BRMF&S DRAFT
01/11/00
3,100,000 Shares
AUDIOVOX CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
___________ __, 2000
XX XXXXX SECURITIES CORPORATION
XXXXXX XXXXXX & COMPANY, INC.
PRUDENTIAL SECURITIES INCORPORATED
LADENBURG XXXXXXXX & CO., INC.
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. Audiovox Corporation, a Delaware corporation (the "Company"),
and the selling shareholders named in Schedule B hereto (the "Selling
Shareholders") propose to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of 3,000,000 shares of Common Stock, $.01 par
value (the "Common Stock"), of the Company. The aggregate of 3,000,000 shares so
proposed to be sold is hereinafter referred to as the "Firm Stock". The Company
and the Selling Shareholders listed in Schedule B hereto also propose to sell to
the Underwriters, upon the terms and conditions set forth in Section 3 hereof,
up to an additional 450,000 shares of Common Stock (the "Optional Stock"). The
Firm Stock and the Optional Stock are hereinafter collectively referred to as
the "Stock". XX Xxxxx Securities Corporation ("XX Xxxxx"), Xxxxxx Xxxxxx &
Company, Inc. ("Xxxxxx Xxxxxx"), Prudential Securities Incorporated
("Prudential") and Ladenburg Xxxxxxxx & Co., Inc. ("Ladenburg") are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives."
2. (I) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MAJOR SHAREHOLDER.
The Company and, with respect to Sections 2(I)(b)(ii) and (iii) to his knowledge
and subject to Section 12 the Major Shareholder, represent and warrant to, and
agree with, the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-91455) (the
"Initial Registration Statement") in respect of the Stock has been
filed with the Securities and Exchange Commission (the "Commission");
the Initial Registration Statement and any
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post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
(the "Rules and Regulations") of the Commission thereunder, which
became effective upon filing, no other document with respect to the
Initial Registration Statement or document incorporated by reference
therein has heretofore been filed with the Commission; and, to the best
of the Company's knowledge, no stop order suspending the effectiveness
of the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and, to the best of the Company's knowledge, no proceeding for
that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement
or filed with the Commission pursuant to Rule 424(a) of the Rules and
Regulations, is hereinafter called a "Preliminary Prospectus"); the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities
Act and deemed by virtue of Rule 430A under the Securities Act to be
part of the Initial Registration Statement at the time it was declared
effective and (ii) the documents incorporated by reference in the
prospectus contained in the Initial Registration Statement at the time
such part of the Initial Registration Statement became effective, each
as amended at the time such part of the Initial Registration Statement
became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statements"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Securities Act, is hereinafter called the "Prospectus" and any
reference herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
by reference in such Preliminary Prospectus or Prospectus, as the case
may be; and any reference to any amendment to the Registration
Statements shall be deemed to refer to and include any annual report of
the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
Act after the effective date of the Initial Registration Statement that
is incorporated by reference in the Registration Statements. No
document has been or will be prepared or distributed in reliance on
Rule 434 under the Securities Act. No order preventing or suspending
the use of any Preliminary Prospectus has been issued by the
Commission.
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(b) (i) The Registration Statement conforms as to form (and the Rule
462(b) Registration Statement, if any, the Prospectus and any
amendments or supplements to either of the Registration Statements or
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform) in all material respects
to the requirements of the Securities Act and the Rules and
Regulations; (ii) the Registration Statement does not and will not, as
of the applicable effective date (as to the Registration Statement and
any amendment thereto), contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus does not contain and, as amended or supplemented, as
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from
the Registration Statements or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission (i) conformed as to form all
material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder, and (ii) none of such
documents contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such
documents are filed with Commission will conform in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(d) Each of the Company and each of its subsidiaries as set forth on
Schedule 2(d) (the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its respective jurisdiction of incorporation, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its respective ownership or lease of property or
the conduct of its respective businesses requires such qualification,
and has all power and authority necessary to own or hold its respective
properties and to conduct the businesses in which it is engaged, except
where the failure to be duly incorporated, validly existing, be in good
standing or to so qualify or have such power or authority would not
have, singularly or in the aggregate, a material adverse effect on the
condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). The Company owns or controls, directly or
indirectly, only the corporations, associations or other entities set
forth in Schedule 2(d).
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(e) This Agreement has been duly authorized executed and delivered by
the Company.
(f) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive
or similar rights and will conform in all material respects to the
description thereof contained in the Prospectus.
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company (including, without limitation, the shares of Stock to be sold
by the Selling Shareholders), have been duly and validly authorized and
issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus.
(h) All the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued, are fully paid and
nonassessable and, except to the extent set forth in the Prospectus,
are owned by the Company directly or indirectly through one or more
wholly-owned subsidiaries, free and clear of any material claim, lien,
encumbrance, security interest, restriction upon voting or transfer or
any other claim of any third party.
(i) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, which conflict, breach, violation or default
would result in a Material Adverse Effect nor will such actions result
in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, which violation would result in a Material
Adverse Effect.
(j) Except for the registration of the Stock under the Securities Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state securities laws in connection with the purchase and distribution
of the Stock by the Underwriters and the listing of the Stock on the
Nasdaq Stock Market, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental agency
or body is required to be obtained by the Company for the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby the failure of
which to obtain would result in a Material Adverse Effect.
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(k) KPMG LLP, who have expressed their opinions on the audited
financial statements and related schedules included or incorporated by
reference in the Registration Statements and the Prospectus are
independent public accountants as required by the Securities Act and
the Rules and Regulations.
(l) The financial statements, together with the related notes and
schedules, included or incorporated by reference in the Prospectus and
in each Registration Statement fairly present the financial position
and the results of operations and changes in financial position of the
Company and its consolidated subsidiaries at the respective dates or
for the respective periods therein specified. Such statements and
related notes and schedules have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
except as may be set forth in the Prospectus.
(m) Neither the Company nor any of its subsidiaries has sustained,
since August 31, 1999, any material loss or interference with its
business from fire, explosion, flood or other calamity, unless covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Prospectus or which would not be reasonably expected to result in a
Material Adverse Effect; and, since such date, except as reflected in
the Prospectus and for borrowings under the Company's secured revolving
credit facility in the ordinary course and stock options issued to
employees or exercised in the ordinary course, there has not been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(n) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, singularly or
in the aggregate, is reasonably likely to have a Material Adverse
Effect or is reasonably likely to prevent or materially adversely
affect the ability of the Company to perform its obligations under this
Agreement; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(o) Neither the Company nor any of its subsidiaries (i) is in violation
of its charter or by-laws, (ii) is in default in any respect, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it
is a party or by which it is bound or to which any of its property or
assets is subject or (iii) is in violation in any respect of any law,
ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject, except in the case of clauses
(ii) and (iii),
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any violations or defaults which, singularly or in the aggregate, would
not have a Material Adverse Effect.
(p) The Company and each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or
foreign regulatory agencies or bodies which are necessary or desirable
for the ownership of their respective properties or the conduct of
their respective businesses as described in the Prospectus, and the
Company has not received notification of any revocation or modification
of any such license, authorization or permit and has no reason to
believe that any such license, certificate, authorization or permit
will not be renewed, except in each case described in this clause (p)
where any failures to possess or make the same, singularly or in the
aggregate, would not have a Material Adverse Effect.
(q) Neither the Company nor any of its subsidiaries is or, after giving
effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus, will become an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended and the rules and regulations of the Commission thereunder.
(r) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any action
designed or intended to stabilize or manipulate the price of any
security of the Company, or which caused or resulted in, 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.
(s) The Company and its subsidiaries own or possess the right to use
all patents, trademarks, trademark registrations, service marks,
service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Prospectus as
being owned by them for the conduct of their respective businesses, and
the Company is not aware of any claim to the contrary or any challenge
by any other person to the rights of the Company and its subsidiaries
with respect to the foregoing except where the failure to own or
possess such right or such claim or challenge would result in a
Material Adverse Effect. To the Company's knowledge, the Company's
business as now conducted and as proposed to be conducted does not and
will not infringe or conflict with any patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses or other
intellectual property or franchise right of any person which could
reasonably be expected to have a Material Adverse Effect after giving
effect to the Company's rights against its suppliers. Except as
described in the Prospectus, no claim is currently pending or, to the
Company's knowledge, has been threatened against the Company alleging
the infringement by the Company of any patent, trademark, service xxxx,
trade name, copyright, trade secret, license in or other intellectual
property right or franchise right of any person which could reasonably
be expected to have a Material Adverse Effect after giving effect to
the Company's rights against its suppliers.
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(t) Except as described in the Prospectus, the Company and each of its
subsidiaries have good and marketable title in fee simple to, or have
valid rights to lease or otherwise use, all items of real or personal
property which are material to the business of the Company and its
subsidiaries taken as a whole, in each case free and clear of all
liens, encumbrances, claims and defects that may result in a Material
Adverse Effect.
(u) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time (the "Code")) or "accumulated funding deficiency" (as defined
in Section 302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA (other than events with respect to which the 30-day
notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan which could have a
Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any "pension plan"; and each "pension plan" (as
defined in ERISA) for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could cause the loss of such
qualification.
(v) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(w) There is no franchise, lease, contract, agreement or document
required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the
Registration Statements which is not described or filed therein as
required; and all descriptions of any such franchises, leases,
contracts, agreements or documents contained in the Registration
Statements, to the extent of such description are accurate descriptions
of such documents in all material respects.
(x) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is
required to be described in the Prospectus and which is not so
described.
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(y) No person or entity has the right to require registration of shares
of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statements or otherwise,
except for persons and entities who have expressly waived such right or
who have been given proper notice and have failed to exercise such
right within the time or times required under the terms and conditions
of such right.
(z) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give
rise to a valid claim against the Company or the Underwriters for a
brokerage commission, finder's fee or like payment in connection with
the offering and sale of the Stock.
(aa) The Stock is listed on the Nasdaq Stock Market.
(II) REPRESENTATIONS AND WARRANTIES AND AGREEMENTS OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder severally represents and warrants to, and agrees with,
the several Underwriters that such Selling Shareholder:
(a) Has, and immediately prior to the Closing Date (as defined in
Section 3 hereof) the Selling Shareholder will have good and valid
title to the shares of Stock to be sold by such Selling Shareholder
hereunder on such date, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of such shares and payment
therefor pursuant hereto, good and valid title to such shares, free and
clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters.
(b) Has duly and irrevocably executed and delivered a custody
agreement, in substantially the form heretofore delivered by the
Representatives (the "Custody Agreement"), with Continental Stock
Transfer & Trust Company, as custodian (the "Custodian"), pursuant to
which certificates in negotiable form for the shares of Stock to be
sold by such Selling Shareholder hereunder have been placed in custody
for delivery under this Agreement.
(c) Has full right, power and authority to enter into this Agreement
and the Custody Agreement; the execution, delivery and performance of
this Agreement and the Custody Agreement by such Selling Shareholders
and the consummation by such Selling Shareholders of the transactions
contemplated hereby and thereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Shareholder is a party or by which the Selling Shareholder is bound or
to which any of the material property or assets of the Selling
Shareholder is subject, nor will such actions result in any violation
of any statute or any material order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Selling
Shareholder or the property or assets of the Selling Shareholder; and,
except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state securities laws in connection with the purchase and distribution
of the Stock by the Underwriters, no consent, approval,
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authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Custody Agreement by
such Selling Shareholder and the consummation by the Selling
Shareholder of the transactions contemplated hereby and thereby.
(d) The Registration Statements do not, and the Prospectus and any
further amendments or supplements to the Registration Statements or the
Prospectus will not, as of the applicable effective date (as to the
Registration Statements and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The preceding
sentence only applies to information contained in or omitted from the
Registration Statements or the Prospectus in reliance upon and in
conformity with written information relating to the Selling Shareholder
furnished to the Company by or on behalf of the Selling Shareholder
specifically for inclusion therein.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and the Selling Shareholders
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
the Selling Shareholders, that number of shares of Firm Stock (rounded up or
down, as determined by XX Xxxxx in its discretion, in order to avoid fractions)
obtained by multiplying 2,000,000 shares of Firm Stock in the case of the
Company and the number of shares of Firm Stock set forth opposite the name of
such Selling Shareholder in Schedule B hereto, in the case of a Selling
Shareholder, in each case by a fraction the numerator of which is the number of
shares of Firm Stock set forth opposite the name of such Underwriter in Schedule
A hereto and the denominator of which is the total number of shares of Firm
Stock.
The purchase price per share to be paid by the Underwriters to the Company and
the Selling Shareholders for the Stock will be $_____ per share (the "Purchase
Price").
The Company and the Selling Shareholders will deliver the Firm Stock to the
Representatives for the respective accounts of the several Underwriters (in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York time, on the second full business day preceding
the Closing Date (as defined below) against payment of the aggregate Purchase
Price therefor by wire transfer to an account at a bank reasonably acceptable to
XX Xxxxx, payable to the order of the Company and the Selling Shareholders, as
the case may be, all at the offices of __________. Time shall be of the essence,
and delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligations of each Underwriter hereunder. The time and
date of the delivery and closing shall be at 10:00 A.M., New York time, on
_______________, 2000, in accordance with Rule 15c6-1 of the Exchange Act. The
time and date of such payment and delivery are herein referred to as the
"Closing Date". The Closing Date and the location of delivery of, and the form
of payment for, the Firm Stock may be varied by agreement among the Company, the
Selling Shareholders and XX Xxxxx.
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The Company and the Selling Shareholders shall make the certificates for the
Stock available to the Representatives for examination on behalf of the
Underwriters in New York, New York at least twenty-four hours prior to the
Closing Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase all or less than all of the Optional Stock. The
Company and the Selling Shareholders agree, severally and not jointly, to sell
to the Underwriters the respective numbers of shares of Optional Stock obtained
by multiplying the number of shares of Optional Stock specified in such notice
by a fraction, the numerator of which is 2,000,000 in the case of the Company
and the number of shares set forth opposite the names of such Selling
Shareholders in Schedule B hereto under the caption "Number of Optional Shares
to be Sold" in the case of the Selling Shareholders and the denominator of which
is the total number of shares of Firm Stock (subject to adjustment by XX Xxxxx
to eliminate fractions). Such shares of Optional Stock shall be purchased from
the Company and each Selling Shareholder for the account of each Underwriter in
the same proportion as the number of shares of Firm Stock set forth opposite
such Underwriter's name bears to the total number of shares of Firm Stock
(subject to adjustment by XX Xxxxx to eliminate fractions). The price per share
to be paid for the Optional Stock shall be the Purchase Price. The option
granted hereby may be exercised as to all or any part of the Optional Stock at
any time, and from time to time, not more than thirty (30) days subsequent to
the date of this Agreement. No Optional Stock shall be sold and delivered unless
the Firm Stock previously has been, or simultaneously is, sold and delivered.
The right to purchase the Optional Stock or any portion thereof may be
surrendered and terminated at any time upon notice by XX Xxxxx to the Company.
The option granted hereby may be exercised by written notice being given to the
Company by XX Xxxxx, setting forth the number of shares of the Optional Stock to
be purchased by the Underwriters and the date and time for delivery of and
payment for the Optional Stock. Each date and time for delivery of and payment
for the Optional Stock (which may be the Closing Date, but not earlier) is
herein called the "Option Closing Date" and shall in no event be earlier than
two (2) business days nor later than five (5) business days after written notice
is given unless the parties otherwise agree. (The Option Closing Date and the
Closing Date are herein called the "Closing Dates".)
The Company will deliver the Optional Stock to the Underwriters (in the form of
definitive certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 Noon, New York time, on the second full business day preceding the
Option Closing Date against payment of the aggregate Purchase Price therefor in
federal (same day) funds by certified or official bank check or checks or wire
transfer to an account at a bank acceptable to XX Xxxxx payable to the order of
the Company and the Selling Shareholders, as the case may be, all at the offices
of _________. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of each Underwriter hereunder. The Company shall make the certificates for the
Optional Stock available to the Representatives for examination on behalf of the
Underwriters in New York, New York not later than 10:00 A.M.,
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New York Time, on the business day preceding the Option Closing Date. The Option
Closing Date and the location of delivery of, and the form of payment for, the
Optional Stock may be varied by agreement between the Company and XX Xxxxx.
The several Underwriters propose to offer the Stock for sale upon the terms and
conditions set forth in the Prospectus.
4. (I) FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and file such Rule
462(b) Registration Statement with the Commission as promptly as
practicable; prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the second business day following the
execution and delivery of this Agreement; make no further amendment or
any supplement to the Registration Statements or to the Prospectus
prior to the Option Closing Date without giving the Representatives a
reasonable period of time, based on the circumstances, to review the
amendment or supplement and reasonably considering the Representatives'
comments thereto; advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to either
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; file promptly
all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Stock; advise
the Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statements or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any
such qualification, use promptly its commercially reasonable best
efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered 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 any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus
to comply with the Securities Act or the Exchange Act, the Company will
12
promptly notify the Representatives thereof and upon their request will
prepare an amended or supplemented Prospectus or make an appropriate
filing pursuant to Section 13 or 14 of the Exchange Act which will
correct such statement or omission or effect such compliance. The
Company will furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from
time to time reasonably request of such amended or supplemented
Prospectus; and in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the
effective date of the Initial Registration Statement, the Company upon
the request of the Representatives and at the expense of such
Underwriter will prepare promptly an amended or supplemented Prospectus
as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act.
(c) To furnish promptly to the Representatives and counsel for the
Underwriters one signed copy of each of the Registration Statements as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed
therewith.
(d) To deliver promptly to the Representatives in New York City such
number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration Statements
as originally filed with the Commission and each amendment thereto (in
each case excluding exhibits), (ii) each Preliminary Prospectus, (iii)
the Prospectus (not later than [12:00 P.M.], New York time, of the
business day following the execution and delivery of this Agreement)
and any amended or supplemented Prospectus (not later than [12:00
P.M.], New York City time, on the business day following the date of
such amendment or supplement) and (iv) any document incorporated by
reference in the Prospectus (excluding exhibits thereto).
(e) To make generally available to its shareholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158).
(f) The Company will promptly take from time to time such actions as
the Representatives may reasonably request to qualify the Stock for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may designate and to continue such
qualifications in effect for so long as required for the distribution
of the Stock; provided that the Company and its subsidiaries shall not
be obligated to qualify as foreign corporations in any jurisdiction in
which they are not so qualified or to file a general consent to service
of process in any jurisdiction;
(g) During the period of one year from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the
other Underwriters, as soon as they are available, copies of all
reports or other communications furnished to shareholders.
13
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares
of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock for a period of 90 days from the date of
the Prospectus without the prior written consent of XX Xxxxx other than
(i) the Company's sale of the Stock hereunder and the issuance of
options, warrants, rights or shares pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans
existing on the date hereof or the exercise thereof or (ii) shares
issued in connection with joint ventures, acquisitions or other
business arrangements approved by the Company's Board of Directors
where the recipient of the shares agrees to be locked up for the
balance of the 90-day period.
(i) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(j) Prior to the Closing Date, the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for
any periods subsequent to the periods covered by the financial
statements appearing in the Registration Statement and the Prospectus.
(k) Prior to the Closing Date, the Company will not issue any press
release or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except
for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Representatives are notified), without the prior written
consent of the Representatives, unless in the judgment of the Company
and its counsel, and after notification to the Representatives, such
press release or communication is required by law.
(l) In connection with the offering of the Stock, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as
defined in Regulation M under the Exchange Act) not to, either alone or
with one or more other persons, bid for or purchase, for any account in
which it or any of its affiliated purchasers has a beneficial interest,
any Stock, or attempt to induce any person to purchase any Stock; and
not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Stock.
(m) The Company will not take any action prior to the Option Closing
Date which would require the Prospectus to be amended or supplemented
pursuant to Section 4(b) without consulting with the Representatives
prior thereto and promptly so amending or supplementing it; and
(n) The Company will apply the net proceeds from the sale of the Stock
as set forth in the Prospectus under the heading "Use of Proceeds".
14
(II) FURTHER AGREEMENTS OF THE SELLING SHAREHOLDERS. The Selling Shareholders
agree with the several Underwriters that:
(a) They will not directly or indirectly offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for
Common Stock other than the sale of the Stock hereunder for a period of
90 days from the date of the Prospectus, without the prior written
consent of XX Xxxxx, provided, that each of the Selling Shareholders
may transfer up to an aggregate of 15,000 shares of Common Stock to a
charitable organization or to a trust or other wholly-owned entity for
the benefit of members of his family, provided further, that the
recipient of such shares agrees to the restrictions in this Section
II(a) for the remainder of the 90 day period.
(b) The shares of Stock represented by the certificates held in custody
under the Custody Agreement are for the benefit of and coupled with and
subject to the interests of the Underwriters and the Selling
Shareholders, and the arrangement for such custody and the appointment
of the Attorneys-in-fact are irrevocable; the obligations of such
Selling Shareholders hereunder shall not be terminated by operation of
law, whether by the death or incapacity, liquidation or distribution of
such Selling Shareholders, or any other event, that if such Selling
Shareholders should die or become incapacitated or is liquidated or
dissolved or any other event occurs, before the delivery of the Stock
hereunder, certificates for the Stock to be sold by such Selling
Shareholders shall be delivered on behalf of such Selling Shareholders
in accordance with the terms and conditions of this Agreement and the
Custody Agreement, and action taken by the Attorneys-in-fact or any of
them under the Power of Attorney shall be as valid as if such death,
incapacity, liquidation or dissolution or other event had not occurred,
whether or not the Custodian, the Attorneys-in-fact or any of them
shall have notice of such death, incapacity, liquidation or dissolution
or other event.
(c) They will deliver to XX Xxxxx on or prior to the Closing Date a
properly completed and executed United States Treasury Department Form
W-8 (if the Selling Shareholder is a non-United States person) or Form
W-9 (if the Selling Shareholder is a United States person) or such
other applicable form or statement, if any, specified by Treasury
Department regulations in lieu thereof.
5. PAYMENT OF EXPENSES. The Company agrees with the Underwriters to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statement,
Preliminary Prospectus, Prospectus, any amendments and exhibits thereto or any
document incorporated by reference therein; (d) the fees and expenses (including
related fees and expenses of counsel for the Underwriters) incurred in
connection with filings made with the National Association of Securities
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(I)(f) and of preparing, printing and distributing Blue Sky
15
Memoranda and Legal Investment Surveys (including related fees and expenses of
counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Stock; and (h) all other costs and expenses incident to
the performance of the obligations of the Company and of the Selling
Shareholders under this Agreement (including, without limitation, the fees and
expenses of the Company's counsel and the Company's independent accountants);
provided that, (i) except as otherwise provided in this Section 5 and in Section
10, the Underwriters shall pay their own costs and expenses, including the fees
and expenses of their counsel, any transfer taxes on the Stock which they may
sell and the expenses of advertising any offering of the Stock made by the
Underwriters and (ii) the Selling Shareholders shall be responsible for the
underwriting discounts and commissions relating to their Shares.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on the
Closing Date, of the representations and warranties of the Company and the
Selling Shareholders contained herein, to the accuracy of the statements of the
Company and the Selling Shareholders made in any certificates pursuant to the
provisions hereof, to the performance by the Company and the Selling
Shareholders in all material respects of their obligations hereunder, and to
each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of either of the
Registration Statements shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the Commission,
and any request for additional information on the part of the
Commission (to be included in the Registration Statements or the
Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives. The Rule 462(b)
Registration Statement, if any, and the Prospectus shall have been
timely filed with the Commission in accordance with Section 4(I)(a).
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Underwriters, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Custody
Agreements, the Stock, the Registration Statement and the Prospectus
and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in
all material respects to counsel for the Underwriters, and the Company
and the Selling Shareholders shall have furnished to such counsel all
documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx shall have furnished to
the Representatives such counsels' written opinion, as counsel to the
Company, addressed to
16
the Underwriters and dated the Closing Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(i) Each of the Company and Audiovox Communications Corp.
("ACC") is validly existing as a corporation in good standing under the
laws of the State of Delaware, is duly qualified to do business and is
in good standing as a foreign corporation in the State of New York, and
has all corporate power and authority necessary to own or hold its
respective properties and to conduct its businesses in which it is
engaged, except where the failure to so qualify or have such power or
authority would not have, singularly or in the aggregate, a Material
Adverse Effect.
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the shares of Stock being delivered by
the Company on the Closing Date, have been duly and validly authorized
and, when issued upon payment therefor pursuant to this Agreement, will
be fully paid, non-assessable and conform in all material respects to
the description thereof contained in the Prospectus.
(iii) ____________ of the _____________ outstanding shares of
capital stock of ACC are owned by the Company directly or indirectly
through one or more wholly-owned subsidiaries.
(iv) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's charter or by-laws or any
agreement or other instrument filed as an exhibit to the Registration
Statements or the Company's Forms 10-K for the year ended November 30,
1998 .
(v) This Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument filed as an exhibit to the Registration Statements or the
Company's Forms 10-K for the year ended November 30, 1998, nor will
such actions result in any violation of (A) the Charter or by-laws of
the Company or ACC or (B) any statute or any order, rule or regulation
of any court or governmental agency or body or court having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except, in the case of (B), where such
violation would result in a Material Adverse Effect.
(vii) Except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with,
any such court or governmental
17
agency or body is required to be obtained by the Company for the
execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby.
(viii) The statements in the Prospectus under the heading
"Material U.S. Tax Considerations Applicable to Non-U.S. Holders of
Common Stock," insofar as such statements purport to summarize matters
of United States federal tax law or legal conclusions with respect
thereto, fairly summarize the matters set forth therein.
(ix) The description in the Registration Statement and
Prospectus of statutes, legal or governmental proceedings and contracts
and other documents are accurate in all material respects; and to the
best of such counsel's knowledge, there are no statutes, legal or
governmental proceedings, contracts or other documents of a character
required to be described in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement which are not
described or filed as required.
(x) To the best of such counsel's knowledge based (with
respect to factual matters) upon a certificate of a responsible officer
of the Company and other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property or asset of
the Company or any of its subsidiaries is the subject which is required
to be described in the Registration Statement pursuant to the Rules and
Regulations which is not so described.
(xi) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion,
the Rule 462(b) Registration Statement, if any, was filed with the
Commission on the date specified therein, the Prospectus was filed with
the Commission pursuant to the subparagraph of Rule 424(b) of the Rules
and Regulations specified in such opinion on the date specified therein
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission.
(xii) The Registration Statements, as of the respective
effective dates, and the Prospectus, as of its date, and any further
amendments or supplements thereto, as of their respective dates, made
by the Company prior to the Closing Date (other than the financial
statements and other financial data contained therein, as to which such
counsel need express no opinion) appeared on their face to be
appropriately responsive as to form with the requirements of the
Securities Act and the Rules and Regulations; and the documents
incorporated by reference in the Prospectus (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion), when they were filed with the Commission appeared
on their face to be appropriately responsive as to form with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.
(xiii) To the best of such counsel's knowledge, based (with
respect to factual matters) on a certificate of a responsible officer
of the Company, no person or entity has
18
the right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statements or otherwise, except for persons and entities
who have expressly waived such right or who have been given proper
notice and have failed to exercise such right within the time or times
required under the terms and conditions of such right.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that (x) such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statements, (y) based on such counsel's examination of the
Registration Statements and such counsel's investigations made in connection
with the preparation of the Registration Statements and "conferences with
certain officers and employees of and with auditors for and counsel to the
Company", such counsel has no reason to believe that (I) the Registration
Statements, as of the respective effective dates, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that the Prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (II) any document incorporated by reference in the
Prospectus, when they were filed with the Commission contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; it being understood that such counsel need
express no opinion as to the financial statements or other financial data
contained in the Registration Statement or the Prospectus.
The foregoing opinion and statement may be qualified by a statement to the
effect that such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and takes no responsibility therefor except to the
extent set forth in the opinion described in clauses (viii) and (ix) above.
(e) Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx shall have furnished to
the Representatives such counsel's written opinion, as counsel to the
Selling Shareholders, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) the execution, delivery and performance of this Agreement
and the Custody Agreement by each Selling Shareholder and the
consummation by each Selling Shareholder of the transactions
contemplated hereby and thereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any statute, any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument known to such
counsel as set forth on a schedule to the opinion to which any Selling
Shareholder is a party or by which any Selling Shareholder is bound or
to which any of the property or assets of any Selling Shareholder is
subject, nor will such actions result in any violation of any statute
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction
19
over any Selling Shareholder or the property or assets of any Selling
Shareholder; and, except for the registration of the Stock under the
Securities Act, the listing of the Stock with the Nasdaq National
Market and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state securities laws in connection with the purchase and distribution
of the Stock by the Underwriters, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement or the Custody Agreement by any Selling
Shareholder and the consummation by any Selling Shareholder of the
transactions contemplated hereby and thereby.
(ii) This Agreement has been executed and delivered by each
Selling Shareholder.
(iii) A Custody Agreement has been duly executed and delivered
by each Selling Shareholder and constitutes a valid and binding
agreement of each Selling Shareholder.
(iv) Upon payment for the Shares to be sold by the Selling
Shareholders and the delivery to DTC or its agent of the Shares
registered in the name of Cede & Co. or such other nominee designated
by DTC, both as provided for in this Agreement, and the crediting of
the Shares to the Underwriters' accounts with DTC, Cede & Co. or such
other nominee designated by DTC will be a "protected purchaser" of the
Shares (as defined in Section 8-303 of the UCC), the Underwriters will
acquire a valid "security entitlement" (within the meaning of Section
8-501 of the UCC) to the Shares, and no action based on an "adverse
claim" (as defined in Section 8-102 of the UCC) may be asserted against
the Underwriters with respect to such security entitlement (assuming
that the Underwriters are without notice of any such adverse claim).
(f) The Representatives shall have received from Xxxxx Raysman
Xxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the Underwriters, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Underwriters may reasonably require, and the Company and
the Selling Shareholders shall have furnished to such counsel such
documents as they reasonably request for enabling them to pass upon
such matters.
(g) At the time of the execution of this Agreement, the Representatives
shall have received from KPMG LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to
the Representatives, (i) confirming that they are independent certified
public accountants with respect to the Company and its subsidiaries
within the meaning of the Securities Act and the Rules and Regulations
and (ii) stating the conclusions and findings of such firm with respect
to the financial statements and certain financial information contained
or incorporated by reference in the Prospectus.
(h) On the Closing Date, the Representatives shall have received a
letter (the "bring-down letter") from KPMG LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of
the bring-down letter (or, with respect to matters involving
20
changes or developments since the respective dates as of which
specified financial information is given in the Prospectus as of a date
not more than three business days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by its letter delivered
to the Representatives concurrently with the execution of this
Agreement pursuant to Section 6(g).
(i) The Company shall have furnished to the Representatives a
certificate, dated the Closing Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating
that in their capacity as an officer and not in their individual
capacity (i) such officers have carefully examined the Registration
Statement and the Prospectus and, in their opinion, the Registration
Statement as of its effective date, did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus as of its date did not
include any untrue statement of a material fact and did not 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, (ii) since the effective date of the
Initial Registration Statement no event has occurred which is required
by applicable law or the Rules and Regulations to have been set forth
in a supplement or amendment to the Registration Statements or the
Prospectus, (iii) to the best of their knowledge after reasonable
investigation, as of the Closing Date, the representations and
warranties of the Company in this Agreement are true and correct and
the Company has complied in all material respects with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and (iv) subsequent to the
date of the most recent financial statements included or incorporated
by reference in the Prospectus, there has been no material adverse
change in the financial position or results of operation of the Company
and its subsidiaries, or any change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole, except as set
forth in the Prospectus.
(j) Each Selling Shareholder or the Custodian or one or more
attorneys-in-fact on behalf of the Selling Shareholders) shall have
furnished to the Representatives on the Closing Date a certificate,
dated such date, signed by, or on behalf of, the Selling Shareholder
stating that the representations and warranties of the Selling
Shareholder contained herein are true and correct as of the Closing
Date and that the Selling Shareholder has complied in all material
respects with all agreements contained herein to be performed by the
Selling Shareholder at or prior to the Closing Date.
(k) Neither the Company nor any of its subsidiaries shall have
sustained since August 31, 1999 any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any
21
development involving a prospective change, in or affecting the
business, general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus and except for borrowings under the Company's secured
revolving credit facility in the ordinary course and stock options
issued to employees or exercised in the ordinary course, the effect of
which, in any such case described in clause (i) or (ii), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of
the Stock on the terms and in the manner contemplated in the
Prospectus.
(l) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Stock; and no injunction, restraining order or
order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Stock.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the Nasdaq Stock Market, or
trading in any securities of the Company on the Nasdaq Stock Market,
shall have been suspended or minimum prices shall have been established
on any such exchange or such market by the Commission, by such exchange
or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the case of clauses (i) through (iv)
in the judgment of the Representatives, impracticable or inadvisable to
proceed with the sale or delivery of the Stock on the terms and in the
manner contemplated in the Prospectus.
(n) The Nasdaq Stock Market shall have approved the Stock for
inclusion, subject only to official notice of issuance.
(o) XX Xxxxx shall have received the written agreements, substantially
in the form of Exhibit I hereto, of the executive officers and
directors of the Company listed in Schedule C to this Agreement.
All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriters.
7. INDEMNIFICATION AND CONTRIBUTION.
22
(a) Indemnification by the Company and the Major Shareholder. Each of
the Company and the Major Shareholder, jointly and severally, shall
indemnify and hold harmless each Underwriter, its officers, employees,
representatives and agents and each person, if any, who controls any
Underwriter within the meaning of the Securities Act (collectively the
"Underwriter Indemnified Parties" and, each an "Underwriter Indemnified
Party") against any loss, claim, damage or liability, joint or several,
or any action in respect thereof, to which that Underwriter Indemnified
Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of
or is based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statements or the
Prospectus or in any amendment or supplement thereto, or (ii) the
omission or alleged omission to state in the Registration Statement or
the Prospectus or in any amendment or supplement thereto a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse each Underwriter
Indemnified Party promptly upon demand for any out-of-pocket legal or
other expenses reasonably incurred by that Underwriter Indemnified
Party in connection with investigating or preparing to defend or
defending against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that neither the Company nor the Major
Shareholder shall 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 an untrue statement or alleged untrue statement in or omission or
alleged omission from the Preliminary Prospectus, either of the
Registration Statements or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for use therein, which information the
parties hereto agree is limited to the Underwriters' Information (as
defined in Section 17); provided further, however, that the foregoing
indemnification agreement with respect to the Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such loss, claim, damage or liability purchased
Securities, or any officers, employees, representatives, agents or
controlling persons of such Underwriter, if (i) a copy of the
Prospectus (as then amended or supplemented) was required by law to be
delivered to such person at or prior to the written confirmation of the
sale of Securities to such person, (ii) a copy of the Prospectus (as
then amended or supplemented) excluding documents incorporated by
reference therein was not sent or given to such person by or on behalf
of such Underwriter and such failure was not due to non-compliance by
the Company with Section 4(I)(d), and (iii) the Prospectus (as so
amended or supplemented) would have cured all or part of the defect
giving rise to such loss, claim, damage or liability; and provided
further, however that the Major Shareholder's liability under this
Section 7(a) shall be limited to the extent that he had knowledge of
the applicable untrue statement or omission. This indemnity agreement
is not exclusive and will be in addition to any liability which the
Company or the Major Shareholder might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or
in equity to each Underwriter Indemnified Party. Notwithstanding
anything in this Section 7(a) to the contrary, the liability of the
Major Shareholder under this Section 7(a), together with any liability
of his under Section 7(b), shall not exceed the amount of the
23
net proceeds received by the Major Shareholder from the sale of shares
of Stock pursuant to this Agreement and the Underwriters agree to first
take legal action against the Company before taking any legal action
against the Major Shareholder.
(b) Indemnification by the Selling Shareholders. The Selling
Shareholders, severally and not jointly, shall indemnify and hold
harmless each Underwriter Indemnified Party, against any loss, claim,
damage or liability, joint or several, or any action in respect
thereof, to which that Underwriter Indemnified Party may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Prospectus, either of the Registration
Statements or the Prospectus or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, either of the Registration Statements or the Prospectus or
in any amendment or supplement thereto a material fact required to be
stated therein or necessary to make the statements therein not
misleading and shall reimburse each Underwriter Indemnified Party
promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing
as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that the Selling Shareholders shall only 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 an untrue statement or alleged
untrue statement in or omission or alleged omission from the
Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity
with written information relating to the Selling Shareholder furnished
to the Company by or on behalf of the Selling Shareholder specifically
for use therein (the "Selling Shareholder's Information"); provided
further, however, that the foregoing indemnification agreement with
respect to the Preliminary Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such loss, claim,
damage or liability purchased Securities, or any officers, employees,
representatives, agents or controlling persons of such Underwriter, if
(i) a copy of the Prospectus (as then amended or supplemented) was
required by law to be delivered to such person at or prior to the
written confirmation of the sale of Securities to such person, (ii) a
copy of the Prospectus (as then amended or supplemented) excluding
documents incorporated by reference therein was not sent or given to
such person by or on behalf of such Underwriter and such failure was
not due to non-compliance by the Company with Section 4(I)(d), and
(iii) the Prospectus (as so amended or supplemented) would have cured
all or part of the defect giving rise to such loss, claim, damage or
liability. This indemnity agreement is not exclusive and will be in
addition to any liability which the Selling Shareholders might
otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to each Underwriter
Indemnified Party. Notwithstanding anything in this Section 7(b) to the
contrary, the liability of any Selling Shareholder under this Section
7(b), together with any liability of such Selling Shareholder under
Section 7(a), shall not exceed the amount
24
of the net proceeds received by such Selling Shareholder from the sale
of shares of Stock pursuant to this Agreement.
(c) Indemnification by Each Underwriter. Each Underwriter, severally
and not jointly, shall indemnify and hold harmless the Company its
officers, employees, representatives and agents, each of its directors
and each person, if any, who controls the Company within the meaning of
the Securities Act (collectively the "Company Indemnified Parties" and
each a "Company Indemnified Party") and the Selling Shareholders, their
respective officers, employees, representatives and agents and each
person, if any, who controls the Selling Shareholders within the
meaning of the Securities Act (collectively, the "Shareholder
Indemnified Parties" and each a "Shareholder Indemnified Party"),
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company Indemnified Parties or
the Selling Shareholder Indemnified Parties may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Preliminary Prospectus, either of the Registration Statements or
the Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
that Underwriter specifically for use therein, and shall reimburse the
Company Indemnified Parties and the Selling Shareholder Indemnified
Parties for any legal or other expenses reasonably incurred by such
parties in connection with investigating or preparing to defend or
defending against or appearing as third party witness in connection
with any such loss, claim, damage, liability or action as such expenses
are incurred; provided that the parties hereto hereby agree that such
written information provided by the Underwriters consists solely of the
Underwriters' Information. This indemnity agreement is not exclusive
and will be in addition to any liability which the Underwriters might
otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to the Company Indemnified
Parties and Selling Shareholder Indemnified Parties.
(d) Notification and Defense. Promptly after receipt by an indemnified
party under this Section 8 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section
8, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 8 except to the extent it has been
materially prejudiced by such failure; and, provided, further, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than
under this Section 8. If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to
25
participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under
this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof but the fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment thereof has been
specifically authorized by the indemnifying party in writing, (ii) such
indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in
the reasonable judgment of such counsel it is advisable for such
indemnified party to employ separate counsel or (iii) the indemnifying
party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties, which firm shall be designated
in writing by XX Xxxxx, if the indemnified parties under this Section 8
consist of any Underwriter Indemnified Party, or by the Company if the
indemnified parties under this Section 8 consist of any Company
Indemnified Parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 8(a), 8(b) and 8(c), shall
use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. Subject to the provisions of
Section 8(e) below, no indemnifying party shall be liable for any
settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld, provided that in any
event consent may be withheld, without limitation, with respect to a
settlement which (i) does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such action or (ii) contains
an admission of guilt on behalf of such indemnified party), but if
settled with its written consent or if there be a final judgment for
the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(e) Settlement if no Reimbursement. If at any time an indemnified party
shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by this Section 8 effected without its written
26
consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of the request for reimbursement,
(ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of
such settlement.
(f) Contribution. If the indemnification provided for in this Section 8
is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a), 8(b) or 8(c), then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative
benefits received by the Company, the Selling Shareholder and the
Underwriters, respectively, from the offering of the Stock or 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 the Company, the Selling Shareholder, and the
Underwriters, respectively, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the
Selling Shareholders and the Underwriters, respectively, with respect
to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this
Agreement (before deducting expenses) received by the Company and the
Selling Shareholders, respectively, bear to the total underwriting
discounts and commissions received by the Underwriters with respect to
the Stock purchased under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company, the Selling Shareholders or the Underwriters
as the case may be, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission; provided that the parties hereto
agree that the written information furnished to the Company through the
Representatives by or on behalf of the Underwriters for use in any
Preliminary Prospectus, either of the Registration Statements or the
Prospectus consists solely of the Underwriter's Information and the
written information furnished to the Company by or on behalf of each
Selling Shareholder shall be such Selling Shareholder's Selling
Shareholder's Information. The Company, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 8(f) were to be determined by
pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 8(f) shall be deemed to include, for
purposes of this Section 8(f), any legal or other expenses reasonably
incurred by such indemnified
27
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(f), (i) no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Stock underwritten by it
and distributed to the public were offered to the public less the
amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (ii) no Selling
Shareholder shall be required to contribute any amount in excess of the
amount of the net proceeds of the Stock sold by such Selling
Shareholder less the amount of any damages which such Selling
Shareholder has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
The Underwriters' obligations to contribute as provided in this Section
8(f) are several in proportion to their respective underwriting
obligations and not joint.
8. TERMINATION. The obligations of the Underwriters hereunder may be terminated
by XX Xxxxx, in its absolute discretion by notice given to and received by the
Company and the Selling Shareholders prior to delivery of and payment for the
Firm Stock if, prior to that time, any of the events described in Sections 6(k),
or 6(m) have occurred or if the Underwriters shall decline to purchase the Stock
for any reason permitted under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8, (b) the Company or any Selling
Stockholder shall fail to tender the Stock for delivery to the Underwriters for
any reason not permitted under this Agreement, or (c) the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement, the
Company and the Selling Shareholders shall reimburse the Underwriters for the
reasonable fees and expenses of their counsel and for such other out-of-pocket
expenses as shall have been reasonably incurred by them in connection with this
Agreement and the proposed purchase of the Stock, and, upon demand, the Company
and the Selling Shareholders shall pay the full amount thereof to the XX Xxxxx.
If this Agreement is terminated pursuant to Section 10 by reason of the default
of one or more Underwriters, neither the Company nor any Selling Shareholders
shall be obligated to reimburse any defaulting Underwriter on account of those
expenses.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
28
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required hereby or
agree to take up all or part of the shares of Stock of a defaulting Underwriter
or Underwriters as provided in this Section 10, (i) the Company and the Selling
Shareholders shall have the right to postpone the Closing Dates for a period of
not more than five (5) full business days in order that the Company and the
Selling Shareholders may effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective numbers of shares to be purchased by the
remaining Underwriters or substituted Underwriters shall be taken as the basis
of their underwriting obligation for all purposes of this Agreement. Nothing
herein contained shall relieve any defaulting Underwriter of its liability to
the Company, the Selling Shareholders or the other Underwriters for damages
occasioned by its default hereunder. Any termination of this Agreement pursuant
to this Section 10 shall be without liability on the part of any non-defaulting
Underwriter, the Selling Shareholders or the Company, except expenses to be paid
or reimbursed pursuant to Sections 5 and 9 and except the provisions of Section
8 shall not terminate and shall remain in effect.
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and the Selling Shareholders and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the persons mentioned in the preceding sentence 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, covenants, agreements and indemnities of the
Company and the Selling Shareholders contained in this Agreement shall also be
for the benefit of the Underwriter Indemnified Parties, and the indemnities of
the several Underwriters shall also be for the benefit of the Company
Indemnified Parties and the Selling Shareholder Indemnified Parties.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC.; LIMITATION ON
MAJOR SHAREHOLDER'S LIABILITY. The respective indemnities, covenants,
agreements, representations, warranties and other statements of the Company, the
Selling Shareholders and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Selling Shareholders, the Company or any person
controlling any of them and shall survive delivery of and payment for the Stock.
Notwithstanding anything in this Agreement to the contrary, the liability of the
Major Shareholder with respect to the representations and warranties made by him
in Section 2(I), shall not exceed the amount of the net proceeds received by the
Major Shareholder from the sale of shares of Stock pursuant to this Agreement
less the amount of any other damages which the Major Shareholder is liable for
under Section 7 hereof.
29
13. NOTICES. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to SG Securities Corporation, Xxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000-0000, Attention: Syndicate
Department (Fax: 000-000-0000), with a copy to: Xxxxx Raysman Xxxxxxxxx
Xxxxxx & Xxxxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxxx Xxxxxxxx, Esq. (Fax: 000-000-0000);
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Audiovox Corporation, 000 Xxxxxx Xxxx.,
Xxxxxxxxxx, XX 00000, Attention: C. Xxxxxxx Xxxxxx (Fax: 000-000-0000),
with copies to: Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxx Xxxxxxx (Fax:
000-000-0000); and Levy & Stopol, LLP, Xxx Xxxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxx (Fax: 000-000-0000);
(c) if to any Selling Shareholders, shall be delivered or sent by mail,
telex or facsimile transmission to such Selling Shareholder at the
address set forth on Schedule B hereto; provided, however, that any
notice to an Underwriter pursuant to Section 8 shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at
its address set forth in its acceptance telex to the Representatives,
which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. and the Nasdaq
National Market are open for trading, (b) "Major Shareholder" means Xxxx X.
Xxxxxx and (c) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. UNDERWRITERS' INFORMATION. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the "Underwriters' Information" consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the last
paragraph on the cover page and the statements in the third and seventh
paragraphs in the Prospectus under the heading "Underwriting."
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters; and any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Shareholders.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any
30
other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders and the
Representatives.
20. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
31
If the foregoing is in accordance with your understanding of the agreement
between the Company, the Selling Shareholders and the several Underwriters,
kindly indicate your acceptance in the space provided for that purpose below.
Very truly yours,
AUDIOVOX CORPORATION
By:
----------------------------
Name:
Title:
SELLING SHAREHOLDERS:
------------------------------
Xxxx X. Xxxxxx
------------------------------
Xxxxxx Xxxxxxxxxxx
Accepted as of
the date first above written:
XX XXXXX SECURITIES CORPORATION
XXXXXX XXXXXX & COMPANY, INC.
PRUDENTIAL SECURITIES
INCORPORATED
LADENBURG, XXXXXXXX & CO., INC.
Acting on their own behalf and as
Representatives of the several Underwriters
referred to in the
foregoing Agreement.
By: XX XXXXX SECURITIES
CORPORATION
By:
------------------------------
Name:
Title:
32
SCHEDULE A
Number of Firm Number of
Shares to be Optional Shares
Name Purchased to be Purchased
---- --------- ---------------
XX Xxxxx Securities Corporation
Xxxxxx Xxxxxx & Company, Inc.
Prudential Securities Incorporated
Ladenburg Xxxxxxxx & Co., Inc.
--------- -------
Total 3,100,000 465,000
========= =======
33
SCHEDULE B
Number of
Number of Firm Optional Shares
Selling Shareholders Shares to xxXxxx to be Sold
-------------------- ---------------- ----------
Xxxx X. Xxxxxx 1,000,000 150,000
c/o Audiovox Corporation
000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000 100,000 15,000
Xxxxxx Xxxxxxxxxxx
c/o Audiovox Corporation
000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Total 1,100,000 165,000
========= =======
34
SCHEDULE C
[List of persons subject to Section 4(h)]
Xxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx
X. Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxx X. Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxx X. Xxxxxx, Xx.
Xxxxxx X. XxXxxxx
35
Exhibit I
[Form of Lock-Up Agreement]
___________, 2000
XX Xxxxx Securities Corporation
Xxxxxx Xxxxxx & Company, Inc.
Prudential Securities Incorporated
Ladenburg Xxxxxxxx & Co., Inc.
As representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Audiovox Corporation - Shares of Common Stock
---------------------------------------------
Dear Sirs:
In order to induce XX Xxxxx Securities Corporation ("XX Xxxxx"), Xxxxxx Xxxxxx &
Company, Inc., Prudential Securities Incorporated and Ladenburg Xxxxxxxx & Co.,
Inc. (the "Representatives"), to enter in to a certain underwriting agreement
with Audiovox corporation, a Delaware corporation (the "Company"), with respect
to the public offering of shares of the Company's Common Stock, par value $.01
per share ("Common Stock"), the undersigned hereby agrees that for a period of
90 days following the date of the final prospectus filed by the Company with the
Securities and Exchange Commission in connection with such public offering, the
undersigned will not, without the prior written consent of XX Xxxxx, directly or
indirectly, offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, any shares of Common Stock (including, without limitation,
Common Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations promulgated under the Securities Act
of 1933, as the same may be amended or supplemented from time to time (such
shares, the "Beneficially Owned Shares")) or securities convertible into or
exercisable or exchangeable in Common Stock; provided, that the undersigned may
transfer up to an aggregate of the lesser of 15,000 Beneficially Owned Shares or
10% of the undersigned's total Beneficially Owned Shares to a charitable
organization or to a trust or other wholly-owned entity for the benefit of
members of the undersigned's family; provided further, that the recipient of
such Beneficially Owned Shares agrees to the restrictions in this letter
agreement for the remainder of the 90 day period.
Anything contained herein to the contrary notwithstanding, any person to whom
shares of Common Stock or Beneficially Owned Shares are transferred from the
undersigned shall be bound by the terms of this Agreement.
In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
transfer agent of the Common Stock with respect to any shares of Common Stock or
Beneficially Owned Shares.
36
[Signatory]
By:
-------------------------------
Name:
Title:
