EXHIBIT 1.1
2,500,000(1) SHARES
LITHIA MOTORS, INC.
CLASS A COMMON STOCK
NO PAR VALUE PER SHARE
FORM OF UNDERWRITING AGREEMENT
_____________, 0000
XXXXXX XXXX LLC
XXXX XXXXXXXX INCORPORATED
EVEREN SECURITIES, INC.,
As Representatives of the
several Underwriters
c/o Xxxxxx Xxxx Incorporated
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introduction. Lithia Motors, Inc., an Oregon corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters"), for which Xxxxxx Xxxx LLC, Xxxx Xxxxxxxx
Incorporated and EVEREN Securities, Inc. are acting as representatives (the
"Representatives"), an aggregate of 2,875,000 shares of the Company's Class A
Common Stock, no par value per share (the "Common Stock"). The 2,500,000 shares
of Common Stock to be sold by the Company are referred to herein as the "Firm
Shares." The Company also proposes to issue and sell to the several
Underwriters an aggregate of not more than 375,000 additional shares of Common
Stock (the "Additional Shares"), if requested by the Underwriters in accordance
with Section 9 hereof. The issuance and sale of the Firm Shares by the Company
to the Underwriters, as contemplated hereby, is referred to herein as the
"Offering." The Firm Shares and the Additional Shares are collectively referred
to herein as the "Shares." The words "you" and "your" refer to the
Representatives of the Underwriters.
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(1) Excludes the Underwriters' option to purchase the Additional Shares to
cover over-allotments, if any.
The Company hereby agrees with the several Underwriters as follows:
2. Representations and Warranties. The Company represents, warrants and
agrees with each of the Underwriters that:
(a) A registration statement on Form S-1, (File No. 333-14031) under
the Securities Act of 1933, as amended (the "Act"), with respect to the Shares,
including a form of prospectus subject to completion, has been prepared by the
Company in conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (the "Rules and Regulations"). Such registration statement has been
filed with the Commission under the Act, and one or more amendments to such
registration statement may also have been so filed. After the execution of this
Agreement, the Company shall file with the Commission either (A) if such
registration statement, as it may have been amended, has been declared by the
Commission to be effective under the Act, a prospectus in the form most recently
included in an amendment to such registration statement filed with the
Commission (or, if no such amendment shall have been filed, in such registration
statement), with such insertions and changes as are required by Rule 430A under
the Act or permitted by Rule 424(b) under the Act as shall have been provided to
and approved by the Representatives prior to the filing thereof, or (B) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representatives prior to the filing thereof.
As used in this Agreement, the term "Registration Statement" means such
registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto; the
Registration Statement shall be deemed to include any information omitted
therefrom pursuant to Rule 430A under the Act and included in the Prospectus (as
hereinafter defined); the term "Registration Statement" shall also include any
registration statement relating to the Common Stock that is filed and becomes
effective pursuant to Rule 462(b) under the Act; the term "Preliminary
Prospectus" means each prospectus subject to completion contained in such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto or filed pursuant to Rule 424(a) under the Act at the time it
was or is declared effective); and the term "Prospectus" means the prospectus
first filed with the Commission pursuant to Rule 424(b) under the Act or, if no
prospectus is required to be filed pursuant to said
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Rule 424(b), such term means the prospectus included in the Registration
Statement.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus and has not instituted
or threatened to institute any proceedings with respect to such an order. When
any Preliminary Prospectus was filed with the Commission it (A) contained all
statements required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the Rules and
Regulations and (B) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, it (A) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the Rules and
Regulations and (B) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. When the Prospectus and when any amendment or supplement
thereto is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or such amendment or supplement is not required to be so filed, when
the Registration Statement and when any amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective) and at
all times subsequent thereto up to and including the Closing Date (as defined in
Section 3 hereof) and the Option Closing Date (as defined in Section 9 hereof),
the Prospectus, as amended or supplemented at any such time, (A) contained or
will contain all statements required to be stated therein in accordance with,
and complied or will comply in all material respects with the requirements of,
the Act and the Rules and Regulations and (B) did not or will not include any,
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing provisions of this
paragraph (b) shall not apply to statements or omissions made in any Preliminary
Prospectus, the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon, and in
conformity with, information furnished in writing to the Company by or on behalf
of the Underwriters through the Representatives expressly for use therein. The
Company has not distributed any offering material in connection with the
Offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus or the Prospectus.
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(c) Each of the Company and (i) LGPAC, Inc., (ii) Lithia DM, Inc.,
(iii) Lithia Chrysler Plymouth Jeep Eagle, Inc., (iv) Lithia MTLM, Inc., (v)
Lithia HPI, Inc., (vi) Lithia SSO, Inc., (vii) Lithia Financial Corporation,
(viii) Lithia Rentals, Inc., (ix) Lithia Auto Services, Inc., (x) Lithia DE,
Inc., and (xi) Lithia Real Estate, Inc., each an Oregon corporation, and (xii)
Lithia's Grants Pass Auto Center, L.L.C., (xii) Lithia Dodge, L.L.C., and (xiv)
Lithia TLM, L.L.C., each an Oregon limited liability company and (xv) Lithia
TKV, Inc. and (xvi) Lithia HS, Inc., each a California corporation,
(collectively, the Company's "Subsidiaries" or individually, a "Subsidiary")
(A) is a duly incorporated and validly existing corporation or limited
liability company under the laws of its jurisdiction of incorporation or
organization, with full power and authority (corporate and other) to own or
lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); and (B) is duly qualified to
do business as a foreign corporation or limited liability company in each
jurisdiction in which the conduct of its business requires such qualification
(except for those jurisdictions in which the failure so to qualify has not had
and will not have a Material Adverse Effect (as hereinafter defined)).
"Material Adverse Effect" means, when used in connection with the Company or its
Subsidiaries, any development, change or effect that is materially adverse to
the business, properties, assets, net worth, condition (financial or other),
results of operations or prospects of the Company and its Subsidiaries taken as
a whole. Except for the Subsidiaries or as disclosed in the Registration
Statement, the Company does not own, and at the Closing Date will 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. Complete and correct
copies of the articles of organization, articles of incorporation and of the
bylaws of the Company and each of its Subsidiaries and all amendments thereto
have been delivered to the Representatives, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date.
(d) The Company has the duly authorized and validly outstanding
capitalization set forth under the caption "Capitalization" in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and will have the adjusted capitalization set forth therein on the
Closing Date and the Option Closing Date, based on the assumptions set forth
therein. The securities of the Company conform to the descriptions thereof
contained in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary
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Prospectus). The outstanding shares of Common Stock have been duly authorized
and validly issued by the Company and are fully paid and nonassessable. Except
as created hereby, referred to in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) or pursuant to the
Company's 1996 Stock Incentive Plan, there are no outstanding options, warrants
or rights to acquire, or instruments convertible into or exchangeable for or any
contracts or commitments or liens related to or entitling any person to purchase
or otherwise acquire, any shares of capital stock or other equity interest in
the Company or any Subsidiary. No holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or other rights to
subscribe for any of the Shares and neither the filing of the registration
statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to, the registration of any securities of the
Company. The Shares have been duly authorized. On the Closing Date or the
Option Closing Date (as the case may be), after payment therefor in accordance
with the terms of this Agreement, (A) the Firm Shares and the Additional Shares
to be sold by the Company hereunder will be validly issued, fully paid and
nonassessable, and (B) good and marketable title to the Shares will pass to the
Underwriters on the Closing Date or the Option Closing Date (as the case may be)
free and clear of any pledge, lien, encumbrance, security interest, claim or
other restriction whatsoever. All the outstanding shares of capital stock of
each Subsidiary has been duly authorized and validly issued, are fully paid
and nonassessable and are owned directly or indirectly by the Company, free
and clear of any pledge, lien, encumbrance, security interest, claim or other
restriction whatsoever. 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, has received, subject to notice
of issuance, approval to have the Shares quoted on the Nasdaq National Market
(the "Nasdaq National Market") and knows of no reason or set of facts which is
likely to adversely affect such approval.
(e) The combined financial statements and the related notes and
schedules thereto included in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present the combined financial condition, results of operations, owners'
equity and cash flows of the Company and its subsidiaries at the dates and for
the periods specified therein. Such financial statements and the related notes
and schedules thereto have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise noted therein) and such financial statements
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as are audited have been examined by KPMG Peat Marwick LLP, who are independent
public accountants within the meaning of the Act and the Rules and Regulations,
as indicated in their reports filed therewith. The selected financial
information and statistical data set forth under the caption "Selected Combined
Financial Data" in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) have been prepared on a basis consistent
with the financial statements of the Company and its subsidiaries. The pro
forma financial statements of the Company and its subsidiaries, and the related
notes thereto, set forth in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence the most recent Preliminary Prospectus),
have been prepared in conformity with the requirements of the Act and the Rules
and Regulations and present fairly the information shown therein based upon the
assumptions set forth therein; and the pro forma adjustments on such pro forma
financial statements have been properly applied on the basis described in the
related notes thereto. The pro forma financial data set forth in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), under the caption "Pro Forma
Combined and Condensed Financial Data" have been prepared on a basis consistent
with the pro forma combined financial statements of the Company and its
subsidiaries. The statements included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) with respect to the accountants pursuant to Rule 509 of
Regulation S-K of the Act are true and correct in all material respects. The
statistical and market-related data included in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) are derived from sources that the Company believes are
reliable and accurate.
(f) The Company and each of its Subsidiaries have filed all necessary
federal, state and local and foreign income, franchise and other material tax
returns and have paid all taxes shown as due thereunder, and the Company has no
knowledge of any tax deficiency which might be assessed against the Company
which, if so assessed, would have a Material Adverse Effect.
(g) The Company and each of its Subsidiaries maintains insurance of the
types and in amounts which they reasonably believe to be adequate for their
businesses in such amounts and with such deductibles as is customary for
companies in the same or similar businesses. All such insurance is outstanding
and fully in force on the date hereof and will be outstanding and duly in force
on the Closing Date and the Option Closing Date, if any.
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(h) Except as disclosed in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there is no pending action, suit, proceeding or
investigation or threatened action, suit, proceeding or investigation before or
by any court, regulatory body or administrative agency or any other governmental
agency or body, domestic or foreign, which (A) questions the validity of the
capital stock of the Company or this Agreement or of any action taken or to be
taken by the Company pursuant to or in connection with this Agreement or as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
(B) is required to be disclosed in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) which is not so disclosed (and such proceedings, if any, as are
summarized therein are accurately summarized in all material respects) or (C)
may have a Material Adverse Effect.
(i) The Company has full legal right, power and authority to enter
into this Agreement and to consummate the transactions provided for herein.
This Agreement has been duly authorized, executed and delivered by the Company
and, assuming it is a binding agreement of yours, constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of creditors, rights and
the application of equitable principles relating to the availability of remedies
and except as rights to indemnity or contribution may be limited by federal or
state securities laws and the public policy underlying such laws), and none of
the Company's execution or delivery of this Agreement, its performance
hereunder, its consummation of the transactions contemplated herein, its
application of the net proceeds of the offering in the manner set forth under
the caption "Use of Proceeds" or the conduct of its business as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default, under, causes or will cause (or
permits or will permit) the maturation or acceleration of any liability or
obligation or the termination of any right under, or result in the creation or
imposition of any lien, charge, or encumbrance upon, any property or assets of
the Company or any of its Subsidiaries pursuant to the terms of (A) the articles
of organization, articles of incorporation or bylaws of the Company or any of
its Subsidiaries, (B) any indenture, mortgage, deed of trust, voting
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trust agreement, stockholders agreement, note agreement, dealership or franchise
agreement (except as identified in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus with respect to such
dealership or franchise agreement) or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them are or may
be bound or to which any of their respective property is or may be subject or
(C) any statute, judgment, decree, order, rule or regulation applicable to the
Company or any of its Subsidiaries of any government, arbitrator, court,
regulatory body or administrative agency or other governmental agency or body,
domestic or foreign, having jurisdiction over the Company, any of its
Subsidiaries or any of their respective activities or properties.
(j) All executed agreements or copies of executed agreements filed as
exhibits to the Registration Statement to which the Company or any of its
Subsidiaries is a party or by which any of them are or may be bound or to which
any of their assets, properties or businesses is or may be subject have been
duly and validly authorized, executed and delivered by the Company or such
Subsidiary, as the case may be, and constitute the legal, valid and binding
agreements of the Company or such Subsidiary, as the case may be, enforceable
against each of them in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of creditors,
rights generally, and general equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws).
The descriptions in the Registration Statement of contracts and other documents
are accurate and fairly present the information required to be shown with
respect thereto by the Act and the Rules and Regulations, and there are no
contracts or other documents which are required by the Act or the Rules and
Regulations to be described in the Registration Statement or filed as exhibits
to the Registration Statement which are not described or filed as required, and
the exhibits which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(k) Subsequent to the most recent respective dates as of which
information is given in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus), and
except as expressly contemplated therein, neither the Company nor any of its
Subsidiaries has incurred, other than in the ordinary course of its business,
any material liabilities or obligations, direct or contingent, purchased any of
its outstanding capital stock, paid
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or declared any dividends or other distributions on its capital stock, except as
disclosed in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) with
respect to the Subchapter S distributions to the Company's Principal Owners (as
defined therein), or entered into any material transactions not in the ordinary
course of business, except as disclosed in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) under the heading "Recent and Pending Acquisitions," and
there has been no material change in capital stock or debt or any material
adverse change in the business, properties, assets, net worth, condition
(financial or other), or results of operations or prospects of the Company and
its Subsidiaries taken as a whole. Neither the Company nor any of its
Subsidiaries (nor the manner in which any of them conducts its business) is in
breach or violation of, or in default under, any term or provision of (A) its
articles of organization, articles of incorporation or bylaws, (B) any
indenture, mortgage, deed of trust, voting trust agreement, stockholders
agreement, note agreement, dealership or franchise agreement or other agreement
or instrument to which it is a party or by which it is or may be bound or to
which any of its property is or may be subject, or any indebtedness, the effect
of which breach or default singly or in the aggregate may have a Material
Adverse Effect, or (C) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of its Subsidiaries or of any arbitrator,
court, regulatory body, administrative agency or any other governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their respective activities or properties and the effect
of which breach or default singly or in the aggregate may have a Material
Adverse Effect.
(l) There is (i) no significant unfair labor practice complaint
pending against the Company or any of its Subsidiaries before the National Labor
Relations Board or any state or local labor relations board, and no significant
grievance or more significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any of its
Subsidiaries, or to the best knowledge of the Company, threatened against any of
them, and (ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or any of its Subsidiaries or, to the best knowledge
of the Company, threatened against any of them except for such actions specified
in clause (i) or (ii) above or otherwise disclosed in the Prospectus, which,
singly or in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
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(m) Since its inception, the Company has not incurred any material
liability arising under or as a result of the application of the provisions of
the Act.
(n) Each of the Company and its Subsidiaries owns, or is licensed
or otherwise has sufficient right to use, the proprietary knowledge,
inventions, patents, trademarks, service marks, trade names, logo marks and
copyrights used in or necessary for the conduct of its business (collectively
"Rights") as described in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus), except where the absence of such right could not reasonably be
expected to have a Material Adverse Effect. No claims have been asserted
against the Company or any of its Subsidiaries by any person with respect to
the use of any such Rights, except where such claim could not reasonably be
expected to have a Material Adverse Effect or challenging or questioning the
validity or effectiveness of any such Rights. The use, in connection with
the business and operations of the Company and its Subsidiaries of such
Rights does not, to the Company's best knowledge, infringe on the rights of
any person, where such infringement could not reasonably be expected to have
a Material Adverse Effect.
(o) No consent, approval, authorization or order of or filing with any
court, regulatory body, administrative agency or any other governmental agency
or body, domestic or foreign, is required for the performance of this Agreement
or the consummation of the transactions contemplated hereby or in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), except such as have been or
may be obtained under the Act or may be required under state securities or Blue
Sky laws in connection with the Underwriters' purchase and distribution of the
Shares.
(p) No consent, approval, authorization of or notice to, or filing with
any third party is required for the performance of this Agreement or the
consummation or the transactions contemplated hereby or in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), except those that have been disclosed in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), or those which would not
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole. Neither the Company nor any of its Subsidiaries has any reason to
believe that any such consent, approval, authorization or filing with any
third party necessary in the future to conduct the business of the Company and
its Subsidiaries as described in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
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Prospectus) will not be granted upon application, except as disclosed therein,
or that any third party is investigating the Company or any of its Subsidiaries
other than in the ordinary course of business or in a review of the
transactions contemplated hereby.
(q) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the Company to
include such securities under the Registration Statement (other than those that
have been disclosed in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), that have not been waived with respect
to the Registration Statement.
(r) Neither the Company nor any of its officers, directors or affiliates
(within the meaning of the Rules and Regulations) has taken, directly or
indirectly, any action designed to stabilize or manipulate the price of any
security of the Company, or which has constituted or which might in the future
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 or otherwise.
(s) Each of the Company and its Subsidiaries has good and marketable
title to, or valid and enforceable leasehold interests in, all properties and
assets owned or leased by it, free and clear of all liens, encumbrances,
security interests, claims, restrictions, equities, claims and defects,
except (A) such as are described in the Registration Statement and Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), or such as do not materially adversely affect the value of any
of such properties or assets taken as a whole and do not materially interfere
with the use made and proposed to be made of any of such properties or
assets, and (B) liens for taxes not yet due and payable as to which
appropriate reserves have been established and reflected in the financial
statements included in the Registration Statement. Each of the Company and
its Subsidiaries own or lease all such properties as are necessary to its
operations as now conducted, and as proposed to be conducted as set forth in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus); and the properties and
business of the Company and its Subsidiaries conform in all material respects
to the descriptions thereof contained in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). All the material leases and subleases of the
Company and its
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Subsidiaries, and under which the Company or any Subsidiary holds
properties or assets as lessee or sublessee, constitute valid leasehold
interests of the Company or such Subsidiary free and clear of any lien,
encumbrance, security interest, restriction, equity, claim or defect, are in
full force and effect, and neither the Company nor any Subsidiary is in default
in respect of any of the material terms or provisions of any such material
leases or subleases, and neither the Company nor any Subsidiary has notice of
any claim which has been asserted by anyone adverse to the Company's or any of
its Subsidiary's rights as lessee or sublessee under either the material lease
or sublease, or affecting or questioning the Company's or any Subsidiary's right
to the continued possession of the leased or subleased premises under any such
material lease or sublease, which may have a Material Adverse Effect.
(t) Neither the Company nor any Subsidiary has violated any
applicable environmental, safety, health or similar law applicable to the
business of the Company, nor any federal or state law relating to discrimination
in the hiring, promotion or pay of employees, nor any applicable federal or
state wages and hours laws, nor any provisions of Employee Retirement Income
Security Act or the rules and regulations promulgated thereunder, the
consequences of which violation may have a Material Adverse Effect.
(u) To the Company's best knowledge, the Company has reasonably
concluded that the costs and liabilities associated with the effect of
environmental laws on the business, operations and properties of the Company
and its Subsidiaries (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
environmental laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) would not, singly or in the aggregate, have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
(v) Each of the Company and its Subsidiaries holds all franchises,
licenses, permits, approvals, certificates and other authorizations from
federal, state and other governmental or regulatory authorities (including
foreign regulatory authorities), all self-regulatory organizations, all domestic
or foreign courts and other tribunals and third parties, including without
limitation, all automobile manufacturers and distributors necessary to the
ownership, leasing and operation of its properties or required for the present
and proposed conduct of its business, and such franchises, licenses, permits,
approvals,
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certificates and other authorizations are in full force and effect and the
Company and its Subsidiaries are in compliance therewith in all material
respects except as otherwise disclosed in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or where the failure so to obtain, maintain or comply
with would not have a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries has received any actual notice of any proceeding relating to
revocation or modification of any such franchise, license, permit, approval,
certificate or authorization, except as described in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(w) No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(x) Neither the Company nor any of its Subsidiaries is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(y) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate located in
Cuba and the Company and each affiliate thereof has complied with all provisions
of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(z) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no business
relationships or related party transactions required to be disclosed therein by
Item 404 of Regulation S-K under the Act.
(aa) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with
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management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(ab) Each agreement to which the Company or any of its Subsidiaries
is a party and pursuant to which the Company or any of its Subsidiaries acts
as a franchisee or dealer, whereby it sells products, including without
limitation the Dealer, Dealer Sales and Service, and Sales and Service
Agreements and the standard provisions relating thereto between the Company
and/or its Subsidiaries and each of Chrysler Corporation, American Honda
Motor Company, American Isuzu Motors, Ford Motor Company, General Motors
Corporation, Mazda Motor of America, Inc., Saturn Distribution Corporation,
Toyota Motor Distributors, Inc., American Suzuki Motor Corporation, Kia
America Motors, Inc. and Volkswagen of America (each a "Dealer Agreement")
and except for as disclosed in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) with respect to the Restructuring, each such Dealer Agreement
being listed as an Exhibit to the Registration Statement, is a valid and
binding agreement and no default has occurred or is continuing thereunder
which might result in any Material Adverse Effect.
(ac) The Company has obtained and delivered to you the agreement of
each of the persons listed on Annex I hereto to the effect that each such
person will not, for a period of 180 days following the effective date of the
Registration Statement, without the written consent of Xxxxxx Xxxx LLC, which
shall not be unreasonably withheld or delayed, directly or indirectly offer
to sell, sell, grant any option for the sale of, or otherwise dispose of, any
Common Stock of the Company owned by such person.
(ad) Any certificates signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty of the Company to the Underwriters as to the matters
covered thereby. Any certificate delivered by the Company to its counsel for
purposes of enabling such counsel to render the opinions referred to in
Section 9 will also be furnished to you and counsel for the Underwriters and
shall be deemed to be additional representations and warranties by the Company
to the Underwriters as to the matters covered thereby.
(ae) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), the Company has not consummated the acquisition or
disposition of any business or property which is "significant" to the Company
within the meaning
- 14 -
of Regulation S-X under the Act, and, except for the acquisition of the business
of Lithia TKV, Inc., Xxxxxxx Dodge, Inc. and Xxx Xxxxxx, Inc., as set forth in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), no such acquisition or
disposition is probable (within the meaning of such Regulation).
(af) The Directors' and Officers' Questionnaires delivered by the
Company to the Representatives on or prior to the Closing Date are true and
correct in all material respects.
3. PURCHASE, SALE AND DELIVERY OF THE SHARES. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to each Underwriter and each Underwriter, severally and not jointly, agrees to
purchase from the Company at a purchase price of $________ per Share, the number
of Firm Shares set forth opposite the name of such Underwriter in Column (1) of
Schedule I hereto.
Delivery of certificates, and payment of the purchase price, for the
Firm Shares shall be made at the offices of Xxxxxx Xxxx LLC at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or such other location as shall be agreed upon by the
Company and the Representatives. Such delivery and payment shall be made at
10:00 a.m., New York City time, on ___________, 1996 or at such other time and
date thereafter as shall be agreed upon by the Representatives and the Company.
The time and date of such delivery and payment are herein called the "Closing
Date." Delivery of the certificates for the Firm Shares shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price for the Firm Shares by Federal or other funds immediately available in New
York City drawn to the order of the Company for the Firm Shares sold by it. The
certificates for the Firm Shares to be so delivered will be in definitive, fully
registered form, will bear no restrictive legends and will be in such
denominations and registered in such names as the Representatives shall request,
not less than two full business days prior to the Closing Date. The
certificates for the Firm Shares will be made available to the Representatives
at such office or such other place as the Representatives may designate for
inspection, checking and packaging not later than 9:30 a.m., New York time on
the business day prior to the Closing Date.
4. PUBLIC OFFERING OF THE SHARES. It is understood that the Underwriters
propose to make a public offering of the Shares at the price and upon the other
terms set forth in the Prospectus.
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5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendments thereto, if not effective at the time of execution
of this Agreement, to become effective as promptly as practicable. If required,
the Company will file the Prospectus and any amendment or supplement thereto
with the Commission in the manner and within the time period required by
Rule 424(b) under the Act. During any time when a prospectus relating to the
Shares is required to be delivered under the Act, the Company (A) will comply
with all requirements imposed upon it by the Act and the Rules and Regulations
to the extent necessary to permit the continuance of sales of or dealings in the
Shares in accordance with the provisions hereof and of the Prospectus, as then
amended or supplemented, and (B) will not file with the Commission the
prospectus or the amendment referred to in the third sentence of Section 2(a)
hereof, any amendment or supplement to such prospectus or any amendment to the
Registration Statement of which the Representatives shall not previously have
been advised and furnished with a copy a reasonable period of time prior to the
proposed filing and as to which filing the Representatives shall not have given
its their consent, which consent shall not be unreasonably withheld or delayed.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Representatives (A) when the Registration Statement,
as amended, has become effective; if the provisions of Rule 430A promulgated
under the Act will be relied upon, when the Prospectus has been filed in
accordance with said Rule 430A and when any post-effective amendment to the
Registration Statement becomes effective; (B) of any request made by the
Commission for amending the Registration Statement, for supplementing any
Preliminary Prospectus or the Prospectus or for additional information, or
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto or the
institution or threat of any investigation or proceeding for that purpose, and
will use its best efforts to prevent the issuance of any such order and, if
issued, to obtain the lifting thereof as soon as possible.
(c) The Company will (A) use its best efforts to arrange for the
qualification of the Shares for offer and sale under the state securities or
blue sky laws of such jurisdictions as the Representatives may designate,
(B) continue such qualifications in effect for as long as may be necessary to
- 16 -
complete the distribution of the Shares, and (C) make such applications, file
such documents and furnish such information as may be required for the purposes
set forth in clauses (A) and (B); PROVIDED, HOWEVER, that the Company shall not
be required to qualify as a foreign corporation or file a general or unlimited
consent to service of process in any such jurisdiction.
(d) The Company consents to the use of the Prospectus (and any
amendment or supplement thereto) by the Underwriters and all dealers to whom the
Shares may be sold, in connection with the offering or sale of the Shares and
for such period of time thereafter as the Prospectus is required by law to be
delivered in connection therewith. If, at any time when a prospectus relating
to the Shares is required to be delivered under the Act, any event occurs as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, or if it becomes
necessary at any time to amend or supplement the Prospectus to comply with the
Act or the Rules and Regulations, the Company promptly will so notify the
Representatives and, subject to Section 5(a)(i) hereof, will prepare and file
with the Commission an amendment to the Registration Statement or an amendment
or supplement to the Prospectus which will correct such statement or omission or
effect such compliance, each such amendment or supplement to be reasonably
satisfactory to counsel to the Underwriters.
(e) As soon as practicable, but in any event not later than 45 days
after the end of the 12-month period beginning on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company will make
generally available to its security holders, in the manner specified in
Rule 158(b) of the Rules and Regulations, and to the Representatives, an
earnings statement which will be in the detail required by, and will otherwise
comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless required by
the Act or the Rules and Regulations, covering a period of at least 12
consecutive months after the effective date of the Registration Statement.
(f) During a period of five years after the date hereof, the Company
will furnish to its shareholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the
Representatives:
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(i) concurrently with furnishing such quarterly reports to its
shareholders, statements of operations of the Company for each quarter in the
form furnished to the Company's shareholders and certified by the Company's
principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
shareholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, owners' equity, and cash
flows of the Company for such fiscal year, accompanied by a copy of the report
thereon of independent public accountants;
(iii) as soon as they are available copies of all information
(financial or other) mailed to shareholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or any securities exchange;
(v) every press release and every material news item or
article of interest to the financial community in respect of the Company or its
affairs which was released or prepared by the Company; and
(vi) any additional information of a public nature concerning
the Company or its business which the Representatives may reasonably request.
During such five-year period, if the Company has active subsidiaries,
the foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(g) 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.
(h) The Company will furnish, without charge, to the Representatives
or on the Representatives' order, at such place as the Representatives may
designate, copies of the each Preliminary Prospectus, the Registration Statement
and any pre-effective or post-effective amendments thereto (three of which
copies will be signed and will include all financial statements and exhibits)
and the Prospectus, and all amendments and supplements thereto, in each case as
soon as available and in
- 18 -
such quantities as the Representatives may reasonably request. The Company will
provide or cause to be provided to the Representatives and upon request to each
Underwriter, a copy of the report on Form SR filed by the Company as required by
Rule 463 under the Act.
(i) The Company will not, directly or indirectly, without the prior
written consent of Xxxxxx Xxxx LLC, which shall not be unreasonably withheld,
issue, sell, grant any option to purchase or otherwise dispose (or announce any
issuance, sale, grant or any option to purchase or other disposition, other than
in connection with a transaction pursuant to Rule 145 of the Securities Act) of
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 180 days after the
date hereof, except pursuant to this Agreement, except for issuances pursuant to
the exercise of stock options outstanding on or granted subsequent to the date
hereof, pursuant to a stock option or other employee benefit plan in existence
on the date hereof and except as contemplated by the Prospectus.
(j) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the Closing Date.
(k) Neither the Company nor any of its officers or directors, nor
affiliates of any of them (within the meaning of the Rules and Regulations) will
take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(l) The Company will apply the net proceeds of the offering received
by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(m) The Company will timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the Rules and
Regulations, the Exchange Act, and the rules and regulations thereunder, and all
such reports, forms and documents filed will comply as to form and substance
with the applicable requirements under the Act, the Rules and Regulations, the
Exchange Act and the rules and regulations thereunder.
(n) As soon as practicable after the Closing Date, and, in any event,
no later than 90 days after the completion of the Offering, the Company will
elect at least two (2) independent board members to the Board of Directors of
the Company and shall maintain at least two (2) independent board members at all
times after the Closing Date.
- 19 -
6. EXPENSES
(a) Regardless of whether the transactions contemplated in this
Agreement are consummated, and regardless of whether for any reason this
Agreement is terminated, the Company will pay, and hereby agrees to indemnify
each Underwriter against, all fees and expenses incident to the performance of
the obligations of the Company under this Agreement, including, but not limited
to, 1. fees and expenses of accountants and counsel for the Company, 2. all
costs and expenses incurred in connection with the preparation, duplication,
printing, filing, delivery and shipping of copies of the Registration Statement
and any pre-effective or post-effective amendments thereto, any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto
(including postage costs related to the delivery by the Underwriters of any
Preliminary Prospectus or Prospectus, or any amendment or supplement thereto),
this Agreement, the Agreement Among Underwriters, any Selected Dealer Agreement,
Underwriters' Questionnaire, Underwriters' Power of Attorney and all other
documents in connection with the transactions contemplated herein, including the
cost of all copies thereof 3. fees and expenses relating to qualification of the
Shares under state securities or blue sky laws, including the cost of preparing
and mailing the preliminary and final blue sky memoranda and filing fees and
disbursements and fees of counsel and other related expenses, if any, in
connection therewith, 4. filing fees of the Commission and the NASD relating to
the Shares, 5. any fees and expenses in connection with the quotation of the
Shares on the Nasdaq National Market, 6. costs and expenses incident to the
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees and any
applicable transfer taxes incurred in connection with the delivery to the
Underwriters of the Shares to be sold by the Company pursuant to this Agreement,
7. costs and expenses incident to any meetings with prospective investors in the
Shares (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters) and 8. costs and expenses of
advertising relating to the offering of the Shares (other than as shall have
been specifically approved by the Representatives to be paid for by the
Underwriters).
(b) If the purchase of the Shares as herein contemplated is not
consummated for any reason other than the Underwriters' default under this
Agreement, including the failure or refusal of an Underwriter to purchase and
pay for Shares pursuant to Section 12 of this Agreement, or other than by reason
of Section 11(a), the Company shall reimburse the several Underwriters for their
out-of-pocket expenses (including rea-
- 20 -
sonable counsel fees and disbursements) in connection with any investigation
made by them, and any preparation made by them in respect of marketing of the
Shares or in contemplation of the performance by them of their obligations
hereunder.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation of each
Underwriter to purchase and pay for the Shares set forth opposite the name of
such Underwriter in Schedule I is subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date as if they had been made on and as of the Closing Date;
the accuracy on and as of the Closing Date of the statements of officers of the
Company made pursuant to the provisions hereof; the performance by the Company
on and as of the Closing Date of its covenants and agreements hereunder; and the
following additional conditions:
(a) If the Company has elected to rely on Rule 430A under the Act,
the Registration Statement shall have been declared effective, and the
Prospectus (containing the information omitted pursuant to Rule 430A) shall have
been filed with the Commission not later than the Commission's close of business
on the second business day following the date hereof or such later time and date
to which the Representatives shall have consented; if the Company does not elect
to rely on Rule 430A, the Registration Statement shall have been declared
effective not later than 11:00 A.M., New York time, on the date hereof or such
later time and date to which the Representatives shall have consented; if
required, in the case of any changes in or amendments or supplements to the
Prospectus in addition to those contemplated above, the Company shall have filed
such Prospectus as amended or supplemented with the Commission in the manner and
within the time period required by Rule 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, or any
- 21 -
supplement thereto, contains an untrue statement of fact which, in the
Representatives' opinion, is material, or omits to state a fact which, in the
Representatives' opinion, is material and is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall have
received from counsel to the Underwriters, such opinion or opinions with respect
to the issuance and sale of the Firm Shares, the Registration Statement and the
Prospectus and such other related matters as the Representatives reasonably may
request and such counsel shall have received such documents and other
information as they request to enable them to pass upon such matters.
(d) On the Closing Date the Underwriters shall have received the
opinion, dated the Closing Date, of Xxxxxx, Pepper & Shefelman, counsel to the
Company ("Company Counsel"), to the effect set forth below:
(i) Each of the Company and each of its Subsidiaries (A) is a
duly incorporated and validly existing corporation or limited
liability company under the laws of its jurisdiction of incorporation
or organization with full power and authority to own or lease its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and (B) is duly qualified
to do business as a foreign corporation or limited liability company
in each jurisdiction in which the conduct of its business requires
such qualification (except for those jurisdictions in which the
failure so to qualify can be cured without having a Material Adverse
Effect);
(ii) The Company has authorized capital stock as set forth in the
Prospectus; the securities of the Company conform in all material
respects to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock have been duly authorized and
validly issued by the Company, are fully paid and nonassessable, and
are free of any preemptive or other rights to subscribe for any of the
Shares; the Company has duly authorized the issuance and sale of the
Shares to be sold by it hereunder; such Shares, when issued by the
Company and paid for in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and will conform in all
material respects to the description thereof contained in the
Prospectus and will not be subject to any preemptive, subscription or
other similar rights; and the Shares have been duly authorized for
quotation on the Nasdaq National Market;
- 22 -
(iii) The Registration Statement is effective under the Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best
knowledge of such counsel, are threatened or contemplated under the
Act; the registration statement originally filed with respect to the
Shares and each amendment thereto and the Prospectus and, if any, each
amendment and supplement thereto (except for the financial statements,
schedules and other financial data included therein, as to which such
counsel need not express any opinion), complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; the descriptions contained and summarized in the
Registration Statement and the Prospectus of the terms and provisions
of contracts and other documents, including, without limitation, the
terms and provisions of the Dealer Agreements and employee benefit
plans, are accurate and fairly represent in all material respects the
information required to be shown by the Act and the Rules and
Regulations and do not contain any 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; to the best
knowledge of such counsel, there are no contracts or documents which
are required by the Act to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required by the Act and
the Rules and Regulations; to the best knowledge of such counsel,
there is not pending or threatened against the Company or any of its
Subsidiaries any action, suit, proceeding or investigation before or
by any court, regulatory body, or administrative agency or any other
governmental agency or body, domestic or foreign, of a character
required to be disclosed in the Registration Statement or the
Prospectus which is not so disclosed therein; and the statements set
forth under the headings "Business--Regulation" and "Business--
Litigation," in the Registration Statement and the Prospectus, insofar
as such statements constitute a summary of the legal matters or
proceedings referred to therein, provide an accurate summary of such
legal matters and proceedings;
(iv) The Company has the requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions provided for herein; this
- 23 -
Agreement has been duly authorized, executed and delivered by the Company; and
this Agreement, assuming due authorization, execution and delivery by each other
party hereto, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws now or hereafter in effect
relating to or affecting creditors, rights generally or by general principles of
equity relating to the availability of remedies and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the public policy underlying such laws. Except as otherwise set forth in the
Prospectus, none of the Company's execution or delivery of this Agreement, its
performance hereof, its consummation of the transactions contemplated herein or
its application of the net proceeds of the offering in the manner set forth
under the caption "Use of Proceeds," conflicts or will conflict with or results
or will result in any breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon, any property or assets of the Company or any
of its Subsidiaries pursuant to the terms of the articles of organization,
articles of incorporation or bylaws of the Company or any of its Subsidiaries;
the terms of any indenture, mortgage, deed of trust, voting trust agreement,
shareholder's agreement, note agreement, dealership or franchise agreement or
other agreement or instrument known to such counsel after reasonable
investigation to which the Company or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries is or may be bound or to which any of their
respective properties may be subject; any statute, rule or regulation of any
regulatory body or administrative agency or other governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their respective activities or properties; or any
judgment, decree or order, known to such counsel after reasonable investigation,
of any government, arbitrator, court, regulatory body or administrative agency
or other governmental agency or body, domestic or foreign, having such
jurisdiction; and no consent, approval, authorization or order of any court,
regulatory body or administrative agency or other governmental agency or body,
domestic or foreign, has been or is required for the Company's Agreement or the
consummation of the transactions contemplated hereby, except such as have been
obtained under the Act or may be required under state securities or blue sky
laws in connection with the purchase and distribution by the Underwriters of the
Shares;
- 24 -
(v) To the best of such counsel's knowledge, the conduct of
the businesses of the Company and its Subsidiaries is not in violation of
any federal, state or local statute, administrative regulation or other
law, which violation is likely to have a Material Adverse Effect; and each
of the Company and its Subsidiaries has obtained all licenses, permits,
franchises, certificates and other authorizations from state, federal and
other regulatory authorities as are necessary or required for the
ownership, leasing and operation of its properties and the conduct of its
business as presently conducted and as contemplated in the Prospectus;
(vi) The issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned by the Company free and clear of any
perfected security interests or, to the best knowledge of such counsel, any
other liens, encumbrances, claims or security interests; no Subsidiary of
the Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on such
Subsidiary's capital stock, from repaying to the Company any loans or
advances to such Subsidiary from the Company or from transferring any of
such Subsidiary's property or assets to the Company or any other Subsidiary
of the Company, except as described in or contemplated by the Prospectus;
(vii) To the best of such counsel's knowledge, except as
described in the Prospectus, no claims have been asserted against the
Company or any of its Subsidiaries by any person to the use of any such
Rights or challenging or questioning the validity or effectiveness of any
such Rights, except such claims that could not reasonably be expected to
have a Material Adverse Effect. The use, in connection with the businesses
and operations of the Company and its Subsidiaries of such Rights, does
not, to the best of such counsel's knowledge, infringe on the rights of any
person, except where such infringement could not reasonably be expected to
have a Material Adverse Effect; and
(viii) Neither the Company nor any of its subsidiaries is, or
will be upon the issuance and sale of the Shares by the Company and
compliance with the terms of the Agreement, an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the
- 25 -
Prospectus, such counsel has participated in conferences with officers and
representatives of the Company and with the Company's independent public
accountants, at which conferences such counsel made inquiries of such officers,
representatives and accountants and discussed the contents of the Registration
Statement and the Prospectus and (without taking any further action to verify
independently the statements made in the Registration Statement and the
Prospectus and, except as stated in the foregoing opinion, without assuming
responsibility for the accuracy, completeness or fairness of such statements)
nothing has come to such counsel's attention that causes such counsel to believe
that either the Registration Statement as of the date it is declared effective
and as of the Closing Date or the Prospectus as of the date thereof and as of
the Closing Date contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (it being understood
that such counsel need not express any opinion with respect to the financial
statements, schedules and other financial data included in the Registration
Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the date of
such opinion.
(e) On or prior to the Closing Date, counsel to the Underwriters
shall have been furnished such documents, certificates and opinions as they may
reasonably require in order to evidence the accuracy, completeness or
satisfaction of any of the representations or warranties of the Company or
conditions herein contained.
(f) At the time that this Agreement is executed by the Company, the
Underwriters shall have received from each of KPMG Peat Marwick LLP and Xxxx
Xxxxx LLP a letter as of the date this Agreement is executed by the Company in
form and substance satisfactory to you (the "Original Letter"), and on the
Closing Date the Underwriters shall have received from each of such firms a
letter dated the Closing Date stating that, as of a specified date not earlier
than five (5) days prior to the Closing Date, nothing has come to the attention
of such firm to suggest that the statements made in the Original Letter are not
true and correct.
- 26 -
(g) On the Closing Date, the Underwriters shall have received a
certificate, dated the Closing Date, of the principal executive officer and the
principal financial or accounting officer of the Company to the effect that each
of such persons has carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto and this Agreement, and
that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date,
and the Company and each of its Subsidiaries has complied with all
agreements and covenants and satisfied all conditions contained, in this
Agreement on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best knowledge of each of
such persons are contemplated or threatened under the Act and any and all
filings required by Rule 424 and Rule 430A have been timely made;
(iii) The Registration Statement and Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein, and neither the Registration
Statement nor any amendment thereto includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
neither the Prospectus (nor any supplement thereto) nor any Preliminary
Prospectus includes or included any untrue statement of a material fact or
omits or omitted 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; and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus up to and
including the Closing Date and except for as necessary to undertake either
the Reorganization or the Acquisitions as described in the Registration
Statement or the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), neither the Company nor any of
the Subsidiaries has incurred, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent;
neither the Company nor any of the Subsidiaries has purchased any of its
outstanding capital stock or paid or declared any dividends or other
distributions on its capital stock, except as disclosed in
- 27 -
the Prospectus with respect to the Subchapter S distributions to the
Company's Principal Owners; neither the Company nor any of the Subsidiaries
has entered into any transactions not in the ordinary course of business;
and there has not been any change in the capital stock or long-term debt or
any increase in the short-term borrowings (other than any increase in
short-term borrowings in the ordinary course of business) of the Company or
any material adverse change to the business properties, assets, net worth,
condition (financial or other), results of operations or prospects of the
Company and its Subsidiaries taken as a whole; neither the Company nor any
of the Subsidiaries has sustained any material loss or damage to its
property or assets, whether or not insured; there is no litigation which is
pending or threatened against the Company or any of its Subsidiaries which
is required under the Act or the Rules and Regulations to be set forth in
an amended or supplemented Prospectus which has not been set forth; and
there has not occurred any event required to be set forth in an amended or
supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the date of
the certificate.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus up to and including the
Closing Date there has not been (i) any change or decrease specified in the
letter or letters referred to in paragraph (f) of this Section 7 or (ii) any
change, or any development involving a prospective change, in the business or
properties of the Company or its Subsidiaries which change or decrease in the
case of clause (i) or change or development in the case of clause (ii) makes it
impractical or inadvisable in the Representatives' judgment to proceed with the
public offering or the delivery of the Shares as contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any jurisdiction
designated by you pursuant to Section 5(c)(A) hereof has been issued on or prior
to the Closing Date and no proceedings for that purpose have been instituted or,
to your knowledge or that of the Company, have been or are contemplated.
(j) The Representatives shall have received from each person
listed on Annex I hereto an agreement to the effect that such person will
not, directly or indirectly, without the prior written consent of Xxxxxx Xxxx
LLC, which shall not be unreasonably withheld or delayed, offer, sell, grant
any option to purchase
- 28 -
or otherwise dispose (or announce any offer, sale, grant of an option to
purchase or other disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock for
a period of 180 days after the date of this Agreement.
(k) The Company shall have furnished the Underwriters with such
further opinions, letters, certificates or documents as you or counsel for the
Underwriters may reasonably request. All opinions, certificates, letters and
documents to be furnished by the Company will comply with the provisions hereof
only if they are reasonably satisfactory in all material respects to the
Underwriters and to counsel for the Underwriters. The Company shall furnish the
Underwriters with conformed copies of such opinions, certificates, letters and
documents in such quantities as you reasonably request. The certificates
delivered under this Section 7 shall constitute representations, warranties and
agreements of the Company, as the case may be, as to all matters set forth
therein as fully and effectively as if such matters had been set forth in
Section 2 of this Agreement.
(l) The Shares have been duly authorized for quotation on the Nasdaq
National Market.
(m) Each of the transactions contemplated by the Reorganization
Agreement shall have been consummated and the acquisition of Melody Vacaville,
Inc. described under the heading "RECENT AND PENDING ACQUISITIONS," in the
Prospectus shall have been consummated.
8. INDEMNIFICATION
(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 or Section 20 of the Exchange Act, against any and all
losses, claims, damages or liabilities, joint or several (and actions in respect
thereof), to which such Underwriter or such controlling person may become
subject, under the Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or any blue sky application or other document executed by the Company
specifically for the purpose of qualifying, or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify, any or all of the Shares under the securities or blue sky laws thereof
(any such application,
- 29 -
document or information being hereinafter called a "Blue Sky Application"), 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, as incurred, such
Underwriter or such controlling persons for any legal or other expenses incurred
by such Underwriter or such controlling persons in connection with
investigating, defending or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in any of such documents in reliance upon and in conformity with
information furnished in writing to the Company on behalf of such Underwriter
through the Representatives expressly for use therein, and PROVIDED, FURTHER,
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, claim, damage, liability or action (i) results from the fact
that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act and (ii) arises out of or is based upon an untrue statement or
omission of a material fact contained in such Preliminary Prospectus that was
corrected in the Prospectus (as amended and supplemented), unless such failure
resulted from non-compliance by the Company with Section 5(h) hereof.
The indemnity agreement in this paragraph (a) shall be in addition to
any liability which the Company may otherwise have.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, and each of its
officers who has signed the Registration Statement, each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any and all losses, claims, damages or liabilities
(and actions in respect thereof) to which the Company or any of the Company's
directors, officers, or controlling persons may become subject, under the Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the
- 30 -
Registration Statement or the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto or in any Blue Sky Application, 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 each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information furnished
in writing by that Underwriter through the Representatives to the Company
expressly for use therein; and will reimburse, as incurred, all legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. The Company acknowledges that the
statements with respect to the public offering of the Shares set forth under the
heading "Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters to the Company expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement contained
in this subsection (b) shall be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 8, notify such indemnifying party or
parties of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) of this
Section 8 or to the extent that the indemnifying party was not adversely
affected by such omission. In case any such action is brought against an
indemnified party and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties against which a claim is
to be made will be entitled to participate therein and, to the extent that it or
they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and otherwise to participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to
- 31 -
such indemnified party of its election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 8 for any legal or
other expenses (other than the reasonable costs of investigation) subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party has employed such counsel in connection with the
assumption of such different or additional legal defenses in accordance with the
proviso to the immediately preceding sentence, (ii) the indemnifying party has
not employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages, expenses
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) (i) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified, on the other hand, from the offering of
the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. In any case where the Company is a
contributing party and the Underwriters are the indemnified party, the relative
benefits received by the Company on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the cover page of the Prospectus. 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 by
the Underwriters, and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an
- 32 -
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph (d), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by the Underwriters
hereunder. The Underwriters, obligations to contribute pursuant to this
paragraph (d) are several in proportion to their respective underwriting
obligations, and not joint. 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. For purposes of this paragraph (d), (i) each person, if any,
who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter and (ii) each director of the Company, each officer of the
Company who has signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Company,
subject in each case to this paragraph (d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission so to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation (x) it or they may have
hereunder or otherwise than under this paragraph (d) or (y) to the extent that
such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may otherwise have.
9. RIGHT TO INCREASE OFFERING. At anytime during a period of 30 days
from the date of the Prospectus, the Underwriters, by no less than two business
days' prior notice to the Company, may designate a closing (which may be
concurrent with, and part of, the closing on the Closing Date with respect to
the Firm Shares or may be a second closing held on a date subsequent to the
Closing Date, in either case such date shall be referred to herein as the
"Option Closing Date") at which the Underwriters may purchase all or less than
all of the Additional Shares in accordance with the provisions of this Section 9
at the purchase price per share to be paid for the Firm Shares. In no event
shall the option Closing Date be later than 10 business days
- 33 -
after written notice of election to purchase Additional Shares is given.
The Company agrees to sell to the several Underwriters on the Option
Closing Date the number of Additional Shares specified in such notice and the
Underwriters agree severally and not jointly, to purchase such Additional Shares
on the Option Closing Date. Such Additional Shares shall be purchased for the
account of each Underwriter in the same proportion as the number of Firm Shares
set forth opposite the name of such Underwriter listed on Schedule I bears to
the total number of Firm Shares (subject to adjustment by you to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the Firm Shares.
No Additional Shares shall be sold or delivered unless the Firm Shares
previously have been, or simultaneously are, sold and delivered. The right to
purchase the Additional Shares or any portion thereof may be surrendered and
terminated at any time upon notice by you to the Company.
Except to the extent modified by this Section 9, all provisions of
this Agreement relating to the transactions contemplated to occur on the Closing
Date for the sale of the Firm Shares shall apply, MUTATIS MUTANDIS, to the
Option Closing Date for the sale of the Additional Shares.
10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Shares. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
11. EFFECTIVE DATE AND TERMINATION
(a) This Agreement shall become effective at 11:00 A.M., New
York time on the first business day following the date hereof, or at such
earlier time after the Registration Statement becomes effective as the
Representatives, in their sole discretion, shall release the Shares for the sale
to the public unless prior to such time the Representatives shall have received
written notice from the Company that it elects that this Agreement shall not
become effective, or the Rep-
- 34 -
resentatives shall have given written notice to the Company that the
Representatives on behalf of the Underwriters elect that this Agreement shall
not become effective; PROVIDED, HOWEVER, that the provisions of this Section and
of Section 6 and Section 8 hereof shall at all times be effective. For purposes
of this Section 11(a), the Shares to be purchased hereunder shall be deemed to
have been so released upon the earlier of notification by the Representatives to
securities dealers releasing such Shares for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
(b) This Agreement (except for the provisions of Sections 6 and 8
hereof) may be terminated by the Representatives by notice to the Company in the
event that the Company has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or the Option Closing Date, or if any of the representations or
warranties of the Company is not accurate in any respect or if the covenants,
agreements or conditions of, or applicable to the Company herein contained have
not been complied with in any respect or satisfied within the time specified on
the Closing Date or the Option Closing Date, respectively, or if prior to the
Closing Date or the Option Closing Date:
(i) the Company or any of its Subsidiaries shall have sustained
a loss by strike, fire, flood, accident or other calamity of such a
character as to have a Material Adverse Effect on Company and its
Subsidiaries taken as a whole regardless of whether or not such loss was
insured;
(ii) trading in the Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market
shall have been suspended or a material limitation on such trading shall
have been imposed or minimum or maximum prices shall have been established
on any such exchange or market system;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an outbreak
or escalation of any other insurrection or armed conflict involving the
United States; or
(v) there shall have been a material adverse change in (A)
general economic, political or financial conditions or (B) the present or
prospective business or
- 35 -
condition (financial or other) of the Company and its Subsidiaries taken as
a whole that, in each case, in the Representatives' judgment makes it
impracticable or inadvisable to make or consummate the public offering,
sale or delivery of the Company's Shares on the terms and in the manner
contemplated in the Prospectus and the Registration Statement.
(c) Termination of this Agreement under this Section 11 or Section 12
after the Firm Shares have been purchased by the Underwriters hereunder shall be
applicable only to the Additional Shares. Termination of this Agreement shall
be without liability of any party to any other party other than as provided in
Sections 6 and 8 hereof.
12. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 7 or 11 hereof) to
purchase and pay for (a) in the case of the Closing Date, the number of Firm
Shares agreed to be purchased by such Underwriter or Underwriters upon tender to
you of such Firm Shares in accordance with the terms hereof or (b) in the case
of the Option Closing Date, the number of Additional Shares agreed to be
purchased by such Underwriter or Underwriters upon tender to you of such
Additional Shares in accordance with the terms hereof, and the number of such
Shares shall not exceed 10% of the Firm Shares or Additional Shares required to
be purchased on the Closing Date or the Option Closing Date, as the case may be,
then, each of the non-defaulting Underwriters shall purchase and pay for (in
addition to the number of such Shares which it has severally agreed to purchase
hereunder) that proportion of the number of Shares which the defaulting
Underwriter or Underwriters shall have so failed or refused to purchase on such
Closing Date or Option Closing Date, as the case may be, which the number of
Shares agreed to be purchased by such nondefaulting Underwriter bears to the
aggregate number of Shares so agreed to be purchased by all such non-defaulting
Underwriters on such Closing Date or Option Closing Date, as the case may be.
In such case, you shall have the right to postpone the Closing Date or the
Option Closing Date, as the case may be, to a date not exceeding seven full
business days after the date originally fixed as such Closing Date or the Option
Closing Date, as the case may be, pursuant to the terms hereof in order that any
necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made.
If one or more of the Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 7 or 11
- 36 -
hereof) to purchase and pay for (a) in the case of the Closing Date, the number
of Firm Shares agreed to be purchased by such Underwriter or Underwriters upon
tender to you of such Firm Shares in accordance with the terms hereof or
(b) in the case of the Option Closing Date, the number of Additional Shares
agreed to be purchased by such Underwriter or Underwriters upon tender to you of
such Additional Shares in accordance with the terms hereof, and the number of
such Shares shall exceed 10% of the Firm Shares or Additional Shares required to
be purchased by all the Underwriters on the Closing Date or the Option Closing
Date, as the case may be, then (unless within 48 hours after such default
arrangements to your satisfaction shall have been made for the purchase of the
defaulted Shares by an Underwriter or Underwriters) and subject to the
provisions of Section 11(b) hereof, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or on the part of the
Company except as otherwise provided in Sections 6 and 8 hereof. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this paragraph. Nothing in this Section 12, and no action
taken hereunder, shall relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
13. NOTICES. All communications hereunder shall be in writing and if sent
to the Representatives or the Underwriters shall be mailed or delivered or
telecopied and confirmed by letter to x/x Xxxxxx Xxxx LLC at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department or, if sent to the
Company, shall be mailed or delivered or telecopied and confirmed by letter to
the Company at 000 X. Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000, Attention: Xxxxxx
X. XxXxxx.
14. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Company and each Underwriter and the Company's and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representations, warranties, indemnities and
contribution agreements of the Company contained in this Agreement shall also be
for the benefit of any person or per-
- 37 -
sons, if any, who control any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and except that the Underwriters'
indemnity and contribution agreements shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement, any person or persons, if any, who control the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Shares from the Underwriters will be deemed a successor because
of such purchase.
15. APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the choice of law or conflict of law principles thereof. Each party
hereto consents to the jurisdiction of each court in which any action is
commenced seeking indemnity or contribution pursuant to Section 8 above
and,agrees to accept, either directly or through an agent, service of process of
each such court.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
If the foregoing correctly sets forth our understanding, please
indicate the Underwriters' acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
LITHIA MOTORS, INC.
By:
----------------------------
Name: Xxxxxx X. XxXxxx
Title: President, Chief
Executive Officer
and Secretary
- 38 -
Accepted as of the date first above written:
XXXXXX XXXX LLC
XXXX XXXXXXXX INCORPORATED
EVEREN SECURITIES, INC.
By: Xxxxxx Xxxx LLC
Acting on its own behalf and as one of the Representatives of the several
Underwriters referred to in the foregoing Agreement
By:
-----------------------------
Title:
--------------------------
- 39 -
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated _____________, 1996
Number of
Firm
Shares to be
Purchased
from
the Company
-----------
Name
----
Xxxxxx Xxxx LLC
-----------
Xxxx Xxxxxxxx Incorporated
-----------
EVEREN Securities, Inc
-----------
Total
-----------
-----------
-----------
- 40 -
ANNEX I
PERSONS DELIVERING LOCK-UP
AGREEMENTS
Underwriting Agreement dated _____________, 1996
Lithia Holding Company, L.L.C., an Oregon limited liability company
Xxxxxx X. XxXxxx
X.X. Xxxx Xxxxxxx
X. Xxxxxxxx Xxxx
Xxxxx X. Xxxxx
- 41 -
