of the Company and
its subsidiaries taken as a whole or the business affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of war
or national emergency after the date hereof or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your judgment, make the
offering or delivery of the Shares impracticable or inadvisable, (iii)
suspension of trading in securities on the New York Stock Exchange or the
American Stock Exchange or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on either such Exchange, or a halt
or suspension of trading in securities generally which are quoted on The Nasdaq
National Market System, or (iv) declaration of a banking moratorium by either
federal or New York State authorities; or
(b) as provided in Sections 7 and 9 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company,
as to any obligation of the Underwriters to purchase the Option Shares, upon the
occurrence at any time prior to the Option Closing Date of any of the events
described in subparagraph (a) above or as provided in Sections 7 and 9 of this
Agreement.
12. Written Information. For all purposes under this Agreement
(including, without limitation, Section 1, Section 2, Section 3 and Section 8
hereof), the Company and the Selling Shareholders understand and agree with each
of the Underwriters that the following constitutes the only written information
furnished to the Company by or through the Representatives specifically for use
in preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto: (i) the per share "Price to
Public" and per share "Underwriting Discounts and Commissions" set forth on the
cover page of the Prospectus, and (ii) the information set forth under the
caption "Underwriting" in the Preliminary Prospectus and the Prospectus.
13. Successors. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Company, the Selling
Shareholders and their respective successors, executors, administrators, heirs
and assigns, and the officers, directors and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares merely because
of such purchase.
29
30
14. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers or the Selling Shareholders and (c)
delivery of and payment for the Shares under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
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.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Minnesota.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Shareholders and the several Underwriters in accordance with its terms.
30
31
Very truly yours,
ROCKFORD CORPORATION
By:___________________________________________
W. Xxxx Xxxxxx
President and Chief Executive Officer
SELLING SHAREHOLDERS LISTED ON
SCHEDULE B
By:___________________________________________
W. Xxxx Xxxxxx
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
Xxxx Xxxxxxxx Incorporated
Xxxxxxx & Company, Inc.
As Representatives of the several Underwriters
By Xxxx Xxxxxxxx Incorporated
By:_____________________________________
Name:___________________________________
Its:____________________________________
[SIGNATURE PAGE TO UNDERWRITING AGREEMENT]
32
SCHEDULE A
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM MAXIMUM NUMBER
UNDERWRITER SHARES TO BE PURCHASED OF OPTION SHARES
Xxxx Xxxxxxxx Xxxxxxx................................ _________ _______
Xxxxxxx & Company, Inc............................... _________ _______
Total................................................ 3,387,824 508,174
========= =======
33
SCHEDULE B
NUMBER OF MAXIMUM NUMBER
SELLER FIRM SHARES OF OPTION SHARES
------ ----------- ----------------
Rockford Corporation................................. 2,500,000 508,174
Selling Shareholders: 887,824
Part A
Boulder Investors Limited Partnership................ 399,439
Part B
Xxxxx and Xxxxxx Xxxxxx.............................. 119,174
Xxxxxxx X. Coffee, Trustee and Individually.......... 48,160
Will Xxxxxxx......................................... 60,200
Xxxx Xxxxx........................................... 54,966
Xxxxxx Xxxxxxxx...................................... 37,410
Xxxxx Xxxxxxxx....................................... 25,800
Xxxxxx Xxxxx......................................... 23,146
Xxxxxxx Xxxxxxx...................................... 22,678
Vrolyk & Company..................................... 10,750
Xxxxxxxx Xxxxxxxx.................................... 20,566
Xxxxx and Xxxxx Xxxxxx............................... 20,329
Xxxxx Xxxxxxxxx...................................... 10,279
Xxxxxx XxxXxxxx...................................... 4,300
Xxxxxx X. Xxxxxxx.................................... 8,995
Xxx Xxxxxxxx......................................... 8,062
34
Xxxx X. Xxxxx........................................ 6,450
Xxxxx Xxxxxx......................................... 1,075
Xxxxxxx X. Xxxxxx.................................... 1,505
Xxxxxxx X. Xxxxxxxx.................................. 1,531
Xxxx Xxxxx........................................... 1,720
Xxxx Xxxxxx.......................................... 860
Xxxxxx Xxxxx......................................... 430
--------- -------
Total................................................ 3,387,824 508,174
========= =======
