1
EXHIBIT 1.1
1,550,000 SHARES(1)
PIERCING PAGODA
COMMON STOCK
UNDERWRITING AGREEMENT
____________, 1997
XXXXXXXXX, XXXXXXXX & COMPANY LLC
Wheat, First Securities, Inc.
Xxxxxx Xxxx LLC
Xxxxxx/Xxxxxx Incorporated
As Representatives of the several Underwriters
c/x Xxxxxxxxx, Xxxxxxxx & Company LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies/Gentlemen:
Piercing Pagoda, Inc., a Delaware corporation (the "Company"),
and certain shareholders of the Company named in Schedule B hereto
(hereafter called the "Selling Stockholders" address you as the
Representatives of each of the persons, firms and corporations listed in
Schedule A hereto (herein collectively called the "Underwriters") and
hereby confirm their respective agreements with the several Underwriters
as follows:
1. Description of Shares. The Company proposes to issue and sell
650,000 shares of its authorized and unissued Common Stock, par value
$.01 to the several Underwriters. The Selling Stockholders, acting
severally and not jointly, propose to sell an aggregate of 900,000
shares of the Company's authorized and outstanding Common Stock, par
value $.01, to the several Underwriters. The 650,000 shares of Common
Stock, par value $.01, of the Company to be sold by the Company are
hereinafter called the "Company Shares" and the 900,000 shares of Common
Stock, par value $.01, to be sold by the Selling Stockholders are
hereinafter called the "Selling Stockholder Shares." The Company Shares
and the Selling Stockholder Shares are hereinafter collectively referred
to as the "Firm Shares." The Company and the Selling Stockholders also
propose to grant, severally and not jointly, to the Underwriters an
option to purchase up to 232,500 additional shares of the Company's
Common Stock, par value $.01 (the "Option Shares"), as provided in
Section 7 hereof. As used in this Agreement, the term "Shares" shall
include the Firm Shares and the Option Shares. All shares of Common
Stock, par value $.01, of the Company to be outstanding after giving
effect to the sales contemplated hereby, including the Shares, are
hereinafter referred to as "Common Stock."
--------
(1) Plus an option to purchase up to 232,500 additional shares from
the Company and certain stockholders of the Company to cover
over-allotments.
2
2. Representations, Warranties and Agreements of the Company and
the Selling Stockholders.
I. The Company represents and warrants to and agrees with each
Underwriter and each Selling Stockholder that:
(a) A registration statement on Form S-1 (File No.
333-_____) with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and
the applicable rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under the Act
and has been filed with the Commission; such amendments to such
registration statement, such amended prospectuses subject to completion
and such abbreviated registration statements pursuant to Rule 462(b) of
the Rules and Regulations as may have been required prior to the date
hereof have been similarly prepared and filed with the Commission; and
the Company will file such additional amendments to such registration
statement, such amended prospectuses subject to completion and such
abbreviated registration statements as may hereafter be required. Copies
of such registration statement and amendments, of each related
prospectus subject to completion (the "Preliminary Prospectuses"),
including all documents incorporated by reference therein, and of any
abbreviated registration statement pursuant to Rule 462(b) of the Rules
and Regulations have been delivered to you.
If the registration statement relating to the Shares has
been declared effective under the Act by the Commission, the Company
will prepare and promptly file with the Commission the information
omitted from the registration statement pursuant to Rule 430A(a) or, if
Xxxxxxxxx, Xxxxxxxx & Company LLC, on behalf of the several
Underwriters, shall agree to the utilization of Rule 434 of the Rules
and Regulations, the information required to be included in any term
sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules
and Regulations pursuant to subparagraph (1), (4) or (7) of Rule 424(b)
of the Rules and Regulations or as part of a post-effective amendment to
the registration statement (including a final form of prospectus). If
the registration statement relating to the Shares has not been declared
effective under the Act by the Commission, the Company will prepare and
promptly file an amendment to the registration statement, including a
final form of prospectus, or, if Xxxxxxxxx, Xxxxxxxx & Company LLC, on
behalf of the several Underwriters, shall agree to the utilization of
Rule 434 of the Rules and Regulations, the information required to be
included in any term sheet filed pursuant to Rule 434(b) or (c), as
applicable, of the Rules and Regulations. The term "Registration
Statement" as used in this Agreement shall mean such registration
statement, including financial statements, schedules and exhibits, in
the form in which it became or becomes, as the case may be, effective
(including, if the Company omitted information from the registration
statement pursuant to Rule 430A(a) or files a term sheet pursuant to
Rule 434 of the Rules and Regulations, the information deemed to be a
part of the registration statement at the time it became effective
pursuant to Rule 430A(b) or Rule 434(d) of the Rules and Regulations)
and, in the event of any amendment thereto or the filing of any
abbreviated registration statement pursuant to Rule 462(b) of the Rules
and Regulations relating thereto after the effective date of such
registration statement, shall also mean (from and after the
effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration statement as so amended,
together with any such abbreviated registration statement. The term
"Prospectus" as used in this Agreement shall mean the prospectus
relating to the Shares as included in such Registration Statement at the
time it becomes effective (including, if the Company omitted information
from the Registration Statement pursuant to Rule 430A(a) of the Rules
and Regulations, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) of
the Rules and Regulations); provided, however, that if in reliance on
Rule 434 of the Rules and Regulations and with the consent of Xxxxxxxxx,
Xxxxxxxx & Company LLC, on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to
Rule 434(b) or (c), as applicable, prior to the time that a confirmation
is sent or given for purposes of Section 2(10)(a) of the Act, the term
"Prospectus" shall mean the "prospectus subject to completion" (as
defined in Rule 434(g) of the Rules and Regulations) last provided to
the Underwriters by the Company and circulated by the Underwriters to
all prospective purchasers of the Shares (including the information
deemed to be a part of the Registration Statement at the time it became
effective pursuant to Rule 434(d) of the Rules and Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with
the offering of the Shares that differs from the prospectus referred to
in the immediately preceding sentence (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations), the term "Prospectus" shall refer
to such revised prospectus from and after the time it is first provided
to the Underwriters for such use. If in reliance on Rule 434 of the
Rules and Regulations and
2
3
with the consent of Xxxxxxxxx, Xxxxxxxx & Company LLC, on behalf of the
several Underwriters, the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable,
prior to the time that a confirmation is sent or given for purposes of
Section 2(10)(a) of the Act, the Prospectus and the term sheet,
together, will not be materially different from the prospectus in the
Registration Statement.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted
proceedings for that purpose, and each such Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and
the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and at the
time the Registration Statement became or becomes, as the case may be,
effective and at all times subsequent thereto up to and on the Closing
Date (hereinafter defined) and on any later date on which Option Shares
are to be purchased, (i) the Registration Statement and the Prospectus,
and any amendments or supplements thereto, contained and will contain
all material information required to be included therein by the Act and
the Rules and Regulations and will in all material respects conform to
the requirements of the Act and the Rules and Regulations, (ii) the
Registration Statement, and any amendments or supplements thereto, did
not and will not include any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (iii) the Prospectus,
and any amendments or supplements thereto, did not and will not include
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 none of the representations and warranties contained in
this subparagraph (b) shall apply to information contained in or omitted
from the Registration Statement or Prospectus, or any amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter specifically for use in the preparation thereof.
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation with full power
and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Prospectus; the
Company owns all of the outstanding capital stock of its subsidiaries
free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest; each of the Company and its subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or be in good standing would
not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise; no proceeding
has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification; each of the Company and its subsidiaries is
in possession of and operating in compliance with all authorizations,
licenses, certificates, consents, orders and permits from state, federal
and other regulatory authorities which are material to the conduct of
its business, all of which are valid and in full force and effect;
neither the Company nor any of its subsidiaries is in violation of its
respective charter or bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material bond, debenture, note or other evidence of
indebtedness, or in any material lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which it or any of its subsidiaries or their respective properties
may be bound; and neither the Company nor any of its subsidiaries is in
material violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or over their respective properties
of which it has knowledge. The Company does not own or control, directly
or indirectly, any corporation, association or other entity other than
those subsidiaries listed in Exhibit 21 to the Company's Annual Report
on Form 10-K filed with the Commission and incorporated by reference
into the Registration Statement.
(d) The Company has full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement on the part of the
Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by
3
4
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles; the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in
a material breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any bond, debenture, note or other
evidence of indebtedness, or under any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which it or any of its subsidiaries or their respective
properties may be bound, (ii) the charter or bylaws of the Company or
any of its subsidiaries, or (iii) any law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or over their respective
properties. No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or over their respective properties is required for the
execution and delivery of this Agreement and the consummation by the
Company or any of its subsidiaries of the transactions herein
contemplated, except such as may be required under the Act, the
Securities Exchange Act of 1934, as the Exchange Act (if applicable), or
under state or other securities or Blue Sky laws, all of which
requirements have been satisfied in all material respects.
(e) There is not any pending or, to the best of the
Company's knowledge, threatened action, suit, claim or proceeding
against the Company, any of its subsidiaries or any of their respective
officers or any of their respective properties, assets or rights before
any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries
or over their respective officers or properties or otherwise which (i)
might result in any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise or might
materially and adversely affect their properties, assets or rights, (ii)
might prevent consummation of the transactions contemplated hereby or
(iii) is required to be disclosed in the Registration Statement or
Prospectus and is not so disclosed; and there are no agreements,
contracts, leases or documents of the Company or any of its subsidiaries
of a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement by the Act or the Rules and Regulations or by the
Exchange Act or the rules and regulations of the Commission thereunder
which have not been accurately described in all material respects in the
Registration Statement or Prospectus or filed as exhibits to the
Registration Statement.
(f) All outstanding shares of capital stock of the Company
(including the Selling Stockholder Shares) have been duly authorized and
validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued
in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding
capital stock of the Company is as set forth in the Prospectus under the
caption "Capitalization" and conforms in all material respects to the
statements relating thereto contained in the Registration Statement and
the Prospectus (and such statements correctly state the substance of the
instruments defining the capitalization of the Company); the Firm Shares
and the Option Shares to be purchased from the Company hereunder have
been duly authorized for issuance and sale to the Underwriters pursuant
to this Agreement and, when issued and delivered by the Company against
payment therefor in accordance with the terms of this Agreement, will be
duly and validly issued and fully paid and nonassessable, and will be
sold free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest; and no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders exists with respect to any of the Firm Shares or Option
Shares to be purchased from the Company hereunder or the issuance and
sale thereof other than those that have been expressly waived prior to
the date hereof and those that will automatically expire upon and will
not apply to the consummation of the transactions contemplated on the
Closing Date. No further approval or authorization of any shareholder,
the Board of Directors of the Company or others is required for the
issuance and sale or transfer of the Shares except as may be required
under the Act, the Exchange Act or under state or other securities or
Blue Sky laws. All issued and outstanding shares of capital stock of
each subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and were not issued in
violation of or subject to any preemptive right, or other rights to
subscribe for or purchase shares and are owned by the Company free and
clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest. Except as disclosed in the Prospectus and the
financial statements of the Company, and the related notes thereto,
included or incorporated by reference in the Prospectus, neither the
Company nor any subsidiary has outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase,
any securities or obligations
4
5
convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the
options or other rights granted and exercised thereunder, set forth or
incorporated by reference in the Prospectus accurately and fairly
presents the information required to be shown with respect to such
plans, arrangements, options and rights.
(g) KPMG Peat Marwick LLP, which has examined the
consolidated financial statements of the Company, together with the
related schedules and notes, as of March 31, 1996 and 1997 and for each
of the years in the three (3) years ended March 31, 1997 filed with the
Commission as a part of or incorporated by reference into the
Registration Statement, which are included or incorporated by reference
in the Prospectus, are independent accountants within the meaning of the
Act and the Rules and Regulations; the audited consolidated financial
statements of the Company, together with the related schedules and
notes, and the unaudited consolidated financial information, forming
part of the Registration Statement and Prospectus, fairly present the
financial position and the results of operations of the Company and its
subsidiaries at the respective dates and for the respective periods to
which they apply; and all audited consolidated financial statements of
the Company, together with the related schedules and notes, and the
unaudited consolidated financial information, filed with the Commission
as part of or incorporated by reference into the Registration Statement,
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except
as may be otherwise stated therein. The selected and summary financial
and statistical data included or incorporated by reference in the
Registration Statement present fairly the information shown therein and
have been compiled on a basis consistent with the audited financial
statements presented therein. No other financial statements or schedules
are required to be included or incorporated by reference in the
Registration Statement.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there
has not been (i) any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise, (ii) any
transaction that is material to the Company and its subsidiaries
considered as one enterprise, except transactions entered into in the
ordinary course of business, (iii) any obligation, direct or contingent,
that is material to the Company and its subsidiaries considered as one
enterprise, incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (iv) any change
in the capital stock or outstanding indebtedness of the Company or any
of its subsidiaries that is material to the Company and its subsidiaries
considered as one enterprise, (v) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any
of its subsidiaries, or (vi) any loss or damage (whether or not insured)
to the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise.
(i) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiaries has good and
marketable title to all properties and assets described in the
Registration Statement and Prospectus as owned by it, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable
interest, other than such as would not have a material adverse effect on
the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries considered as
one enterprise, (ii) the agreements to which the Company or any of its
subsidiaries is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable by the Company and its
subsidiaries (as applicable), except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles and, to the best of the
Company's knowledge, the other contracting party or parties thereto are
not in material breach or material default under any of such agreements,
and (iii) each of the Company and its subsidiaries has valid and
enforceable leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles. Except as set forth in the Registration Statement and
Prospectus, the Company owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted.
5
6
(j) The Company and its subsidiaries have timely filed all
necessary federal, state and foreign income and franchise tax returns
and have paid all taxes shown thereon as due, and there is no tax
deficiency that has been or, to the best of the Company's knowledge,
might be asserted against the Company or any of its subsidiaries that
might have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise; and all tax
liabilities are adequately provided for on the books of the Company and
its subsidiaries.
(k) The Company and its subsidiaries maintain insurance
with insurers of recognized financial responsibility of the types and in
the amounts generally deemed adequate for their respective businesses
and consistent with insurance coverage maintained by similar companies
in similar businesses, including, but not limited to, insurance covering
real and personal property owned or leased by the Company or its
subsidiaries against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is
in full force and effect; neither the Company nor any such subsidiary
has been refused any insurance coverage sought or applied for; and
neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise.
(l) To the best of Company's knowledge, no labor
disturbance by the employees of the Company or any of its subsidiaries
exists or is imminent; and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers that might be expected to result in a material adverse change
in the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise. No collective bargaining agreement exists
with any of the Company's employees and, to the best of the Company's
knowledge, no such agreement is imminent.
(m) Each of the Company and its subsidiaries owns or
possesses adequate rights to use all patents, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names and
copyrights which are necessary to conduct its businesses as described in
the Registration Statement and Prospectus; the expiration of any
patents, patent rights, trade secrets, trademarks, service marks, trade
names or copyrights would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise; the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of
the Company by others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights; and the Company has not received any notice of, and
has no knowledge of, any infringement of or conflict with asserted
rights of others with respect to any patent, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise.
(n) The Common Stock is registered pursuant to Section
12(g) of the Exchange Act and is listed on The Nasdaq National Market,
and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from The Nasdaq National
Market, nor has the Company received any notification that the
Commission or the National Association of Securities Dealers, Inc.
("NASD") is contemplating terminating such registration or listing.
(o) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in
the future to conduct, its affairs in such a manner as to ensure that it
will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules
and regulations.
(p) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on
which Option Shares are to be purchased, as the case may be, and (ii)
completion of the distribution of the
6
7
Shares, any offering material in connection with the offering and sale
of the Shares other than any Preliminary Prospectuses, the Prospectus,
the Registration Statement and other materials, if any, permitted by the
Act.
(q) Neither the Company nor any of its subsidiaries has at
any time during the last five (5) years (i) made any unlawful
contribution to any candidate for foreign office or failed to disclose
fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any
jurisdiction thereof.
(r) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(s) Each executive officer and director of the Company and
each Selling Stockholder has agreed in writing that such person will
not, for a period of 180 days from the date that the Registration
Statement is declared effective by the Commission (the "Lock-up
Period"), offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to
purchase any shares of Common Stock or any securities convertible into
or exchangeable for shares of Common Stock (collectively, "Securities")
now owned or hereafter acquired directly by such person or with respect
to which such person has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide gift or gifts, provided the donee or
donees thereof agree in writing to be bound by this restriction, (ii) as
a distribution to partners or shareholders of such person, provided that
the distributees thereof agree in writing to be bound by the terms of
this restriction, or (iii) with the prior written consent of Xxxxxxxxx,
Xxxxxxxx & Company LLC. The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which is designed to or reasonably expected
to lead to or result in a Disposition of Securities during the Lock-up
Period, even if such Securities would be disposed of by someone other
than such holder. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its
value from Securities. Furthermore, such person has also agreed and
consented to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Securities held by such
person except in compliance with this restriction. The Company has
provided to counsel for the Underwriters a complete and accurate list of
all securityholders of the Company and the number and type of securities
held by each securityholder. The Company has provided to counsel for the
Underwriters true, accurate and complete copies of all of the agreements
pursuant to which its officers, directors and shareholders have agreed
to such or similar restrictions (the "Lock-up Agreements") presently in
effect or effected hereby. The Company hereby represents and warrants
that it will not release any of its officers, directors or other
shareholders from any Lock-up Agreements currently existing or hereafter
effected without the prior written consent of Xxxxxxxxx, Xxxxxxxx &
Company LLC.
(t) Except as set forth in the Registration Statement and
Prospectus, (i) the Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of
toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business, (ii) the
Company has received no notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim is
required to be disclosed in the Registration Statement and the
Prospectus, (iii) the Company will not be required to make future
material capital expenditures to comply with Environmental Laws and (iv)
no property which is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section
9601, et seq.), or otherwise designated as a contaminated site under
applicable state or local law.
(u) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
7
8
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.
(v) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the
benefit of any of the officers or directors of the Company or any of the
members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
II. Each Selling Stockholder, severally and not jointly,
represents and warrants to and agrees with each Underwriter and the
Company that:
(a) Such Selling Stockholder now has and on the Closing
Date, and on any later date on which Option Shares are purchased, will
have valid marketable title to the Shares to be sold by such Selling
Stockholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than pursuant to this
Agreement; and upon delivery of such Shares hereunder and payment of the
purchase price as herein contemplated, each of the Underwriters will
obtain valid marketable title to the Shares purchased by it from such
Selling Stockholder, free and clear of any pledge, lien, security
interest pertaining to such Selling Stockholder or such Selling
Shareholder's property, encumbrance, claim or equitable interest,
including any liability for estate or inheritance taxes, or any
liability to or claims of any creditor, devisee, legatee or beneficiary
of such Selling Stockholder.
(b) Such Selling Stockholder has duly authorized (if
applicable), executed and delivered, in the form heretofore furnished to
the Representatives, an irrevocable Power of Attorney (the "Power of
Attorney") appointing ___________ and ___________ as attorneys-in-fact
(collectively, the "Attorneys" and individually, an "Attorney") and a
Letter of Transmittal and Custody Agreement (the "Custody Agreement")
with ______________________________, as custodian (the "Custodian");
each of the Power of Attorney and the Custody Agreement constitutes a
valid and binding agreement on the part of such Selling Stockholder,
enforceable in accordance with its terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles; and each of such Selling Shareholder's Attorneys, acting
alone, is authorized to execute and deliver this Agreement and the
certificate referred to in Section 6(h) hereof on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the several
Underwriters to such Selling Stockholder as provided in Section 3
hereof, to authorize the delivery of the Selling Stockholder Shares and
the Option Shares to be sold by such Selling Stockholder under this
Agreement and to duly endorse (in blank or otherwise) the certificate or
certificates representing such Shares or a stock power or powers with
respect thereto, to accept payment therefor, and otherwise to act on
behalf of such Selling Stockholder in connection with this Agreement.
(c) All consents, approvals, authorizations and orders
required for the execution and delivery by such Selling Stockholder of
the Power of Attorney and the Custody Agreement, the execution and
delivery by or on behalf of such Selling Stockholder of this Agreement
and the sale and delivery of the Selling Stockholder Shares and the
Option Shares to be sold by such Selling Stockholder under this
Agreement (other than, at the time of the execution hereof (if the
Registration Statement has not yet been declared effective by the
Commission), the issuance of the order of the Commission declaring the
Registration Statement effective and such consents, approvals,
authorizations or orders as may be necessary under state or other
securities or Blue Sky laws) have been obtained and are in full force
and effect; such Selling Stockholder, if other than a natural person,
has been duly organized and is validly existing in good standing under
the laws of the jurisdiction of its organization as the type of entity
that it purports to be; and such Selling Stockholder has full legal
right, power and authority to enter into and perform its obligations
under this Agreement and such Power of Attorney and Custody Agreement,
and to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder under this Agreement.
(d) Such Selling Stockholder will not, during the Lock-up
Period, effect the Disposition of any Securities now owned or hereafter
acquired directly by such Selling Stockholder or with respect to which
such Selling Stockholder has or hereafter acquires the power of
disposition, otherwise than (i) as a bona fide gift or gifts, provided
the donee or donees thereof agree in writing to be bound by this
restriction, (ii) as a distribution to partners or shareholders of such
Selling Stockholder, provided that the distributees thereof agree in
writing to be bound by the terms of this restriction, or (iii) with the
8
9
prior written consent of Xxxxxxxxx, Xxxxxxxx & Company LLC. The
foregoing restriction is expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition
of Securities during the Lock-up Period, even if such Securities would
be disposed of by someone other than the Selling Stockholder. Such
prohibited hedging or other transactions would including, without
limitation, any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation, any
put or call option) with respect to any Securities or with respect to
any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Such Selling Stockholder also agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent
against the transfer of the securities held by such Selling Stockholder
except in compliance with this restriction.
(e) Certificates in negotiable form for all Shares to be
sold by such Selling Stockholder under this Agreement, together with a
stock power or powers duly endorsed in blank by such Selling
Stockholder, have been placed in custody with the Custodian for the
purpose of effecting delivery hereunder.
(f) This Agreement has been duly authorized by each
Selling Stockholder that is not a natural person and has been duly
executed and delivered by or on behalf of such Selling Stockholder and
is a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles; and the performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of or constitute a default
under any bond, debenture, note or other evidence of indebtedness, or
under any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder, or
any Selling Stockholder Shares or any Option Shares to be sold by such
Selling Stockholder hereunder, may be bound or, to the best of such
Selling Stockholders' knowledge, result in any violation of any law,
order, rule, regulation, writ, injunction, judgment or decree of any
court, government or governmental agency or body, domestic or foreign,
having jurisdiction over such Selling Stockholder or over the properties
of such Selling Stockholder, or, if such Selling Stockholder is other
than a natural person, result in any violation of any provisions of the
charter, bylaws or other organizational documents of such Selling
Stockholder.
(g) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares.
(h) Such Selling Stockholder has not distributed and will
not distribute any prospectus or other offering material in connection
with the offering and sale of the Shares.
(i) All information furnished by or on behalf of such
Selling Stockholder relating to such Selling Stockholder and the Selling
Stockholder Shares that is contained in the representations and
warranties of such Selling Stockholder in such Selling Shareholder's
Power of Attorney or set forth in the Registration Statement or the
Prospectus is, and at the time the Registration Statement became or
becomes, as the case may be, effective and at all times subsequent
thereto up to and on the Closing Date, and on any later date on which
Option Shares are to be purchased, was or will be, true, correct and
complete, and does not, and at the time the Registration Statement
became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on the Closing Date (hereinafter defined),
and on any later date on which Option Shares are to be purchased, will
not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make such
information not misleading.
(j) Such Selling Stockholder will review the Prospectus
and will comply with all agreements and satisfy all conditions on its
part to be complied with or satisfied pursuant to this Agreement on or
prior to the Closing Date, or any later date on which Option Shares are
to be purchased, as the case may be, and will advise one of its
Attorneys and Xxxxxxxxx, Xxxxxxxx & Company LLC prior to the Closing
Date or such later date on which Option Shares are to be purchased, as
the case may be, if any statement to be made on behalf of such Selling
Stockholder in the certificate
9
10
contemplated by Section 6(h) would be inaccurate if made as of the
Closing Date or such later date on which Option Shares are to be
purchased, as the case may be .
(k) Such Selling Stockholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right
of first refusal or other similar right to purchase any of the Shares
that are to be sold by the Company or any of the other Selling
Stockholders to the Underwriters pursuant to this Agreement; such
Selling Stockholder does not have, or has waived prior to the date
hereof, any registration right or other similar right to participate in
the offering made by the Prospectus, other than such rights of
participation as have been satisfied by the participation of such
Selling Stockholder in the transactions to which this Agreement relates
in accordance with the terms of this Agreement; and such Selling
Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any
capital stock, rights, warrants, options or other securities from the
Company, other than those described in the Registration Statement and
the Prospectus.
3. Purchase, Sale and Delivery of Shares. 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 Stockholders agree severally and not jointly, to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholders, respectively, at
a purchase price of $_____ per share, the respective number of Firm
Shares as hereinafter set forth and Selling Stockholder Shares set forth
opposite the names of the Company and the Selling Stockholders in
Schedule B hereto. The obligation of each Underwriter to the Company and
to each Selling Stockholder shall be to purchase from the Company or
such Selling Stockholder that number of Firm Shares or Selling
Stockholder Shares, as the case may be, which (as nearly as practicable,
as determined by you) is in the same proportion to the number of Company
Shares or Selling Stockholder Shares, as the case may be, set forth
opposite the name of the Company or such Selling Stockholder in Schedule
B hereto as the number of Firm Shares which is set forth opposite the
name of such Underwriter in Schedule A hereto (subject to adjustment as
provided in Section 10) is to the total number of Firm Shares to be
purchased by all the Underwriters under this Agreement.
The certificates in negotiable form for the Selling
Stockholder Shares have been placed in custody (for delivery under this
Agreement) under the Custody Agreement. Each Selling Stockholder agrees
that the certificates for the Selling Stockholder Shares of such Selling
Stockholder so held in custody are subject to the interests of the
Underwriters hereunder, that the arrangements made by such Selling
Stockholder for such custody, including the Power of Attorney is to that
extent irrevocable and that the obligations of such Selling Stockholder
hereunder shall not be terminated by the act of such Selling Stockholder
or by operation of law, whether by the death or incapacity of such
Selling Stockholder or the occurrence of any other event, except as
specifically provided herein or in the Custody Agreement. If any Selling
Stockholder should die or be incapacitated, or if any other such event
should occur, before the delivery of the certificates for the Selling
Stockholder Shares hereunder, the Selling Stockholder Shares to be sold
by such Selling Stockholder shall, except as specifically provided
herein or in the Custody Agreement, be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such
death, incapacity or other event had not occurred, regardless of whether
the Custodian shall have received notice of such death or other event.
Delivery of definitive certificates for the Firm Shares to
be purchased by the Underwriters pursuant to this Section 3 shall be
made against payment of the purchase price therefor by the several
Underwriters by certified or official bank check or checks drawn in
next-day funds, payable to the order of the Company with regard to the
Shares being purchased from the Company, and to the order of the
Custodian for the respective accounts of the Selling Stockholders with
regard to the Shares being purchased from such Selling Stockholders (and
the Company and such Selling Stockholders agrees not to deposit and to
cause the Custodian not to deposit any such check in the bank on which
it is drawn, and not to take any other action with the purpose or effect
of receiving immediately available funds, until the business day
following the date of its delivery to the Company or the Custodian, as
the case may be, and, in the event of any breach of the foregoing, the
Company or the Selling Stockholders, as the case may be, shall reimburse
the Underwriters for the interest lost and any other expenses borne by
them by reason of such breach), at the offices of Wolf, Block, Xxxxxx
and Xxxxx-Xxxxx, Twelfth Floor Packard Building, X.X. Xxxxxx 00xx &
Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (or at such other
place as may be agreed upon among the Representatives and the Company
and the Attorneys), at 7:00 A.M., San Francisco time (a) on the third
(3rd) full business day following the first day that Shares are traded,
(b) if this Agreement is executed and delivered after
10
11
1:30 P.M., San Francisco time, the fourth (4th) full business day
following the day that this Agreement is executed and delivered or (c)
at such other time and date not later than seven (7) full business days
following the first day that Shares are traded as the Representatives
and the Company and the Attorneys may determine (or at such time and
date to which payment and delivery shall have been postponed pursuant to
Section 10 hereof), such time and date of payment and delivery being
herein called the "Closing Date;" provided, however, that if the Company
has not made available to the Representatives copies of the Prospectus
within the time provided in Section 4(d) hereof, the Representatives
may, in their sole discretion, postpone the Closing Date until no later
than two (2) full business days following delivery of copies of the
Prospectus to the Representatives. The certificates for the Firm Shares
to be so delivered will be made available to you at such office or such
other location including, without limitation, in New York City, as you
may reasonably request for checking at least one (1) full business day
prior to the Closing Date and will be in such names and denominations as
you may request, such request to be made at least two (2) full business
days prior to the Closing Date. If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by
the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any
Underwriter or Underwriters whose check or checks shall not have been
received by you prior to the Closing Date for the Firm Shares to be
purchased by such Underwriter or Underwriters. Any such payment by you
shall not relieve any such Underwriter or Underwriters of any of its or
their obligations hereunder.
After the Registration Statement becomes effective, the
several Underwriters intend to make a public offering (as such term is
described in Section 11 hereof) of the Firm Shares at a public offering
price of $_____ per share. After the public offering, the several
Underwriters may, in their discretion, vary the public offering price.
The information set forth in the last paragraph on the
front cover page (insofar as such information relates to the
Underwriters), on the inside front cover concerning stabilization and
over-allotment by the Underwriters, and under the [__] and [__]
paragraphs under the caption "Underwriting" in any Preliminary
Prospectus and in the Prospectus constitutes the only information
furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Prospectus or the Registration Statement,
and you, on behalf of the respective Underwriters, represent and warrant
to the Company and the Selling Stockholders that the statements made
therein do not include any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
4. Further Agreements of the Company. The Company agrees
with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective as promptly as possible; the Company
will use its best efforts to cause any abbreviated registration
statement pursuant to Rule 462(b) of the Rules and Regulations as may be
required subsequent to the date the Registration Statement is declared
effective to become effective as promptly as possible; the Company will
notify you, promptly after it shall receive notice thereof, of the time
when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has
become effective or any supplement to the Prospectus has been filed; if
the Company omitted information from the Registration Statement at the
time it was originally declared effective in reliance upon Rule 430A(a)
of the Rules and Regulations, the Company will provide evidence
satisfactory to you that the Prospectus contains such information and
has been filed, within the time period prescribed, with the Commission
pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to such
Registration Statement as originally declared effective which is
declared effective by the Commission; if the Company files a term sheet
pursuant to Rule 434 of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus and term sheet
meeting the requirements of Rule 434(b) or (c), as applicable, of the
Rules and Regulations, have been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (7) of Rule
424(b) of the Rules and Regulations; if for any reason the filing of the
final form of Prospectus is required under Rule 424(b)(3) of the Rules
and Regulations, it will provide evidence satisfactory to you that the
Prospectus contains such information and has been
11
12
filed with the Commission within the time period prescribed; it will
notify you promptly of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare and
file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel
for the several Underwriters ("Underwriters' Counsel"), may be necessary
or advisable in connection with the distribution of the Shares by the
Underwriters; it will promptly prepare and file with the Commission, and
promptly notify you of the filing of, any amendments or supplements to
the Registration Statement or Prospectus which may be necessary to
correct any statements or omissions, if, at any time when a prospectus
relating to the Shares is required to be delivered under the Act, any
event shall have occurred as a result of which the Prospectus or any
other prospectus relating to the Shares as then in effect would include
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; in case any
Underwriter is required to deliver a prospectus nine (9) months or more
after the effective date of the Registration Statement in connection
with the sale of the Shares, it will prepare promptly upon request, but
at the expense of such Underwriter, such amendment or amendments to the
Registration Statement and such prospectus or prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act; and it will file no amendment or supplement to the
Registration Statement or Prospectus, or, prior to the end of the period
of time in which a prospectus relating to the Shares is required to be
delivered under the Act, which shall not previously have been submitted
to you a reasonable time prior to the proposed filing thereof or to
which you shall reasonably object in writing, subject, however, to
compliance with the Act and the Rules and Regulations, the Exchange Act
and the rules and regulations of the Commission thereunder and the
provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or
of the initiation or threat of any proceeding for that purpose; and it
will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if
such stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as
you may designate and to continue such qualifications in effect for so
long as may be required for purposes of the distribution of the Shares,
except that the Company shall not be required in connection therewith or
as a condition thereof to qualify as a foreign corporation or to execute
a general consent to service of process in any jurisdiction in which it
is not otherwise required to be so qualified or to so execute a general
consent to service of process. In each jurisdiction in which the Shares
shall have been qualified as above provided, the Company will make and
file such statements and reports in each year as are or may be required
by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and,
in the case of the Prospectus and any term sheet or abbreviated term
sheet under Rule 434, in no event later than the first (1st) full
business day following the first day that Shares are traded, copies of
the Registration Statement (three of which will be signed and which will
include all exhibits), each Preliminary Prospectus, the Prospectus and
any amendments or supplements to such documents, including any
prospectus prepared to permit compliance with Section 10(a)(3) of the
Act, all in such quantities as you may from time to time reasonably
request. Notwithstanding the foregoing, if Xxxxxxxxx, Xxxxxxxx & Company
LLC, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the Company shall
provide to you copies of a Preliminary Prospectus updated in all
respects through the date specified by you in such quantities as you may
from time to time reasonably request.
(e) The Company will make generally available to its
securityholders as soon as practicable, but in any event not later than
the forty-fifth (45th) day following the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the
Registration Statement, an earnings statement (which will be in
reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and covering a twelve (12) month period
beginning after the effective date of the Registration Statement.
(f) During a period of five (5) years after the date hereof, the
Company will furnish to its shareholders as soon as practicable after
the end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and
unaudited quarterly reports of operations for each of the first three
quarters of the fiscal year,
12
13
and will furnish to you and the other several Underwriters hereunder,
upon request (i) concurrently with furnishing such reports to its
shareholders, statements of operations of the Company for each of the
first three (3) quarters in the form furnished to the Company's
shareholders, (ii) concurrently with furnishing to its shareholders, a
balance sheet of the Company as of the end of such fiscal year, together
with statements of operations, of shareholders' equity, and of cash
flows of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent certified public
accountants, (iii) as soon as they are available, copies of all reports
(financial or other) mailed to shareholders, (iv) as soon as they are
available, copies of all reports and financial statements furnished to
or filed with the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. ("NASD"), (v) every material
press release and every material news item or article in respect of the
Company or its affairs which was generally released to shareholders or
prepared by the Company or any of its subsidiaries, and (vi) any
additional information of a public nature concerning the Company or its
subsidiaries, or its business which you may reasonably request. During
such five (5) year period, if the Company shall have active
subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and
its subsidiaries are consolidated, and shall be accompanied by similar
financial statements for any significant subsidiary which is not so
consolidated.
(g) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common
Stock.
(i) If the transactions contemplated hereby are not consummated
by reason of any failure, refusal or inability on the part of the
Company or any Selling Stockholder to perform any agreement on their
respective parts to be performed hereunder or to fulfill any condition
of the Underwriters' obligations hereunder, or if the Company shall
terminate this Agreement pursuant to Section 11(a) hereof, or if the
Underwriters shall terminate this Agreement pursuant to Section
11(b)(i), the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including fees and disbursements of
Underwriters' Counsel) incurred by the Underwriters in investigating or
preparing to market or marketing the Shares.
(j) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of
which in your opinion the market price of the Common Stock has been or
is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising
the Company to the effect set forth above, forthwith prepare, consult
with you concerning the substance of and disseminate a press release or
other public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(k) During the Lock-up Period, the Company will not, without the
prior written consent of Xxxxxxxxx Xxxxxxxx & Company LLC, effect the
Disposition of, directly or indirectly, any Securities other than the
sale of the Firm Shares and the Option Shares to be sold by the
Company hereunder and the Company's issuance of options or Common Stock
under the Company's presently authorized ___________ (the "Option
Plan").
(l) During a period of ninety (90) days from the effective date
of the Registration Statement, the Company will not file a registration
statement registering shares under the Option Plan or other employee
benefit plan.
5. Expenses.
(a) The Company and the Selling Stockholders agree with
each Underwriter that:
The Company and the Selling Stockholders will pay and bear all
costs and expenses in connection with the preparation, printing and
filing of the Registration Statement (including financial statements,
schedules and exhibits),
13
14
Preliminary Prospectuses and the Prospectus and any amendments or
supplements thereto; the printing of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Preliminary Blue Sky
Survey and any Supplemental Blue Sky Survey, the Underwriters'
Questionnaire and Power of Attorney, and any instruments related to any
of the foregoing; the issuance and delivery of the Shares hereunder to
the several Underwriters, including transfer taxes, if any, the cost of
all certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company;
all fees and other charges of the Company's independent certified public
accountants; the cost of furnishing to the several Underwriters copies
of the Registration Statement (including appropriate exhibits),
Preliminary Prospectus and the Prospectus, and any amendments or
supplements to any of the foregoing; NASD filing fees and the cost of
qualifying the Shares under the laws of such jurisdictions as you may
designate (including filing fees and fees and disbursements of
Underwriters' Counsel in connection with such NASD filings and Blue Sky
qualifications); and all other expenses directly incurred by the Company
and the Selling Stockholders in connection with the performance of their
obligations hereunder. Any additional expenses incurred as a result of
the sale of the Shares by the Selling Stockholders will be borne
collectively by the Company and the Selling Stockholders. The provisions
of this Section 5(a)(i) are intended to relieve the Underwriters from
the payment of the expenses and costs which the Selling Stockholders and
the Company hereby agree to pay, but shall not affect any agreement
which the Selling Stockholders and the Company may make, or may have
made, for the sharing of any of such expenses and costs. Such agreements
shall not impair the obligations of the Company and the Selling
Stockholders hereunder to the several Underwriters.
(b) In addition to its other obligations under Section
8(a) hereof, the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other
proceeding described in Section 8(a) hereof, it will reimburse the
Underwriters on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligation to reimburse
the Underwriters for such expenses and the possibility that such
payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with
interest, compounded daily, determined on the basis of the prime rate
(or other commercial lending rate for borrowers of the highest credit
standing) listed from time to time in The Wall Street Journal which
represents the base rate on corporate loans posted by a substantial
majority of the nation's thirty (30) largest banks (the "Prime Rate").
Any such interim reimbursement payments which are not made to the
Underwriters within thirty (30) days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request.
(c) In addition to their other obligations under Section
8(b) hereof, each Selling Stockholder agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 8(b) hereof relating to such
Selling Stockholder, it will reimburse the Underwriters on a monthly
basis for all reasonable legal or other expenses incurred in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of such Selling
Shareholder's obligation to reimburse the Underwriters for such expenses
and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, the
Underwriters shall promptly return such payment to the Selling
Stockholders, together with interest, compounded daily, determined on
the basis of the Prime Rate. Any such interim reimbursement payments
which are not made to the Underwriters within thirty (30) days of a
request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
(d) In addition to their other obligations under Section
8(c) hereof, the Underwriters severally and not jointly agree that, as
an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section 8(c)
hereof, they will reimburse the Company and each Selling Stockholder on
a monthly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of
the Underwriters' obligation to reimburse the Company and each such
Selling Stockholder for such expenses and the possibility that such
payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company and
each such Selling Stockholder shall promptly return such payment to the
Underwriters together with interest, compounded daily, determined on
14
15
the basis of the Prime Rate. Any such interim reimbursement payments
which are not made to the Company and each such Selling Stockholder
within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in
Sections 5(a)(ii), 5(a)(iii) and 5(b) hereof, including the amounts of
any requested reimbursement payments, the method of determining such
amounts and the basis on which such amounts shall be apportioned among
the reimbursing parties, shall be settled by arbitration conducted under
the provisions of the Constitution and Rules of the Board of Governors
of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized to do
so. Any such arbitration will be limited to the operation of the interim
reimbursement provisions contained in Sections 5(a)(ii), 5(a)(iii) and
5(b) hereof and will not resolve the ultimate propriety or
enforceability of the obligation to indemnify for expenses which is
created by the provisions of Sections 8(a), 8(b) and 8(c) hereof or the
obligation to contribute to expenses which is created by the provisions
of Section 8(e) hereof.
6. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Shares as provided
herein shall be subject to the accuracy, as of the date hereof and the
Closing Date and any later date on which Option Shares are to be
purchased, as the case may be, of the representations and warranties of
the Company and the Selling Stockholders herein, to the performance by
the Company and the Selling Stockholders of their respective obligations
hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 2:00 P.M., San Francisco time, on the date following the
date of this Agreement, or such later date as shall be consented to in
writing by you; and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have
been initiated or, to the knowledge of the Company, any Selling
Stockholder or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and
the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to
Underwriters' Counsel, and such counsel shall have been furnished with
such papers and information as they may reasonably have requested to
enable them to pass upon the matters referred to in this Section.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, or any later date on which
Option Shares are to be purchased, as the case may be, there shall not
have been any change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and
its subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may
be, the following opinion of counsel for the Company and the Selling
Stockholders, dated the Closing Date or such later date on which Option
Shares are to be purchased addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the
Underwriters, to the effect that:
(i) The Company and each Significant Subsidiary (as
that term is defined in Regulation S-X of the Act) has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation;
15
16
(ii) The Company and each Significant Subsidiary has
the corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Prospectus;
(iii) The Company and each Significant Subsidiary is
duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction, if any, in which
the ownership or leasing of its properties or the conduct
of its business requires such qualification, except where
the failure to be so qualified or be in good standing
would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business
of the Company and its subsidiaries considered as one
enterprise. To such counsel's knowledge, the Company does
not own or control, directly or indirectly, any
corporation, association or other entity other than EARS,
Inc.;
(iv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" as of the dates stated
therein, the issued and outstanding shares of capital
stock of the Company (including the Selling Stockholder
Shares) have been duly and validly issued and are fully
paid and nonassessable, and, to such counsel's knowledge,
will not have been issued in violation of or subject to
any preemptive right, co-sale right, registration right,
right of first refusal or other similar right;
(v) All issued and outstanding shares of capital
stock of each Significant Subsidiary of the Company have
been duly authorized and validly issued and are fully paid
and nonassessable, and, to such counsel's knowledge, have
not been issued in violation of or subject to any
preemptive right, co-sale right, registration right, right
of first refusal or other similar right and are owned by
the Company free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest;
(vi) The Firm Shares or the Option Shares, as the
case may be, to be issued by the Company pursuant to the
terms of this Agreement have been duly authorized and,
upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly
issued and fully paid and nonassessable, and will not have
been issued in violation of or subject to any preemptive
right, co-sale right, registration right, right of first
refusal or other similar right.
(vii) The Company has the corporate power and
authority to enter into this Agreement and to issue, sell
and deliver to the Underwriters the Shares to be issued
and sold by it hereunder;
(viii) This Agreement has been duly authorized by
all necessary corporate action on the part of the Company
and has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery by
you, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except insofar
as indemnification provisions may be limited by applicable
law and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights
generally or by general equitable principles;
(ix) The Registration Statement has become effective
under the Act and, to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened
under the Act;
(x) The Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than the
financial statements (including supporting schedules) and
financial data derived therefrom as to which such counsel
need express no opinion), as of the effective date of the
Registration Statement, complied as to form in all
material respects with the requirements of the Act and the
applicable Rules and Regulations; and the financial data
derived therefrom as to which such counsel need express no
opinion) complied when filed pursuant to the Exchange Act
as to form in all material respects with the requirements
of the Act and the Rules and Regulations and the Exchange
Act and the applicable rules and regulations of the
Commission thereunder;
16
17
(xi) The information in the Prospectus under the
caption "Description of Capital Stock," to the extent that
it constitutes matters of law or legal conclusions, has
been reviewed by such counsel and is a fair summary of
such matters and conclusions; and the forms of
certificates evidencing the Common Stock and filed as
exhibits to the Registration Statement comply with
Delaware law;
(xii) The description in the Registration Statement
and the Prospectus of the charter and bylaws of the
Company and of statutes are accurate and fairly present
the information required to be presented by the Act and
the applicable Rules and Regulations;
(xiii) To such counsel's knowledge, there are no
agreements, contracts, leases or documents to which the
Company is a party of a character required to be described
or referred to in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement
which are not described or referred to therein or filed as
required;
(xiv) The performance of this Agreement and the
consummation of the transactions herein contemplated
(other than performance of the Company's indemnification
obligations hereunder, concerning which no opinion need be
expressed) will not (a) result in any violation of the
Company's charter or bylaws or (b) to such counsel's
knowledge, result in a material breach or violation of any
of the terms and provisions of, or constitute a default
under, any bond, debenture, note or other evidence of
indebtedness, or any lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other
agreement or instrument known to such counsel to which the
Company is a party or by which its properties are bound,
or any applicable statute, rule or regulation known to
such counsel or, to such counsel's knowledge, any order,
writ or decree of any court, government or governmental
agency or body having jurisdiction over the Company or any
of its subsidiaries, or over any of their properties or
operations;
(xv) No consent, approval, authorization or order of
or qualification with any court, government or
governmental agency or body having jurisdiction over the
Company or any of its subsidiaries, or over any of their
properties or operations is necessary in connection with
the consummation by the Company of the transactions herein
contemplated, except such as have been obtained under the
Act or such as may be required under state or other
securities or Blue Sky laws in connection with the
purchase and the distribution of the Shares by the
Underwriters;
(xvi) To such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened
against the Company or any of its subsidiaries of a
character required to be disclosed in the Registration
Statement or the Prospectus by the Act or the Rules and
Regulations, other than those described therein;
(xvii) To such counsel's knowledge, neither the
Company nor any of its subsidiaries is presently (a) in
material violation of its respective charter or bylaws, or
(b) in material breach of any applicable statute, rule or
regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the
Company or any of its subsidiaries, or over any of their
properties or operations;
(xviii) To such counsel's knowledge, except as set
forth in the Registration Statement and Prospectus, no
holders of Common Stock or other securities of the Company
have registration rights with respect to securities of the
Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the
Company having rights known to such counsel to
registration of such shares of Common Stock or other
securities, because of the filing of the Registration
Statement by the Company have, with respect to the
offering contemplated thereby, waived such rights or such
rights have expired by reason of lapse of time following
notification of the Company's intent to file the
Registration Statement or have included securities in the
Registration Statement pursuant to the exercise of and in
full satisfaction of such rights;
17
18
(xix) Each Selling Stockholder which is not a
natural person has full right, power and authority to
enter into and to perform its obligations under the Power
of Attorney and Custody Agreement to be executed and
delivered by it in connection with the transactions
contemplated herein; the Power of Attorney and Custody
Agreement of each Selling Stockholder that is not a
natural person has been duly authorized by such Selling
Stockholder; the Power of Attorney and Custody Agreement
of each Selling Stockholder has been duly executed and
delivered by or on behalf of such Selling Stockholder; and
the Power of Attorney and Custody Agreement of each
Selling Stockholder constitutes the valid and binding
agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general
equitable principles;
(xx) Each of the Selling Stockholders has full
right, power and authority to enter into and to perform
its obligations under this Agreement and to sell,
transfer, assign and deliver the Shares to be sold by such
Selling Stockholder hereunder;
(xxi) This Agreement has been duly authorized by
each Selling Stockholder that is not a natural person and
has been duly executed and delivered by or on behalf of
each Selling Stockholder; and
(xxii) Upon the delivery of and payment for the
Shares as contemplated in this Agreement, each of the
Underwriters will receive valid marketable title to the
Shares purchased by it from such Selling Stockholder, free
and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest. In rendering
such opinion, such counsel may assume that the
Underwriters are without notice of any defect in the title
of the Shares being purchased from the Selling
Stockholders.
In addition, such counsel shall state that such
counsel has participated in conferences with officials and other
representatives of the Company, the Representatives, Underwriters'
Counsel and the independent certified public accountants of the Company,
at which such conferences the contents of the Registration Statement and
Prospectus and related matters were discussed, and although they have
not verified the accuracy or completeness of the statements contained in
the Registration Statement or the Prospectus, nothing has come to the
attention of such counsel which leads them to believe that, at the time
the Registration Statement became effective and at all times subsequent
thereto up to and on the Closing Date and on any later date on which
Option Shares are to be purchased, the Registration Statement and any
amendment or supplement thereto, when such documents became effective or
were filed with the Commission (other than the financial statements
including supporting schedules and other financial and statistical
information derived therefrom, as to which such counsel need express no
comment) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or at the Closing Date or any
later date on which the Option Shares are to be purchased, as the case
may be, the Registration Statement, the Prospectus and any amendment or
supplement thereto (except as aforesaid) contained any untrue statement
of a material fact or omitted to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to
questions of law not involving the laws of the United States or the
State of Pennsylvania and Delaware upon opinions of local counsel, and
as to questions of fact upon representations or certificates of officers
of the Company, the Selling Stockholders or officers of the Selling
Stockholders (when the Selling Stockholder is not a natural person), and
of government officials, in which case their opinion is to state that
they are so relying and that they have no knowledge of any material
misstatement or inaccuracy in any such opinion, representation or
certificate. Copies of any opinion, representation or certificate so
relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may
be, an opinion of Sidley & Austin, in form and substance satisfactory to
you, with respect to the sufficiency of all such corporate proceedings
and other legal matters relating to this Agreement and the transactions
contemplated hereby as you may reasonably require, and the Company shall
have furnished to such counsel such documents as they may have requested
for the purpose of enabling them to pass upon such matters.
18
19
(f) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may
be, a letter from KPMG Peat Marwick LLP addressed to the Underwriters,
dated the Closing Date or such later date on which Option Shares are to
be purchased, as the case may be, confirming that they are independent
certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations
and based upon the procedures described in such letter delivered to you
concurrently with the execution of this Agreement (herein called the
"Original Letter"), but carried out to a date not more than five (5)
business days prior to the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, (i) confirming,
to the extent true, that the statements and conclusions set forth in the
Original Letter are accurate as of the Closing Date or such later date
on which Option Shares are to be purchased, as the case may be, and (ii)
setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to
reflect any changes in the facts described in the Original Letter since
the date of such letter, or to reflect the availability of more recent
financial statements, data or information. The letter shall not disclose
any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus. The Original Letter from KPMG
Peat Marwick LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that they are independent
certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations,
(ii) set forth their opinion with respect to their examination of the
consolidated balance sheet of the Company as of March 31, 1996 and 1997
and related consolidated statements of income, changes in stockholders'
equity, and cash flows for the three-year period ended March 31, 1997,
and (iii) address other matters agreed upon by KPMG Peat Marwick LLP and
you. In addition, you shall have received from KPMG Peat Marwick LLP a
letter addressed to the Company and made available to you for the use of
the Underwriters stating that their review of the Company's system of
internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's
consolidated financial statements as of March 31, 1997, did not disclose
any weaknesses in internal controls that they considered to be material
weaknesses.
(g) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may
be, a certificate of the Company, dated the Closing Date or such later
date on which Option Shares are to be purchased, as the case may be,
signed by the Chief Executive Officer and Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made
on and as of the Closing Date or any later date on which
Option Shares are to be purchased, as the case may be, and
the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date or any later
date on which Option Shares are to be purchased, as the
case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
pending or threatened under the Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the
delivery of such certificate, the Registration Statement
and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be
included therein by the Act and the Rules and Regulations
or the Exchange Act and the applicable rules and
regulations of the Commission thereunder, as the case may
be, and in all material respects conformed to the
requirements of the Act and the Rules and Regulations or
the Exchange Act and the applicable rules and regulations
of the Commission thereunder, as the case may be, the
Registration Statement, and any amendment or supplement
thereto, did not and does not include any untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, the Prospectus, and any
amendment or supplement thereto, did not and does not
include 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
19
20
which they were made, not misleading, and, since the
effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended
or supplemented Prospectus which has not been so set
forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been (a) any material adverse
change in the condition (financial or otherwise),
earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one
enterprise, (b) any transaction that is material to the
Company and its subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that
is material to the Company and its subsidiaries considered
as one enterprise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary
course of business, (d) any change in the capital stock or
outstanding indebtedness of the Company or any of its
subsidiaries that is material to the Company and its
subsidiaries considered as one enterprise, (e) any
dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or any of its
subsidiaries, or (f) any loss or damage (whether or not
insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been
sustained which has a material adverse effect on the
condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its
subsidiaries considered as one enterprise.
(h) You shall be satisfied that, and you shall have
received a certificate, dated the Closing Date, or any later date on
which Option Shares are to be purchased, as the case may be, from the
Attorneys for each Selling Stockholder to the effect that, as of the
Closing Date, or any later date on which Option Shares are to be
purchased, as the case may be, they have not been informed that:
(i) The representations and warranties made by such
Selling Stockholder herein are not true or correct in any
material respect on the Closing Date or on any later date
on which Option Shares are to be purchased, as the case
may be; or
(ii) Such Selling Stockholder has not complied with
any obligation or satisfied any condition which is
required to be performed or satisfied on the part of such
Selling Stockholder at or prior to the Closing Date or any
later date on which Option Shares are to be purchased, as
the case may be.
(i) The Company shall have obtained and delivered to you
an agreement from each executive officer and director of the Company and
each Selling Stockholder in writing prior to the date hereof that such
person will not, during the Lock-up Period, effect the Disposition of
any Securities now owned or hereafter acquired directly by such person
or with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts,
provided the donee or donees thereof agree in writing to be bound by
this restriction, (ii) as a distribution to partners or shareholders of
such person, provided that the distributees thereof agree in writing to
be bound by the terms of this restriction, or (iii) with the prior
written consent of Xxxxxxxxx, Xxxxxxxx & Company LLC. The foregoing
restriction shall have been expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a
Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than the such holder.
Such prohibited hedging or other transactions would including, without
limitation, any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation, any
put or call option) with respect to any Securities or with respect to
any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person will have also agreed and consented
to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Securities held by such person except
in compliance with this restriction.
(j) The Company and the Selling Stockholders shall have
furnished to you such further certificates and documents as you shall
reasonably request (including certificates of officers of the Company,
the Selling Stockholders or officers of the Selling Stockholders (when
the Selling Stockholder is not a natural person) as to the accuracy of
the representations and warranties of the Company and the Selling
Stockholders herein, as to the performance by the Company
20
21
and the Selling Stockholders of its their respective obligations
hereunder and as to the other conditions concurrent and precedent to the
obligations of the Underwriters hereunder.
All such opinions, certificates, letters and
documents will be in compliance with the provisions hereof only if they
are reasonably satisfactory to Underwriters' Counsel. The Company and
the Selling Stockholders will furnish you with such number of conformed
copies of such opinions, certificates, letters and documents as you
shall reasonably request.
7. Option Shares.
(a) 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 Stockholders (the "Option
Sellers") hereby grant to the several Underwriters, for the purpose of
covering over-allotments in connection with the distribution and sale of
the Firm Shares only, a nontransferable option to purchase up to an
aggregate of 232,500 Option Shares at the purchase price per share for
the Firm Shares set forth in Section 3 hereof. Such option may be
exercised by the Representatives on behalf of the several Underwriters
on one (1) or more occasions in whole or in part during the period of
thirty (30) days after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company. The
number of Option Shares to be purchased by each Underwriter upon the
exercise of such option shall be the same proportion of the total number
of Option Shares to be purchased by the several Underwriters pursuant to
the exercise of such option as the number of Firm Shares purchased by
such Underwriter (set forth in Schedule A hereto) bears to the total
number of Firm Shares purchased by the several Underwriters (set forth
in Schedule A hereto), adjusted by the Representatives in such manner as
to avoid fractional shares.
Delivery of definitive certificates for the Option
Shares to be purchased by the several Underwriters pursuant to the
exercise of the option granted by this Section 7 shall be made against
payment of the purchase price therefor by the several Underwriters by
certified or official bank check or checks drawn in next-day funds,
payable to each of the Option Sellers (and the Option Sellers agree not
to deposit any such check in the bank on which it is drawn, and not to
take any other action with the purpose or effect of receiving
immediately available funds, until the business day following the date
of its delivery to the Option Sellers). In the event of any breach of
the foregoing, the Option Sellers shall reimburse the Underwriters for
the interest lost and any other expenses borne by them by reason of such
breach. Such delivery and payment shall take place at the offices of
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx, Twelfth Floor, Packard Building,
X.X. Xxxxxx 00xx & Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 or
at such other place as may be agreed upon among the Representatives and
the Option Sellers (i) on the Closing Date, if written notice of the
exercise of such option is received by the Company at least two (2) full
business days prior to the Closing Date, or (ii) on a date which shall
not be later than the third (3rd) full business day following the date
the Company receives written notice of the exercise of such option, if
such notice is received by the Company less than two (2) full business
days prior to the Closing Date.
The certificates for the Option Shares to be so
delivered will be made available to you at such office or such other
location including, without limitation, in New York City, as you may
reasonably request for checking at least one (1) full business day prior
to the date of payment and delivery and will be in such names and
denominations as you may request, such request to be made at least two
(2) full business days prior to such date of payment and delivery. If
the Representatives so elect, delivery of the Option Shares may be made
by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives.
It is understood that you, individually, and not as
the Representatives of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any
Underwriter or Underwriters whose check or checks shall not have been
received by you prior to the date of payment and delivery for the Option
Shares to be purchased by such Underwriter or Underwriters. Any such
payment by you shall not relieve any such Underwriter or Underwriters of
any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section
7(a) hereof, the obligations of the several Underwriters to purchase
such Option Shares will be subject (as of the date hereof and as of the
date of payment and delivery for such Option Shares) to the accuracy of
and compliance with the representations, warranties and agreements of
the
21
22
Company and the Selling Stockholders herein, to the accuracy of the
statements of the Company, the Selling Stockholders and officers of the
Company made pursuant to the provisions hereof, to the performance by
the Company and the Selling Stockholders of its their respective
obligations hereunder, to the conditions set forth in Section 6 hereof,
and to the condition that all proceedings taken at or prior to the
payment date in connection with the sale and transfer of such Option
Shares shall be satisfactory in form and substance to you and to
Underwriters' Counsel, and you shall have been furnished with all such
documents, certificates and opinions as you may request in order to
evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants or
agreements of the Company and the Selling Stockholders or the
satisfaction of any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including,
without limitation, in its capacity as an Underwriter or as a "qualified
independent underwriter" within the meaning of Schedule E of the Bylaws
of the NASD), under the Act, the Exchange Act or otherwise, specifically
including, but not limited to, losses, claims, damages or liabilities
(or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of the
Company herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment or supplement thereto, or 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, or (iii) any
untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the Prospectus,
or any such amendment or supplement thereto, in reliance upon, and in
conformity with, written information relating to any Underwriter
furnished to the Company by such Underwriter, directly or through you,
specifically for use in the preparation thereof and, provided further,
that the indemnity agreement provided in this Section 8(a) with respect
to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any losses, claims, damages,
liabilities or actions based upon any untrue statement or alleged untrue
statement of material fact or omission or alleged omission to state
therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or
alleged omission was corrected had not been sent or given to such person
within the time required by the Act and the Rules and Regulations,
unless such failure is the result of noncompliance by the Company with
Section 4(d) hereof.
The indemnity agreement in this Section 8(a) shall
extend upon the same terms and conditions to, and shall inure to the
benefit of, each person, if any, who controls any Underwriter within the
meaning of the Act or the Exchange Act. This indemnity agreement shall
be in addition to any liabilities which the Company may otherwise have.
(b) Each Selling Stockholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject (including, without limitation, in its
capacity as an Underwriter or as a "qualified independent underwriter"
within the meaning of Schedule E or the Bylaws of the NASD) under the
Act, the Exchange Act or otherwise, specifically including, but not
limited to, losses, claims, damages or liabilities (or actions in
respect thereof) arising out of or based upon (i) any breach of any
representation, warranty, agreement or covenant of such Selling
Stockholder herein contained, (ii) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or 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, or
(iii) any untrue statement or alleged untrue statement of any material
fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, in the case of subparagraphs (ii) and (iii) of this Section
8(b) to the extent, but only
22
23
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company or such Underwriter by
such Selling Stockholder, directly or through such Selling Shareholder's
representatives, specifically for use in the preparation thereof, and
agrees to reimburse each Underwriter for any legal or other expenses
reasonably incurred by it in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement provided in this Section 8(b) with respect
to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any losses, claims, damages,
liabilities or actions based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state
therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or
alleged omission was corrected had not been sent or given to such person
within the time required by the Act and the Rules and Regulations,
unless such failure is the result of noncompliance by the Company with
Section 4(d) hereof.
The indemnity agreement in this Section 8(b) shall extend
upon the same terms and conditions to, and shall inure to the benefit
of, each person, if any, who controls any Underwriter within the meaning
of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which such Selling Stockholder may otherwise
have.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and each Selling Stockholder
against any losses, claims, damages or liabilities, joint or several, to
which the Company or such Selling Stockholder may become subject under
the Act or otherwise, specifically including, but not limited to,
losses, claims, damages or liabilities (or actions in respect thereof)
arising out of or based upon (i) any breach of any representation,
warranty, agreement or covenant of such Underwriter herein contained,
(ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or
supplement thereto, or 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, or (iii) any untrue statement or
alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 8(c) to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter, directly or through you, specifically for use in the
preparation thereof, and agrees to reimburse the Company and each such
Selling Stockholder for any legal or other expenses reasonably incurred
by the Company and each such Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or
action.
The indemnity agreement in this Section 8(c) shall extend
upon the same terms and conditions to, and shall inure to the benefit
of, each officer of the Company who signed the Registration Statement
and each director of the Company, each Selling Stockholder and each
person, if any, who controls the Company or any Selling Stockholder
within the meaning of the Act or the Exchange Act. This indemnity
agreement shall be in addition to any liabilities which each Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
under this Section 8. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it shall elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of the
23
24
indemnifying party's election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more
than one separate counsel (together with appropriate local counsel)
approved by the indemnifying party representing all the indemnified
parties under Section 8(a), 8(b) or 8(c) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. In
no event shall any indemnifying party be liable in respect of any
amounts paid in settlement of any action unless the indemnifying party
shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on all claims that are the subject matter of such
proceeding.
(d) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made
pursuant to this Section 8 but it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 8 provides for
indemnification in such case, all the parties hereto shall contribute to
the aggregate losses, claims, damages or liabilities to which they may
be subject (after contribution from others) in such proportion so that,
except as set forth in Section 8(f) hereof, the Underwriters severally
and not jointly are responsible pro rata for the portion represented by
the percentage that the underwriting discount bears to the public
offering price, and the Company and the Selling Stockholders are
responsible for the remaining portion, provided, however, that (i) no
Underwriter shall be required to contribute any amount in excess of the
amount by which the underwriting discount applicable to the Shares
purchased by such Underwriter exceeds the amount of damages which such
Underwriter has otherwise required to pay and (ii) no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who is not guilty
of such fraudulent misrepresentation. The contribution agreement in this
Section 8(e) shall extend upon the same terms and conditions to, and
shall inure to the benefit of, each person, if any, who controls any
Underwriter, the Company or any Selling Stockholder within the meaning
of the Act or the Exchange Act and each officer of the Company who
signed the Registration Statement and each director of the Company.
(e) The liability of each Selling Stockholder under the
representations, warranties and agreements contained herein and under
the indemnity agreements contained in the provisions of this Section 8
shall be limited to an amount equal to the public offering price of the
Selling Stockholder Shares sold by such Selling Stockholder to the
Underwriters minus the amount of the underwriting discount paid thereon
to the Underwriters by such Selling Stockholder. The Company and such
Selling Stockholders may agree, as among themselves and without limiting
the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be
responsible.
(f) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 8, and are fully
informed regarding said provisions. They further acknowledge that the
provisions of this Section 8 fairly allocate the risks in light of the
ability of the parties to investigate the Company and its business in
order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the Act and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements to
Survive Delivery. All representations, warranties, covenants and
agreements of the Company, the Selling Stockholders and the Underwriters
herein or in certificates delivered pursuant hereto, and the indemnity
and contribution agreements contained in Section 8 hereof shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter or any person controlling any
Underwriter within the meaning of the Act or the Exchange Act, or by or
on behalf of the Company
24
25
or any Selling Stockholder, or any of their officers, directors or
controlling persons within the meaning of the Act or the Exchange Act,
and shall survive the delivery of the Shares to the several Underwriters
hereunder or termination of this Agreement.
10. Substitution of Underwriters. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares
agreed by such Underwriter or Underwriters to be purchased hereunder
upon tender of such Firm Shares in accordance with the terms hereof, and
if the aggregate number of Firm Shares which such defaulting Underwriter
or Underwriters so agreed but failed to purchase does not exceed 10% of
the Firm Shares, the remaining Underwriters shall be obligated,
severally in proportion to their respective commitments hereunder, to
take up and pay for the Firm Shares of such defaulting Underwriter or
Underwriters.
If any Underwriter or Underwriters so defaults and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed to take up and pay for exceeds 10% of the
Firm Shares, the remaining Underwriters shall have the right, but shall
not be obligated, to take up and pay for (in such proportions as may be
agreed upon among them) the Firm Shares which the defaulting Underwriter
or Underwriters so agreed but failed to purchase. If such remaining
Underwriters do not, at the Closing Date, take up and pay for the Firm
Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase, the Closing Date shall be postponed for twenty-four
(24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business
hours) another underwriter or underwriters (which may include any
nondefaulting Underwriter) satisfactory to the Company. If no such
underwriter or underwriters shall have been substituted as aforesaid by
such postponed Closing Date, the Closing Date may, at the option of the
Company, be postponed for a further twenty-four (24) hours, if
necessary, to allow the Company the privilege of finding another
underwriter or underwriters, satisfactory to you, to purchase the Firm
Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase. If it shall be arranged for the remaining
Underwriters or substituted underwriter or underwriters to take up the
Firm Shares of the defaulting Underwriter or Underwriters as provided in
this Section 10, (i) the Company shall have the right to postpone the
time of delivery for a period of not more than seven (7) full business
days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement, supplements to the Prospectus
or other such documents which may thereby be made necessary, and (ii)
the respective number of Firm Shares to be purchased by the remaining
Underwriters and substituted underwriter or underwriters shall be taken
as the basis of their underwriting obligation. If the remaining
Underwriters shall not take up and pay for all such Firm Shares so
agreed to be purchased by the defaulting Underwriter or Underwriters or
substitute another underwriter or underwriters as aforesaid and the
Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement
shall terminate.
In the event of any termination of this Agreement pursuant
to the preceding paragraph of this Section 10, neither the Company nor
any Selling Stockholder shall be liable to any Underwriter (except as
provided in Sections 5 and 8 hereof) nor shall any Underwriter (other
than an Underwriter who shall have failed, otherwise than for some
reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which
Underwriter shall remain liable to the Company, the Selling Stockholders
and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company or any Selling Stockholder (except to
the extent provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any
person substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier
of (i) 6:30 A.M., San Francisco time, on the first full business day
following the effective date of the Registration Statement, or (ii) the
time of the public offering of any of the Shares by the Underwriters
after the Registration Statement becomes effective. The time of the
public offering shall mean the time of the release by you, for
publication, of the first newspaper advertisement relating to the
Shares, or the time at which the Shares are first generally offered by
the Underwriters to the public by letter, telephone, telegram or
telecopy, whichever
25
26
shall first occur. By giving notice as set forth in Section 12 before
the time this Agreement becomes effective, you, as Representatives of
the several Underwriters, or the Company, may prevent this Agreement
from becoming effective without liability of any party to any other
party, except as provided in Sections 4(j), 5 and 8 hereof.
(b) You, as Representatives of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time on or prior to the Closing Date or on
or prior to any later date on which Option Shares are to be purchased,
as the case may be, (i) if the Company or any Selling Stockholder shall
have failed, refused or been unable to perform any agreement on its part
to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled is not fulfilled,
including, without limitation, any change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your sole
judgment, is material and adverse, or (ii) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum
or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange or in the over the
counter market by the NASD, or trading in securities generally shall
have been suspended on either such exchange or in the over the counter
market by the NASD, or if a banking moratorium shall have been declared
by federal, New York or California authorities, or (iii) if the Company
shall have sustained a loss by strike, fire, flood, earthquake, accident
or other calamity of such character as to interfere materially with the
conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured, or (iv) if there shall
have been a material adverse change in the general political or economic
conditions or financial markets as in your reasonable judgment makes it
inadvisable or impracticable to proceed with the offering, sale and
delivery of the Shares, or (v) if there shall have been an outbreak or
escalation of hostilities or of any other insurrection or armed conflict
or the declaration by the United States of a national emergency which,
in the reasonable opinion of the Representatives, makes it impracticable
or inadvisable to proceed with the public offering of the Shares as
contemplated by the Prospectus. In the event of termination pursuant to
subparagraph (i) above, the Company shall remain obligated to pay costs
and expenses pursuant to Sections 4(j), 5 and 8 hereof. Any termination
pursuant to any of subparagraphs (ii) through (v) above shall be without
liability of any party to any other party except as provided in Sections
5 and 8 hereof.
If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11,
you shall promptly notify the Company by telephone, telecopy or
telegram, in each case confirmed by letter. If the Company shall elect
to prevent this Agreement from becoming effective, the Company shall
promptly notify you by telephone, telecopy or telegram, in each case,
confirmed by letter.
12. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent
to you shall be mailed, delivered, telegraphed (and confirmed by letter)
or telecopied (and confirmed by letter) to you c/x Xxxxxxxxx, Xxxxxxxx &
Company LLC, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, telecopier number (000) 000-0000, Attention: General
Counsel; if sent to the Company, such notice shall be mailed, delivered,
telegraphed (and confirmed by letter) or telecopied (and confirmed by
letter) to 0000 Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000, telecopier
number (000) 000-0000, Attention: Xxxxxxx X. Penske, Chief Executive
Officer; if sent to one or more of the Selling Stockholders, such notice
shall be sent mailed, delivered, telegraphed (and confirmed by letter)
or telecopied (and confirmed by letter) to Wolf, Block, Xxxxxx and
Xxxxx-Xxxxx, as Attorney-in-Fact for the Selling Stockholders, at 0000
Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000, telecopier number (610)
882-8343.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and the Selling
Stockholders and their respective executors, administrators, successors
and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person or entity, other than
the parties hereto and their respective executors, administrators,
successors and assigns, and the controlling persons within the meaning
of the Act or the Exchange Act, officers and directors referred to in
Section 8 hereof, any legal or equitable right, remedy or claim 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 the parties hereto and
their respective executors, administrators, successors and assigns and
said controlling persons and said officers and directors, and for the
benefit of no
26
27
other person or entity. No purchaser of any of the Shares from any
Underwriter shall be construed a successor or assign by reason merely of
such purchase.
In all dealings with the Company and the Selling
Stockholders under this Agreement, you shall act on behalf of each of
the several Underwriters, and the Company and the Selling Stockholders
shall be entitled to act and rely upon any statement, request, notice or
agreement made or given by you jointly or by Xxxxxxxxx, Xxxxxxxx &
Company LLC on behalf of you.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New
York.
15. Counterparts. This Agreement may be signed in several
counterparts, each of which will constitute an original.
27
28
If the foregoing correctly sets forth the understanding
among the Company, the Selling Stockholders and the several
Underwriters, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement
among the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
PIERCING PAGODA, INC.
By
-----------------------------------
SELLING SHAREHOLDERS
By
-----------------------------------
Attorney-in-Fact for the Selling Stockholders
named in Schedule B hereto
Accepted as of the date first above written:
XXXXXXXXX, XXXXXXXX & COMPANY LLC
WHEAT, FIRST SECURITIES, INC.
XXXXXX XXXX LLC
XXXXXX/XXXXXX INCORPORATED
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
By XXXXXXXXX, XXXXXXXX & COMPANY LLC
By XXXXXXXXX, XXXXXXXX & COMPANY, INC.
By
---------------------------------------
Authorized Signatory
28
29
SCHEDULE A
Underwriters Number of
------------ Firm Shares
To Be
Purchased
---------
Xxxxxxxxx, Xxxxxxxx & Company LLC......................
Wheat, First Securities, Inc...........................
Xxxxxx Xxxx LLC........................................
Xxxxxx/Xxxxxx Incorporated.............................
----------
Total.................................................. 1,550,000
==========
(i)
30
SCHEDULE B
Company Number of
------- Firm Shares To
Be Sold
-------
Piercing Pagoda, Inc................................. 650,000
Total...........................................
-------
650,000
=======
Name of Selling Stockholder Number of
--------------------------- Selling
Shareholder
Shares
To Be Sold
----------
Xxxxxxx X. Penske....................................
Penske Family Trusts.................................
Xxxxxxx X. Penske Charitable Trust...................
Xxxxxxx and Xxxxxxxx Xxxxxx Foundation...............
----------
Total........................................... 900,000
==========
(ii)
31
SCHEDULE C
Company Number of
------- Firm Shares To
Be Sold
-------
Piercing Pagoda, Inc..................................
-----------
Total............................................
===========
Name of Selling Stockholder Number of
--------------------------- Selling
Shareholder
Shares
To Be Sold
----------
Xxxxxxx X. Penske.....................................
Penske Family Trusts..................................
Xxxxxxx X. Penske Charitable Trust....................
Xxxxxxx and Xxxxxxxx Xxxxxx Foundation................
-----------
Total............................................
===========
(iii)
