Exhibit 1.1
X.X. XXXXX ARTS & CRAFTS, INC.
2,932,500 Shares*
Common Stock
(no par value)
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Underwriting Agreement
March __, 2002
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxxxxxxx & Co. Inc.
Wedbush Xxxxxx Securities Inc.
As representatives of the several
Underwriters named in Schedule I hereto,
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
X.X. Xxxxx Arts & Crafts, Inc., a Pennsylvania corporation (the
"Company"), and the shareholders of the Company named in Schedule II hereto (the
"Selling Shareholders") propose, subject to the terms and conditions stated
herein, to issue and sell to you and the several Underwriters named in Schedule
I hereto (collectively, the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), an aggregate of 2,550,000 shares (the
"Firm Shares") of common stock of the Company, no par value ("Common Stock"), of
which 1,750,000 Firm Shares will be sold by the Company and 800,000 Firm Shares
will be sold by the Selling Shareholders. In addition, solely for the purpose of
covering over-allotments, if any, certain Selling Shareholders propose to grant
the Underwriters the option to purchase up to an additional 382,500 shares (the
"Optional Shares") of Common Stock. The Firm Shares and the Optional Shares,
which the Underwriters elect to purchase pursuant to Section 3 hereof, are
herein collectively called the "Shares".
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-76500)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement (including any
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* Includes 382,500 shares subject to an option to purchase additional
shares to cover over-allotments.
pre-effective amendments thereto) and any post-effective amendments
thereto, each in the form heretofore delivered to you, and, excluding
exhibits thereto, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and, to the
Company's knowledge, no proceeding for that purpose has been initiated
or threatened by the Commission (any preliminary prospectus included in
the Initial Registration Statement and incorporated by reference in the
Rule 462(b) Registration Statement, if any, or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 6(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective or the
Rule 462(b) Registration Statement, if any, at the time it became
effective, each as amended at the time such part of such registration
statement became effective, are hereinafter collectively called the
"Registration Statement"; and such final prospectus, in the form first
filed pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through you expressly for use therein.
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable dates of the Prospectus and any amendment or supplement
thereto, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus taken in
light of the circumstances under which they were made) not misleading;
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provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein;
(d) There are no contracts or other documents required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement by the Act or by the
rules and regulations thereunder which have not been described or filed
as required; the contracts so described in the Prospectus to which the
Company or any of its subsidiaries is a party have been duly
authorized, executed and delivered by the Company and its subsidiaries,
as are party thereto, constitute valid and binding agreements of the
Company and its subsidiaries, as are party thereto, and are enforceable
in accordance with their respective terms against the Company and its
subsidiaries, as are party thereto, except as such enforceability may
be limited by (i) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in effect which
affect the enforcement of creditors' rights generally, (ii) general
principles of equity, whether considered in a proceeding at law or in
equity and (iii) state or federal securities laws or policies relating
to the nonenforceability of the indemnification provisions contained
therein, and, to the Company's knowledge, such contracts are
enforceable in accordance with their respective terms by the Company
and its subsidiaries, as are party thereto, against the other parties
thereto, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of
creditors' rights generally, (ii) general principles of equity, whether
considered in a proceeding at law or in equity and (iii) state or
federal securities laws or policies relating to the nonenforceability
of the indemnification provisions contained therein, and such contracts
are in full force and effect on the date hereof; and neither the
Company nor any of its subsidiaries, nor, to the Company's knowledge,
any other party is in breach of or default under any of such contracts,
except as set forth in the Prospectus or for such breaches or defaults
that will not result in a material adverse change in the business,
assets, management, financial position or results of operations of the
Company and its subsidiaries taken as a whole (hereinafter, a "Material
Adverse Change");
(e) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, except as set forth in the Prospectus or as
would not have a Material Adverse Change; and, since the respective
dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock
(other than issuances of Common Stock pursuant to stock options granted
by the Company pursuant to stock option plans or otherwise described in
the Registration Statement and Prospectus or in documents incorporated
by reference in the Registration Statement or Prospectus) or long-term
debt of the Company or any of its subsidiaries (except for debt
incurred in the ordinary course of business) or any Material Adverse
Change, otherwise than as set forth in the Prospectus;
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(f) The Company and its subsidiaries have good title to all
properties and assets described in the Prospectus as owned by it, in
each case free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company; any real property and
buildings held under lease by the Company or any of its subsidiaries
are held under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
and its subsidiaries; the Company and its subsidiaries own or lease all
such properties as are necessary to their operations as now conducted
or as proposed to be conducted, except where the failure to so own or
lease would not result in a Material Adverse Change;
(g) Each of the Company and its subsidiaries has been duly
incorporated and exists as a corporation in good standing under the
laws of its respective jurisdiction of organization, each with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and each has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, except where the failure to be so qualified
in any such jurisdiction would not result in a Material Adverse Change;
(h) The Company has an authorized capitalization as set forth
in the Prospectus, and all the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid
and non-assessable and conform in all material respects to the
description of the Common Stock contained in the Prospectus; all of the
issued shares of capital stock of each subsidiary of the Company (i)
have been duly authorized and validly issued, are fully paid and
non-assessable and (ii) except as disclosed in the Prospectus and for
pledges pursuant to the Credit Agreement among the Company, Key Bank
National Association, on its own behalf and as Administrative Agent
thereunder, and First Union National Bank and for any liens,
encumbrances or claims on the Company's assets created in the ordinary
course of business, are owned of record by the Company or a
wholly-owned subsidiary of the Company, free and clear of all liens,
encumbrances or claims; except as disclosed in the Prospectus, neither
the Company nor any subsidiary has outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to
purchase any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock
or any such options, rights, convertible securities or obligations;
(i) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly authorized and, when
issued and delivered against payment therefor as provided herein, will
be validly issued and fully paid and non-assessable and will conform in
all material respects to the description of the Common Stock contained
in the Prospectus; no preemptive rights or other rights to subscribe
for or purchase exist with respect to the issuance and sale of the
Shares by the Company pursuant to this Agreement; no shareholder of the
Company has any right, which has not been satisfied or waived, to
require the Company to register the sale of any shares of capital stock
owned by such shareholder under the Act in the public offering
contemplated by this Agreement (except with respect to the Shares to be
sold by the Selling Shareholders pursuant to this Agreement); no
shareholder of the Company has any right to require the Company to
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register the sale of any shares of capital stock owned by such
shareholder under the Act in either the 180-day period or the 90-day
period (as applicable to such shareholder) after the date of the
Prospectus; and no further approval or authority of the shareholders or
the Board of Directors of the Company will be required for the issuance
and sale of the Shares to be sold by the Company as contemplated
herein;
(j) The Company has full corporate power and authority to
enter into this Agreement; this Agreement has been duly authorized,
executed and delivered by the Company, constitutes a valid and binding
obligation of the Company and is enforceable against the Company in
accordance with its terms;
(k) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement 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 of the property or assets of the Company or any of its subsidiaries
is subject, nor will such action result in any violation of the
provisions of the Articles of Incorporation or By-laws of the Company
or similar documents of any of its subsidiaries or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets; and no consent, approval, authorization,
order, filing, registration or qualification of or with any such court
or governmental agency or body is required for the issue and sale of
the Shares by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration
under the Act of the Shares and such consents, approvals,
authorizations, filings, registrations or qualifications as may be
required under state securities or Blue Sky laws or the by-laws and
rules of the National Association of Securities Dealers, Inc. ("NASD")
in connection with the purchase and distribution of the Shares by the
Underwriters;
(l) Except as disclosed in the Prospectus, there are no legal
or governmental actions, suits or proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or may be a party or of which property owned or leased
by the Company or any of its subsidiaries is or may be the subject, or
related to environmental or discrimination matters, which actions,
suits or proceedings, would adversely affect the transactions
contemplated by this Agreement or would, if adversely determined,
result in a Material Adverse Change; no labor disturbance by the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent which would result in a Material
Adverse Change; and neither the Company nor any of its subsidiaries is
a party or subject to the provisions of any injunction, judgment,
decree or order of any court, regulatory body, administrative agency or
other governmental body which might be expected to result in a Material
Adverse Change;
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(m) The Company and its subsidiaries possess all licenses,
certificates, authorizations or permits that are necessary to enable
them to own, lease and operate their respective properties and to carry
on their respective businesses as presently conducted and which the
failure to possess would result in a Material Adverse Change, and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which, singly or in the
aggregate, would be expected to result in a Material Adverse Change;
(n) The Company and its subsidiaries are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety,
including without limitation those relating to occupational safety and
health, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants, including without limitation those relating
to the storage, handling or transportation of hazardous or toxic
materials (collectively, "Environmental Laws"), except where such
noncompliance with Environmental Laws would not, singly or in the
aggregate, be expected to result in a Material Adverse Change;
(o) To the Company's knowledge, PricewaterhouseCoopers LLP,
who have audited certain financial statements of the Company, are
independent public accountants within the meaning of the Act and the
rules and regulations of the Commission thereunder;
(p) The consolidated financial statements and schedules of the
Company, and the related notes thereto, included in the Registration
Statement and the Prospectus present fairly the financial position of
the Company as of the respective dates of such financial statements,
and the results of operations and cash flows of the Company for the
respective periods covered thereby; such statements, schedules and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by the
independent public accountants named in paragraph (o) above; no other
financial statements or schedules are required to be included in the
Registration Statement; and the selected financial data set forth in
the Prospectus under the captions "Summary Consolidated Financial
Data," "Capitalization," "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Results of Operations" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results and Seasonality" present fairly the
information set forth therein on the basis stated in the Registration
Statement;
(q) Except as disclosed in the Registration Statement and
Prospectus, the Company and its subsidiaries own or possess all
trademarks, trade names, patent rights, copyrights, licenses, trade
secrets and proprietary rights necessary to conduct their business as
now conducted; the Company has not received notice of any infringement
by the Company or its subsidiaries of trademark, trade name, patent,
copyrights, licenses, trade secret, proprietary or other similar rights
of others; and there is no claim of infringement being made against the
Company regarding trademark, trade name, patent, copyright, license,
trade secret, proprietary or other similar rights which, if adversely
decided, would reasonably be expected to result in a Material Adverse
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Change; except as disclosed in the Registration Statement and
Prospectus, none of the technology employed by the Company or any of
its subsidiaries has been obtained or is being used by the Company or
any of its subsidiaries in violation of any contractual obligation
binding on the Company or any of its subsidiaries or, to the Company's
knowledge, any of their respective officers, directors, employees or
consultants or otherwise in violation of the rights of any person,
except for such violations that would not reasonably be expected to
result in a Material Adverse Change; none of the Company or any of its
subsidiaries and, to the Company's knowledge, none of its employees has
received any written or oral communications alleging that the Company
or any of its subsidiaries has violated or, by conducting its business
as proposed, would violate any of the intellectual property or
proprietary rights of any other person or entity; neither the operation
of the business of the Company and its subsidiaries by the employees of
the Company or any of its subsidiaries, nor the conduct of the business
of the Company and its subsidiaries as proposed, will, to the Company's
knowledge, result in a breach or violation of the terms, conditions or
provisions of, or constitute a default under, any material contract,
covenant or instrument under which any of such employees is now
obligated; and the Company and its subsidiaries have taken reasonable
measures to prevent the unauthorized dissemination or publication of
its confidential information or the confidential information of third
parties in its possession;
(r) The Company and each of its subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns
which have been required to be filed or has requested and obtained
extensions thereof and has paid all taxes shown as due thereon; and,
except as disclosed in the Registration Statement and Prospectus, the
Company has not received any notice of any tax deficiency which has
been or is reasonably likely to be asserted against the Company or any
of its subsidiaries which would result in a Material Adverse Change;
(s) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(t) Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts which it reasonably deems
adequate for its business, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against by companies engaged in
businesses substantially similar to that of the Company, all of which
insurance is in full force and effect;
(u) Since incorporation, neither the Company nor any of its
subsidiaries has at any time (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
foreign, 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;
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(v) The Company has not taken and will not take, directly or
indirectly through any of its directors, officers or controlling
persons, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(w) The Company has filed a registration statement pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to register the Common Stock. The Common Stock is
listed and duly admitted to trading on the National Association of
Securities Dealers, Inc. Automated Quotation ("Nasdaq") National Market
System. The Company has timely filed a notification with the Nasdaq
National Market System concerning the listing of the Shares to be
issued by it and such Shares are listed and duly admitted to trading on
the Nasdaq National Market System; and
(x) X.X. Xxxxx Incorporated, Moorestown Finance, Inc., and
Xxxxxxxxx Assets, Inc. constitute the only subsidiaries of the Company.
2. Representations and Agreements of the Selling Shareholders. Each of
the Selling Shareholders, severally and not jointly, represents and warrants to,
and agrees with, each of the Underwriters that:
(a) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Shareholder of
this Agreement and the Power-of-Attorney and Custody Agreement (the
"Custody Agreement") hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Shareholder
hereunder, have been obtained; and such Selling Shareholder has full
right, power and authority to enter into this Agreement and the Custody
Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder;
(b) This Agreement and the Custody Agreement have each been
duly authorized, executed and delivered by such Selling Shareholder and
each such document constitutes a valid and binding obligation of such
Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its terms;
(c) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body
with respect to such Selling Shareholder is required in connection with
the sale of the Shares by such Selling Shareholder or the consummation
by such Selling Shareholder of the transactions on his, her or its part
contemplated by this Agreement and the Custody Agreement, except such
as have been obtained under the Act or the rules and regulations
thereunder and such as may be required under state securities or Blue
Sky laws or the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares;
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(d) The sale of the Shares to be sold by such Selling
Shareholder hereunder and the performance by such Selling Shareholder
of this Agreement and the Custody Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, or give any party a right to terminate any of its
obligations under, or result in the acceleration of any obligation
under, any material indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract, agreement or instrument to
which such Selling Shareholder is a party or by which such Selling
Shareholder or any of his, her or its material properties is bound or
affected, or violate or conflict with the organizational documents, if
any, of such Selling Shareholder any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency
or body applicable to such Selling Shareholder;
(e) Such Selling Shareholder has, and at each applicable Time
of Delivery (as defined in Section 5 hereof) will have, good and valid
title to the Shares to be sold by such Selling Shareholder hereunder,
free and clear of all liens, encumbrances or claims except those
created by this Agreement and the Custody Agreement; and, upon delivery
of such Shares and payment therefor pursuant hereto, good and valid
title to such Shares, free and clear of all liens, encumbrances or
claims, will pass to each of the several Underwriters who have
purchased such Shares in good faith and without notice of any such
lien, encumbrance or claim or any other adverse claim within the
meaning of the Uniform Commercial Code;
(f) Such Selling Shareholder has not taken and will not at any
time take, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result in, or which will
constitute, stabilization of the price of shares of Common Stock to
facilitate the sale or resale of any of the Shares.
(g) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information about such Selling Shareholder
furnished to the Company by such Selling Shareholder expressly for use
therein, such statements contained in the Preliminary Prospectus and
the Registration Statement in reliance thereon did, and such statements
contained in the Prospectus and any further amendments or supplements
to the Registration Statement and the Prospectus will, when they become
effective or are filed with the Commission, as the case may be, not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, each Selling
Shareholder agrees to deliver to you prior to or at the First Time of Delivery 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).
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Each of the Selling Shareholders represents and warrants that
certificates in negotiable form representing the Selling Shareholder Firm Shares
and the Optional Shares to be sold by such Selling Shareholder have been placed
in custody under the Custody Agreement, in the form heretofore furnished to you,
duly executed and delivered by such Selling Shareholder to the Custodian (as
defined in the Custody Agreement), and that such Selling Shareholder has duly
executed and delivered a power-of-attorney, in the form heretofore furnished to
you and included in the Custody Agreement (the "Power-of-Attorney"), appointing
Xxxxxxxx X. Fine and Xxxxxx X. Xxxxxx, and each of them, as such Selling
Shareholder's attorney-in-fact (the "Attorneys-in-Fact") with authority to
execute and deliver this Agreement on behalf of such Selling Shareholder, to
determine (subject to the provisions of the Custody Agreement) the purchase
price to be paid by the Underwriters to such Selling Shareholder as provided in
Section 3 hereof, to authorize the delivery of the Shares to be sold by such
Selling Shareholder hereunder and otherwise to act on behalf of such Selling
Shareholder in connection with the transactions contemplated by this Agreement
and the Custody Agreement.
Each of the Selling Shareholders specifically agrees 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 such
Selling Shareholder hereunder shall not be terminated by operation of law,
whether by the death or incapacity of such 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 partnership or
corporation, by the dissolution of such partnership or corporation, or by the
occurrence of any other event. If such Selling Shareholder or any such executor
or trustee should die or become incapacitated, or if any such estate or trust
should be dissolved, or if 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 to be sold by such Selling
Shareholder shall be delivered by or on behalf of such Selling Shareholder 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
Power-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.
3. Shares Subject to Sale.
(a) On the basis of the representations, warranties and
agreements of the Company and the Selling Shareholders contained
herein, and subject to the terms and conditions of this Agreement, (i)
the Company and the Selling Shareholders agree to sell their respective
Firm Shares to the several Underwriters and (ii) each of the
Underwriters agrees, severally and not jointly, to purchase from the
Company and the Selling Shareholders, at a purchase price per share of
$_______, the respective number of Firm Shares (to be adjusted by you
so as to eliminate fractional shares) determined by multiplying the
aggregate number of Firm Shares by a fraction, the numerator of which
is the aggregate number of Firm Shares to be purchased by such
Underwriter as set forth opposite the name of such Underwriter in
Schedule I hereto and the denominator of which is the aggregate number
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of Firm Shares to be purchased by all the Underwriters; and (b) in the
event and to the extent that the Underwriters shall exercise the
election to purchase the Optional Shares as provided below (i) each of
the Selling Shareholders agrees, severally and not jointly, to sell
his, her or its respective Optional Shares to the several Underwriters
and (ii) each of the Underwriter agrees, severally and not jointly, to
purchase, at the purchase price per share set forth in clause (a) of
this Section 3, that portion of the number of Optional Shares as to
which such election shall have been exercised (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying such
number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter on Schedule
I hereto and the denominator of which is the maximum number of the
Optional Shares which all of the Underwriters are entitled to purchase
hereunder.
The Selling Shareholders, as and to the extent indicated in Schedule II
hereto, each hereby grants, severally and not jointly, to the Underwriters the
right to purchase at their election up to 382,500 Optional Shares, respectively,
at the purchase price per share set forth in the paragraph above, for the sole
purpose of covering overallotments in the sale of the Firm Shares. Any such
election to purchase Optional Shares shall be made in proportion to the maximum
number of Optional Shares to be sold by the Selling Shareholders. Any such
election to purchase Optional Shares may be exercised by written notice from you
to the Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery or,
unless you and the Company otherwise agree in writing, earlier than two or later
than three business days after the date of such notice.
4. Offering. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
5. Closing. Certificates in definitive form for the Shares to be
purchased by each Underwriter hereunder, and in such denominations and
registered in such names as Xxxxx, Xxxxxxxx & Xxxx, Inc. may request upon at
least forty-eight hours' prior notice to the Company and the Attorneys-in-Fact,
shall be delivered by or on behalf of the Company and each of the Selling
Shareholders to you for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
same day funds, all at the office of Xxxxx, Xxxxxxxx & Xxxx, Inc., 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., Boston time, on
March___, 2002 or such other time and date as you and the Company may agree upon
in writing, and, with respect to the Optional Shares, 9:30 a.m., Boston time, on
the date specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as you and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of Delivery,"
such time and date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery," and each such time and
date for delivery is herein called a "Time of Delivery." Such certificates will
be made available for checking and packaging at least twenty four hours prior to
each Time of Delivery at such location as you may specify.
11
6. Covenants of the Company. The Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus of which you shall not have been
previously advised and furnished with a copy or to which you shall have
reasonably objected in writing promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when the Registration Statement, or any amendment thereto, has
been filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish you copies
thereof; to advise you, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as you may from time to time reasonably request,
and, if the delivery of a prospectus is required by law at any time
prior to the expiration of nine months after the time of issuance of
the Prospectus in connection with the offering or sale of the Shares
and if at such time any events shall have occurred as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
in order to comply with the Act, to notify you and upon your request to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
12
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required by law to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than the forty-fifth (45th)
day following the end of the full fiscal quarter first occurring after
the first anniversary of the effective date of the Registration
Statement (as defined in Rule 158(c)), an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of any securities of the Company which are substantially similar to the
Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Common Stock or any such substantially similar securities
(other than (i) the sale of the Shares to be sold by the Company
hereunder, (ii) the Company's issuance of shares upon exercise of
outstanding options and the award of options under the Company's 1997
Stock Option Plan or any plan adopted by the Company and approved by
its shareholders at the Company's 2002 Annual Meeting of Shareholders
(the "New Stock Option Plan") and, (iii) the Company's issuance of
shares of Common Stock in connection with the acquisition by the
Company of another company or entity, provided that the terms of such
issuance contractually prohibit the resale or other disposition of such
shares of Common Stock through the date 180 days after the date of the
Prospectus), without your prior written consent.
(f) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to shareholders of
the Company generally, and deliver to you as soon as they are
available, copies of any reports and financial statements furnished to
or filed with the Commission, the Nasdaq National Market or any
national securities exchange on which any class of securities of the
Company is listed (such financial statements to be on a combined or
consolidated basis to the extent the accounts of the Company and its
subsidiaries are combined or consolidated in reports furnished to its
shareholders generally or to the Commission);
(g) To use the net proceeds acquired by it from the sale of
the Shares in the manner specified in the Prospectus under the caption
"Use of Proceeds" and in a manner such that the Company will not become
an "investment company" as that term is defined in the Investment
Company Act;
13
(h) Not to file with the Commission any registration statement
on Form S-8 relating to shares of its Common Stock prior to 180 days
after the effective date of the Registration Statement (other than with
respect to the Company's Employee Stock Purchase Plan which may be
filed at any time); and
(i) Not to accelerate the vesting of any option issued under
any stock option plan such that any such option may be exercised within
180 days from the date of the Prospectus (other than in connection with
a sale of the Company).
7. Covenants of the Selling Shareholders. Each Selling Shareholder
agrees to pay or cause to be paid all taxes, if any, on the transfer and sale of
the Shares to be sold by such Selling Shareholder hereunder and the fees and
expenses, if any, of counsel and accountants retained by such Selling
Shareholder. The Company agrees with the Selling Shareholders to pay all costs
and expenses incident to the performance of the obligations of the Selling
Shareholders under this Agreement (except as set forth above), including, but
not limited to, all expenses incident to the delivery of the certificates for
the Shares to be sold by such Selling Shareholder, the costs and expenses
incident to the preparation, printing and filing of the Registration Statement
(including all exhibits thereto), all Preliminary Prospectuses and the
Prospectus and any amendments or supplements thereto, the expenses of qualifying
the Shares to be sold by the Selling Shareholders under the state securities or
Blue Sky laws, all filing fees and the reasonable fees and expenses of counsel
for the Underwriters payable in connection with the review of the offering of
the Shares by the NASD, and the cost of furnishing to the Underwriters the
required copies of the Registration Statement, all Preliminary Prospectuses and
the Prospectus and any amendments or supplements thereto; provided that each
Selling Shareholder agrees to pay or cause to be paid its pro rata share (based
on the percentage which the number of Shares sold by such Selling Shareholder
bears to the total number of Shares sold) of all underwriting discounts and
commissions.
8. Expenses. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing, producing
and reproducing any Agreement among Underwriters, this Agreement, the Blue Sky
Memorandum and any other documents in connection with the offering, purchase,
sale and delivery of the Shares; (iii) all expenses and filing fees in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 6(b) hereof and the filing fees
incident to securing any required review by the NASD of the terms of the sale of
the Shares; (iv) the fees and disbursements of counsel for the Underwriters in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 6(b) hereof and in connection with
the Blue Sky survey (including the fees and disbursements of counsel for the
Underwriters in connection with the qualification of the Shares for offering and
sale in connection with the directed share program), and the fees and expenses
of counsel to the Underwriters incident to securing any required review by the
NASD of the terms of the sale of the Shares; (v) the cost of preparing stock
certificates; (vi) the cost and charges of any transfer agent or registrar; and
14
(vii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section 8. It is understood, however, that, except as provided in this Section
8, Section 10 and Section 13 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees and expenses of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
9. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, to the condition that all representations and
warranties and other statements of the Company and each Selling Shareholder (if
applicable) herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company and each Selling Shareholder (if applicable)
shall each have performed in all material respects all of their respective
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 6(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Xxxxxx, Hall & Xxxxxxx, counsel to the Underwriters, shall
have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to this Agreement, the Registration Statement,
the Prospectus and other related matters as you may reasonably request;
(c) Blank Rome Xxxxxxxx & XxXxxxxx LLP, counsel to the
Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form and substance reasonably satisfactory to you,
with respect to the matters set forth in Annex I hereto;
(d) On the effective date of the Registration Statement at a
time prior to execution of this Agreement, at 9:30 a.m. Boston time on
the effective date of the most recently filed post-effective amendment
to the Registration Statement and at each Time of Delivery,
PricewaterhouseCoopers LLP shall have furnished to you a letter or
letters, dated the respective date of delivery thereof, in form and
substance reasonably satisfactory to you, to the effect set forth in
Annex II hereto;
(e) (i) Neither the Company nor any of its subsidiaries have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the Prospectus,
and (ii) since the respective dates as of which information is given in
the Prospectus, there shall not have been any change in the capital
stock (other than issuances of Common Stock pursuant to the Company's
1997 Stock Option Plan) or long-term debt of the Company or any change,
15
or any development involving a prospective change, in or affecting the
business, assets, management, financial position or results of
operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth in the Prospectus, the effect of which, in
any such case described in clause (i) or (ii), is in the judgment of
the Representatives so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of
the Shares being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred
any of the following: (i) additional material governmental
restrictions, not in force and effect on the date hereof, shall have
been imposed upon trading in securities generally or minimum or maximum
prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the NASDAQ National
market, or trading in securities generally or in the Shares shall have
been suspended or materially limited on the NASDAQ National Market, or
a general banking moratorium shall have been established by federal or
New York authorities, or (ii) an outbreak or escalation of hostilities
or other national or international calamity or any substantial change
in political, financial or economic conditions shall have occurred or
shall have accelerated or escalated to such an extent, as, in the
judgment of the Representatives, to affect adversely the marketability
of the Shares;
(g) The Shares to be sold by the Company at such Time of
Delivery shall be listed and duly admitted to trading on the Nasdaq
National Market System;
(h) Each director and officer of the Company and each Selling
Shareholder shall have executed and delivered to you a lock-up
agreement in form and substance reasonably satisfactory to you;
(i) The Company and each Selling Shareholder shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and of such Selling
Shareholder, respectively, in their capacities as such, reasonably
satisfactory to you, as to the accuracy of the representations and
warranties of the Company and of such Selling Shareholder,
respectively, herein at and as of such Time of Delivery, as to the
performance in all material respects by the Company and of such Selling
Shareholder, respectively, of all of his, her or its obligations
hereunder to be performed at or prior to such Time of Delivery, and as
to such other matters as you may reasonably request and the Company
shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a), (e), (g) and (h) of this Section
9, and as to such other matters as you may reasonably request; and
(j) Counsel to each Selling Shareholder shall have furnished
to you their respective written opinions, dated such Time of Delivery,
in form and substance reasonably satisfactory to you, with respect to
the matters set forth in Annex III hereto.
16
10. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Act (each, a "Company
Indemnified Party") against any losses, claims, damages or liabilities
(a "Loss"), to which any Company Indemnified Party may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse any Company
Indemnified Party for any legal or other expenses reasonably incurred
by such Company Indemnified Party in connection with investigating or
defending any such action or claim as such expenses are incurred;
provided, however, that the Company shall not be liable in any such
case to the extent that any such Loss arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by
any Underwriter through you expressly for use therein.
(b) Each Selling Shareholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter and each person,
if any, who controls such Underwriter within the meaning of Section 15
of the Act (each, a "Selling Shareholder Indemnified Party") against
any Loss to which any Selling Shareholder Indemnified Party may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse any Selling Shareholder Indemnified Party for any legal or
other expenses reasonably incurred by such Selling Shareholder
Indemnified Party in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however,
that this indemnity shall apply with respect to such Selling
Shareholder only to the extent that any such Loss arises out of or is
based upon an untrue statement or alleged untrue statement, or omission
or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished by such Selling Shareholder specifically for use
in the preparation thereof; and, provided, further, that such Selling
Shareholder shall not be liable in any such case to the extent that any
such Loss arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Underwriter
through you expressly for use therein. In no event shall any Selling
Shareholder be liable or responsible under this Agreement for any
amount in the aggregate in excess of the net proceeds received by such
Selling Shareholder with respect to the Shares sold by such Selling
Shareholder.
17
(c) Each Underwriter will, severally and not jointly,
indemnify and hold harmless the Company, each Selling Shareholder, each
of the directors of the Company, each of the officers of the Company
who shall have signed the Registration Statement, and each other
person, if any, who controls the Company or any Selling Shareholder
within the meaning of Section 15 of the Act (each, an "Underwriter
Indemnified Party") against any Loss to which any Underwriter
Indemnified Party may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through you expressly for
use therein; and will reimburse any Underwriter Indemnified Party for
any legal or other expenses reasonably incurred by it or them in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; no
indemnification shall be available hereunder to any party who shall
fail to give notice as provided in the preceding sentence if, and only
to the extent that, the party to whom such notice was not given was
unaware of the action, suit, investigation, inquiry or proceeding to
which the notice would have related and was materially prejudiced by
the failure to give such notice, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under such subsection. In
case any such action shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or
18
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a), (b) or (c) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company 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 or if the indemnified party failed to give
the notice required under subsection (d) above, then each indemnifying
party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company
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 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, respectively, bear to the total underwriting discounts
and commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or any Selling Shareholder 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 subsection (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
subsection (e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Shares underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission and no Selling
Shareholder shall be required to contribute any amount in excess of the
net proceeds received by such Selling Shareholder with respect to the
Shares sold by such Selling Shareholder. 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 subsection (e) to contribute are several in proportion to their
respective underwriting obligations and not joint.
19
11. Termination.
(a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time
of Delivery, you may in your discretion arrange for you or another
party or other parties to purchase such Shares on the terms contained
herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then
the Company and the Selling Shareholders shall be entitled to a further
period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such
terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Shareholders that you have so
arranged for the purchase of such Shares, or the Company and the
Selling Shareholders notifies you that they have so arranged for the
purchase of such Shares, you or the Company and the Selling
Shareholders shall have the right to postpone such Time of Delivery for
a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments or supplements to the
Registration Statement or the Prospectus which in your opinion may
thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section 11
with like effect as if such person had originally been a party to this
Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed
one-tenth of the aggregate number of all the Shares to be purchased at
such Time of Delivery, then the Company shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which
such Underwriter agreed to purchase hereunder at such Time of Delivery
and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such
defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-tenth of
the aggregate number of all the Shares to be purchased at such Time of
Delivery, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of
the Underwriters to purchase and of the Company to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter, the Company or any Selling Shareholder,
except for the expenses to be borne by the Company, any Selling
Shareholder and the Underwriters as provided in Section 8 hereof and
the indemnity and contribution agreements in Section 10 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability
for its default.
20
12. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company, each Selling Shareholder and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company or any Selling Shareholder, or any officer or
director or controlling person of the Company or any Selling Shareholder and
shall survive delivery of and payment for the Shares.
13. Expenses of Termination. If this Agreement shall be terminated
pursuant to Section 11 hereof, neither the Company nor any Selling Shareholder
shall then have any liability to any Underwriter except as provided in Section 8
hereof; but, if for any other reason this Agreement is terminated, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but neither the Company nor any Selling Shareholder
shall have any further liability to any Underwriter in respect of the Shares not
so delivered except as provided in Section 8 hereof.
14. Notice. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf of you
as the Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of Xxxxx, Xxxxxxxx
& Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx Xxxxxx, with a
copy to Xxxxxx X. Xxxx, Esq., Xxxxxx, Hall & Xxxxxxx, 00 Xxxxx Xxxxxx, Xxxxxx,
XX 00000; if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: President, with a copy to Xxx Xxxxxxx, Esq.,
Blank Rome Xxxxxxx & XxXxxxxx LLP, Xxx Xxxxx Xxxxxx Xxxxxxxxxxxx, XX 00000; and
if to any Selling Shareholder shall be delivered or sent by mail, telex or
facsimile transmission to the address of such Selling Shareholder set forth in
Schedule II hereto; provided, however, that any notice to an Underwriter
pursuant to Section 10(d) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriter's Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company by you on request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
21
15. Miscellaneous.
(a) This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company and the Selling
Shareholders and, to the extent provided in Sections 10 and 12 hereof,
the officers and directors of the Company and each person who controls
the Company, any Selling Shareholder or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue
of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
(b) Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts, without
regard to the conflicts of laws principles thereof.
(d) This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Shareholders. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company for examination, upon request, but without warranty on
your part as to the authority of the signors thereof.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
22
Any person executing and delivering this Agreement as Attorney-in-Fact
for the Selling Shareholders represents by so doing that he has been duly
appointed as Attorney-in-Fact by each Selling Shareholder pursuant to a validly
existing and binding Power-of-Attorney which authorizes such Attorney-in-Fact to
take such action.
Very truly yours,
X.X. XXXXX ARTS & CRAFTS, INC.
By:
-------------------------------------
Xxxx X. Xxxxxx
Chief Executive Officer
SELLING SHAREHOLDERS
(Named in Schedule II to the Agreement)
By:
-------------------------------------
Name:
Title: Attorney-in-Fact
Accepted as of the date
hereof at Boston, Massachusetts
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXXXXXX & CO. INC.
WEDBUSH XXXXXX SECURITIES INC.
By:
-----------------------------
(Xxxxx, Xxxxxxxx & Xxxx, Inc.
On behalf of each of
the Underwriters)
23
SCHEDULE I
---------------------------------------------------------------------------------------------------------------------
Number of Optional Shares to
Total Number of Firm be Purchased if Maximum
Shares to be Purchased Option Exercised
---------------------------------------------------------------------------------------------------------------------
Xxxxx, Xxxxxxxx & Xxxx, Inc.
---------------------------------------------------------------------------------------------------------------------
Xxxxxxxxxx & Co. Inc.
---------------------------------------------------------------------------------------------------------------------
Wedbush Xxxxxx Securities Inc.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
TOTAL 2,550,000 382,500
---------------------------------------------------------------------------------------------------------------------
24
SCHEDULE II
---------------------------------------------------------------------------------------------------------------------
Total Number of Firm Shares Total Number of Optional Shares
to be Sold Shares to be Sold
---------------------------------------------------------------------------------------------------------------------
The Company 1,750,000 ________
---------------------------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxx 367,750 191,250
c/o X.X. Xxxxx Arts & Crafts, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 64,500 ________
c/o X.X. Xxxxx Arts & Crafts, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
Xxxxxx & Xxxxxxx Xxxxxx 70,000 ________
Family Private Foundation
c/o Drake, Sommers, Loeb,
Xxxxxxx & Xxxxxxx, PLLC
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Family Private Foundation 148,875 95,625
c/o Drake, Sommers, Loeb,
Xxxxxxx & Xxxxxxx, PLLC
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
---------------------------------------------------------------------------------------------------------------------
Xxxxxxx & Xxxxxx Xxxxxx 148,875 95,625
Private Foundation
c/o Drake, Sommers, Loeb,
Xxxxxxx & Xxxxxxx, PLLC
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
TOTAL 2,550,000 382,500
---------------------------------------------------------------------------------------------------------------------
25
