Exhibit 1
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DICK'S SPORTING GOODS, INC.
(a Delaware corporation)
__________ Shares of Common Stock
PURCHASE AGREEMENT
Dated: _____________, 2002
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TABLE OF CONTENTS
PAGE
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SECTION 1. Representations and Warranties.............................................................. 3
(a) Representations and Warranties by the Company.................................................. 3
(i) Compliance with Registration Requirements............................................. 3
(ii) Independent Accountants............................................................... 4
(iii) Financial Statements.................................................................. 4
(iv) No Material Adverse Change in Business............................................... 5
(v) Good Standing of the Company.......................................................... 5
(vi) Good Standing of Subsidiaries......................................................... 5
(vii) Capitalization........................................................................ 6
(viii) Authorization of Agreement............................................................ 6
(ix) Authorization and Description of Securities........................................... 6
(x) Absence of Defaults and Conflicts..................................................... 7
(xi) Absence of Labor Disputes............................................................. 7
(xii) Absence of Proceedings................................................................ 8
(xiii) Accuracy of Exhibits.................................................................. 8
(xiv) Possession of Intellectual Property................................................... 8
(xv) Absence of Further Requirements....................................................... 8
(xvi) Possession of Licenses and Permits.................................................... 9
(xvii) Title to Property..................................................................... 9
(xviii) Investment Company Act................................................................ 9
(xix) Environmental Laws.................................................................... 9
(xx) Registration Rights................................................................... 10
(xxi) Related Party Transactions............................................................ 10
(xxii) Suppliers............................................................................. 10
(xxiii) Stabilization or Manipulation......................................................... 10
(xxiv) Accounting Controls................................................................... 11
(xxv) Tax Returns........................................................................... 11
(xxvi) MD&A.................................................................................. 11
(xxvii) Pre-Offering Transactions............................................................. 11
(b) Representations and Warranties by the Selling Stockholders..................................... 11
(i) Accurate Disclosure................................................................... 12
(ii) Authorization of Agreements........................................................... 12
(iii) Good and Marketable Title............................................................. 13
(iv) Due Execution of Power of Attorney and Custody Agreement.............................. 13
(v) Absence of Manipulation............................................................... 13
(vi) Absence of Further Requirements....................................................... 13
(vii) Restriction on Sale of Securities..................................................... 14
(viii) Certificates Suitable for Transfer.................................................... 14
(ix) No Association with NASD.............................................................. 14
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(x) Power and Authority................................................................... 15
(c) Officer's Certificates......................................................................... 15
SECTION 2. Sale and Delivery to Underwriters; Closing..................................................... 15
(a) Initial Securities............................................................................. 15
(b) Option Securities.............................................................................. 15
(c) Payment........................................................................................ 16
(d) Denominations; Registration.................................................................... 17
(e) Appointment of Qualified Independent Underwriter............................................... 17
SECTION 3. Covenants of the Company....................................................................... 17
(a) Compliance with Securities Regulations and Commission Requests................................. 17
(b) Filing of Amendments........................................................................... 17
(c) Delivery of Registration Statements............................................................ 18
(d) Delivery of Prospectuses....................................................................... 18
(e) Continued Compliance with Securities Laws...................................................... 18
(f) Blue Sky Qualifications........................................................................ 18
(g) Rule 158....................................................................................... 19
(h) Use of Proceeds................................................................................ 19
(i) Listing........................................................................................ 19
(j) Restriction on Sale of Securities.............................................................. 19
(k) Reporting Requirements......................................................................... 20
(l) Compliance with NASD Rules..................................................................... 20
(m) Compliance with Rule 463....................................................................... 20
SECTION 4. Payment of Expenses............................................................................ 20
(a) Expenses....................................................................................... 20
(b) Expenses of the Selling Stockholders........................................................... 21
(c) Termination of Agreement....................................................................... 21
(d) Allocation of Expenses......................................................................... 21
SECTION 5. Conditions of Underwriters' Obligations........................................................ 21
(a) Effectiveness of Registration Statement........................................................ 21
(b) Opinion of Counsel for Company................................................................. 21
(c) Opinion of Counsel for each of the Selling Stockholders........................................ 22
(d) Opinion of Counsel for Underwriters............................................................ 22
(e) Officers' Certificate.......................................................................... 22
(f) Certificate of Chief Financial Officer......................................................... 22
(g) Certificate of Selling Stockholders............................................................ 22
(h) Accountant's Comfort Letter.................................................................... 23
(i) Bring-down Comfort Letter...................................................................... 23
(j) Approval of Listing............................................................................ 23
(k) No Objection................................................................................... 23
(l) Lock-up Agreements............................................................................. 23
(m) Pre-Offering Transactions...................................................................... 23
(n) Conditions to Purchase of Option Securities.................................................... 23
(i) Officers' Certificate................................................................. 23
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(ii) Certificate of Chief Financial Officer................................................ 23
(iii) Certificate of Selling Stockholder.................................................... 24
(iv) Opinions of Counsel for Company....................................................... 24
(v) Opinion of Counsel for the Selling Stockholders....................................... 24
(vi) Opinion of Counsel for Underwriters................................................... 24
(vii) Bring-down Comfort Letter............................................................. 24
(o) Additional Documents........................................................................... 24
(p) Termination of Agreement....................................................................... 25
SECTION 6. Indemnification................................................................................ 25
(a) Indemnification of Underwriters................................................................ 25
(b) Indemnification of Company, Directors, Officers and Selling Stockholders....................... 26
(c) Actions against Parties; Notification.......................................................... 27
(d) Settlement without Consent if Failure to Reimburse............................................. 28
(e) Indemnification for Reserved Securities........................................................ 28
(f) Other Agreements with Respect to Indemnification................................................ 28
SECTION 7. Contribution................................................................................... 28
SECTION 8. Representations, Warranties and Agreements to Survive Delivery................................. 30
SECTION 9. Termination of Agreement....................................................................... 30
(a) Termination; General........................................................................... 30
(b) Liabilities.................................................................................... 31
SECTION 10. Default by One or More of the Underwriters..................................................... 31
SECTION 11. Default by one or more of the Selling Stockholders or the Company.............................. 31
SECTION 12. Notices........................................................................................ 32
SECTION 13. Parties ...................................................................................... 32
SECTION 14. Governing Law and Time......................................................................... 33
SECTION 15. Effect of Headings............................................................................. 33
SCHEDULES
Schedule A - Name of Underwriters.................................. Sch A-1
Schedule B - List of Selling Stockholders.......................... Sch B-1
Schedule C - Pricing Information................................... Sch C-1
Schedule D - List of Persons and Entities Subject to Lock-up....... Sch D-1
EXHIBITS
Exhibit A - Form of Opinion of Xxxxxxxx Xxxxxxxxx Professional Corporation A-1
Exhibit B - Form of Opinion of Counsel of each Selling Stockholder........ B-1
Exhibit C - Form of Lock-up Letter........................................ C-1
Exhibit D - Form of Comfort Letter of Deloitte & Touche LLP............... D-1
Exhibit E - Form of Certificate of Chief Financial Officer................ E-1
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DICK'S SPORTING GOODS, INC.
(a Delaware corporation)
__________ Shares of Common Stock
($0.01 Par Value)
PURCHASE AGREEMENT
________________, 2002
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx, Sachs & Co.
Banc of America Securities LLC
Xxxxxxx Xxxxx & Company, L.L.C.
as Representatives of the several Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Dick's Sporting Goods, Inc., a Delaware corporation (the "Company"), and
the persons listed in Schedule B hereto (collectively, the "Selling
Stockholders"), confirm their respective agreements with Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of
the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Xxxxxxx Lynch, Goldman,
Sachs & Co., Banc of America Securities LLC and Xxxxxxx Xxxxx & Company, L.L.C.
are acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company and the Selling Stockholders, acting
severally and not jointly, and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
$.01 par value per share, of the Company ("Common Stock") set forth in Schedules
A and B hereto, and (ii) the grant by the Selling Stockholders to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of __________ additional shares
of Common Stock to cover over-allotments, if any. The aforesaid __________
shares of Common Stock (the "Initial Securities") to be purchased by the
Underwriters and all or any part
of the __________ shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities."
The Company and the Selling Stockholders understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company, the Selling Stockholders and the Underwriters agree that up
to _______ of the Securities to be purchased by the Underwriters (the "Reserved
Securities") shall be reserved for sale by the Underwriters to certain eligible
employees and persons having business relationships with the Company ("Reserved
Share Invitees"), as part of the distribution of the Securities by the
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations. To the
extent that such Reserved Securities are not orally confirmed for purchase by
such Reserved Share Invitees by the end of the first business day after the date
of this Agreement, such Reserved Securities may be offered to the public as part
of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-96587) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall
refer to the preliminary prospectus dated ___________, 2002 together with the
Term Sheet and all references in this Agreement to the date of the Prospectus
shall mean the
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date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
Just prior to the completion of the offering, (1) the Company intends to
file a charter amendment with the State of Delaware which authorizes the
issuance of shares of Common Stock, Class B common stock (the "Class B Common
Stock"), and preferred stock, (2) the Company will undertake a stock split in
the form of a dividend of all previously existing shares of Common Stock (the
"Existing Common Stock") into Common Stock and (3) Xxxxxx X. Xxxxx and his
relatives will then exchange their shares of Common Stock for shares of Class B
Common Stock (the "Exchange") pursuant to an Exchange Agreement to be entered
into among the Company and Xx. Xxxxx and his relatives (the "Exchange
Agreement"). All of such transactions are collectively referred to herein as the
"Pre-Offering Transactions." The Underwriters shall only be purchasing shares of
Common Stock (post-split) pursuant to this Agreement. For purposes of this
agreement, the term "Other Selling Stockholders" refers to all stockholders
other than Xxxxxx X. Xxxxx (and entities controlled by or affiliated with Xx.
Xxxxx).
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with. At the respective times the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Prospectus, any preliminary
prospectus and any supplement thereto or prospectus wrapper prepared in
connection therewith, at their respective times of issuance and at the
Closing Time, complied and will comply in all material respects with any
applicable laws or regulations of foreign
3
jurisdictions in which the Prospectus and such preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with
the offer and sale of Reserved Securities. Neither the Prospectus nor any
amendments or supplements thereto (including any prospectus wrapper), at
the time the Prospectus or any such amendment or supplement was issued and
at the Closing Time (and, if any Option Securities are purchased, at the
Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different," as such term is used in Rule 434,
from the prospectus included in the Registration Statement at the time it
became effective. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Prospectus or any
amendments or supplements to the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Registration Statement
and the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement and the Prospectus. The
as adjusted financial information included in the Prospectus presents
fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro
4
forma financial statements and pro forma financial information and have
been properly compiled on the bases described therein, and the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein. All financial statements and pro forma
financial statements required to be included in the Registration Statement
and the Prospectus pursuant to the 1933 Act, the 1933 Act Regulations and
Regulation S-X have been included in the Registration Statement and the
Prospectus. The financial information included in the Registration
Statement with respect to fiscal 1997 is accurate and has been derived
from the Company's consolidated financial statements as of February 28,
1998 and for the fiscal year then ended; the fiscal 1997 financial
statements not included in the registration statement fairly present the
financial position of the Company and its consolidated subsidiaries as of
February 28, 1998 and for the fiscal year then ended and were prepared in
conformity with GAAP and on a basis consistent with the Company's audited
financial statements included in the Registration Statement; the financial
information for fiscal 1997 which is included in the Registration
Statement which is not directly included in or derivable from such audited
financial statements for fiscal 1997 has been derived from the books and
records of the Company which during fiscal 1997 and through the date
hereof were maintained in accordance with generally accepted auditing
standards and rules and regulations adopted by AICPA and the Securities
Exchange Act of 1934 as amended.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change in
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered
into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of the Company
(each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its
5
incorporation or organization, has all requisite power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure
so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Prospectus, all of
the issued and outstanding capital stock of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable and
is owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the Company
are the subsidiaries listed on Exhibit 21 to the Registration Statement.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as of the date indicated as set forth in the
Prospectus in the column entitled "Actual" under the caption
"Capitalization" and upon consummation of the sale of the Securities and
the Pre-Offering Transactions and assuming no convertible securities or
options currently exercisable for common stock are exercised or converted
will be as set forth in the Prospectus in the column entitled "As
Adjusted" under the caption "Capitalization." The shares of issued and
outstanding capital stock of the Company, including the Securities to be
purchased by the Underwriters from the Selling Stockholders, have been
duly authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company, including
the Securities to be purchased by the Underwriters from the Selling
Stockholders, was issued in violation of the preemptive or other similar
rights of any securityholder of the Company; the shares of capital stock
to be issued by the Company in connection with the Pre-Offering
Transactions, including the Securities to be purchased by the Underwriters
from the Selling Stockholders, have been duly authorized and as of the
Closing Time will be validly issued and fully paid and non-assessable and
will not be issued in violation of the preemptive, anti-dilution or other
similar rights of any securityholder of the Company; and the sale of
shares of Common Stock by the Company to the Underwriters will not trigger
any anti-dilution rights of any securityholder of the Company and the sale
of shares of Common Stock by the Selling Stockholders to the Underwriters
will not trigger any co-sale or tag-along rights or other similar rights
of any other securityholder of the Company.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities to
be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set
6
forth herein, will be validly issued and fully paid and non-assessable;
the Common Stock and Class B Common Stock conforms in all material
respects to all statements relating thereto contained in the Prospectus
and such description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property
or assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
consummation of the Pre-Offering Transactions and the issuance and sale of
the Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments, and will not
result in the payment of any fee or an obligation to pay any fee to any
other broker, dealer or other similar institution other than the
Underwriters (except as disclosed in the Prospectus), nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or any subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any subsidiary, provided that the
obligation of the Company to use all of the net proceeds of the offering
received by it to repay indebtedness outstanding under its principal
credit facility will not be deemed a Repayment Event hereunder so long as
no default or event of default otherwise exists under such credit
facility.
(xi) Absence of Labor Disputes. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the
7
employees of any of its or any subsidiary's principal suppliers, vendors,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against the Company or any subsidiary, which is
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which would be expected to result in a Material
Adverse Effect, or which would be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement (including the Pre-Offering
Transactions) or the performance by the Company of its obligations
hereunder; the aggregate of all pending legal or governmental proceedings
to which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, would not reasonably be expected to result in
a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xv) Absence of Further Requirements. Except for the filing of the
Company's Amended and Restated Certificate of Incorporation, which will
occur on or prior to the Closing Date, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree
of, any court or governmental authority or agency is necessary or required
for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder
or the consummation of the transactions contemplated by this Agreement
(including the Pre-Offering Transactions and the use of the proceeds of
the sale of the Securities as described in the Prospectus under "Use of
Proceeds"), except (i) such as have been
8
already obtained under the 1933 Act or the 1933 Act Regulations or state
securities laws and (ii) such as have been obtained under the laws and
regulations of jurisdictions outside the United States in which the
Reserved Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one
enterprise, are in full force and effect, and neither the Company nor any
subsidiary has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xviii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xix) Environmental Laws. Except as described in the Prospectus and
except as would not, singly or in the aggregate, result in a Material
Adverse Effect, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health,
9
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum
products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws"), (B)
the Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events, facts or
circumstances that would reasonably be expected to form the basis of any
liability or obligation of the Company or any of its subsidiaries,
including, without limitation, any order, decree, plan or agreement
requiring clean-up or remediation, or any action, suit or proceeding by
any private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to any Hazardous Materials or
any Environmental Laws.
(xx) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities (1) registered
pursuant to the Registration Statement (except for rights which have been
complied with or waived) or (2) otherwise registered by the Company under
the 1933 Act (except as described in the Prospectus).
(xxi) Related Party Transactions. No relationship, direct or
indirect, exists between or among the Company or any affiliate (as the
term is defined in 12b-2 under the Securities Exchange Act of 1934, as
amended (the "1934 Act")) of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of any of them, on
the other hand, which is required by the 1933 Act or by the 1933 Act
Regulations to be described in the Registration Statement or the
Prospectus which is not so described or is not described as required.
(xxii) Suppliers. No supplier of merchandise to the Company or any
of its subsidiaries has ceased shipments of merchandise to the Company or
indicated, to the Company's knowledge, an interest in decreasing or
ceasing its sales to the Company or otherwise modifying its relationship
with the Company, other than in the normal and ordinary course of business
consistent with past practices in a manner which would not, singly or in
the aggregate, result in a Material Adverse Effect.
(xxiii) Stabilization or Manipulation. Neither the Company nor any
of its officers, directors or controlling persons has taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale of the Securities.
10
(xxiv) Accounting Controls. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxv) Tax Returns. The Company and its subsidiaries have filed all
federal, state, local and foreign tax returns that are required to have
been filed by them pursuant to applicable foreign, federal, state, local
or other law or have duly requested extensions thereof, except insofar as
the failure to file such returns or request such extensions would not
reasonably be expected to result in a Material Adverse Effect, and has
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company and its Subsidiaries, except for such taxes or
assessments, if any, as are being contested in good faith and as to which
adequate reserves have been provided or where the failure to pay would not
reasonably be expected to result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company in respect of
any income and corporation tax liability of the Company and each
subsidiary for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
reasonably be expected to result in a Material Adverse Effect.
(xxvi) MD&A. There are no transactions, arrangements or other
relationships which are required to be disclosed in the Prospectus by the
Commission's "Statement About Management's Discussion and Analysis of
Financial Condition and Results of Operations" (January 22, 2002) which
are not so described or described as required.
(xxvii) Pre-Offering Transactions. The Pre-Offering Transactions
have been duly authorized by the Company and will be consummated by the
Company on or before the Closing Time. The Exchange Agreement has been
authorized, executed and delivered by the Company. The Company's Amended
and Restated Certificate of Incorporation as described in the Prospectus
has been approved by all necessary corporate, board and stockholder
action, does not require any governmental or third party approval and will
be in full force and effect on or before the Closing Time. The issuance of
shares of Common Stock and Class B Common Stock in accordance with the
Pre-Offering Transactions does not require registration under the 1933 Act
or the 1933 Act Regulations and will not be integrated with the sale of
the Securities hereunder.
(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder severally and not jointly represents and warrants to each
Underwriter as of the date hereof, as of the Closing Time, and as of each Date
of Delivery, and agrees with each Underwriter, as follows:
11
(i) Accurate Disclosure. To the best knowledge of each Selling
Stockholder (other than an Other Selling Stockholder), the representations
and warranties of the Company contained in Section 1(a) hereof are true
and correct. Such Selling Stockholder has reviewed and is familiar with
the Registration Statement and the Prospectus and neither the Prospectus
nor any amendments or supplements thereto (including any prospectus
wrapper) includes any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided that, with respect to any Selling Stockholder who is
an Other Selling Stockholder, this representation and warranty is limited
to information furnished in writing by or on behalf of such Other Selling
Stockholder expressly for use in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto). Such Selling Stockholder is not
prompted to sell the Securities to be sold by such Selling Stockholder
hereunder by any information concerning the Company or any subsidiary of
the Company which is both (i) not set forth in the Prospectus and (ii)
required to be set forth therein pursuant to the 1933 Act and the 1933 Act
Regulations promulgated thereunder by the Commission.
(ii) Authorization of Agreements. Such Selling Stockholder has the
full right, power and authority to enter into this Agreement and a Power
of Attorney and Custody Agreement (the "Power of Attorney and Custody
Agreement") and, to the extent a party thereto, the Exchange Agreement and
to sell, transfer and deliver the Securities to be sold by such Selling
Stockholder hereunder. The execution and delivery of this Agreement and
the Power of Attorney and Custody Agreement and, to the extent a party
thereto, the Exchange Agreement and the delivery of shares of Existing
Common Stock, Common Stock and Class B Common Stock to the custodian under
the Power of Attorney and Custody Agreement and the sale and delivery of
the Securities to be sold by such Selling Stockholder and the consummation
of the transactions contemplated herein and compliance by such Selling
Stockholder with its obligations hereunder have been duly authorized by
such Selling Stockholder and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance (except for taxes which
may be payable by the Selling Stockholder as a result of this Agreement)
upon the Securities to be sold by such Selling Stockholder or any property
or assets of such Selling Stockholder pursuant to any contract,
stockholders agreement, registration rights agreement, indenture,
mortgage, deed of trust, loan or credit agreement, note, license, lease or
other agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder may be bound, or to which any of the
property or assets of such Selling Stockholder is subject, nor will such
action result in any violation of the provisions of the charter or by-laws
or other organizational instrument of such Selling Stockholder, if
applicable, or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
such Selling Stockholder or any of its properties.
12
(iii) Good and Marketable Title. Such Selling Stockholder has good
and marketable title to the shares of Existing Common Stock, Common Stock,
Class B Common Stock or options or warrants exercisable for shares of
Common Stock deposited with the Custodian and such Selling Stockholder has
or will at the Closing Time and on the Date of Delivery have good and
marketable title to the Securities to be sold by such Selling Stockholder
hereunder, in each case free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind, other than
pursuant to this Agreement; and upon delivery of such Securities and
payment of the purchase price therefor as herein contemplated, assuming
each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from such Selling Stockholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iv) Due Execution of Power of Attorney and Custody Agreement. Such
Selling Stockholder has duly authorized, executed and delivered, in the
form heretofore furnished to the Representative, the Power of Attorney and
Custody Agreement with Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx as attorneys
in fact (each, an "Attorney in Fact") and the Company as custodian (the
"Custodian"); the Custodian is authorized to deliver the Securities to be
sold by such Selling Stockholder hereunder and to accept payment
therefore; and each Attorney-in-Fact is authorized to execute and deliver
this Agreement and the certificate referred to in Section 5(g) or that may
be required pursuant to Sections 5(n) and 5(o) on behalf of such Selling
Stockholder, to sell, assign and transfer to the Underwriters the
Securities to be sold by such Selling Stockholder hereunder, to determine
the purchase price to be paid by the Underwriters to such Selling
Stockholder, as provided in Section 2(a) hereof, to authorize the delivery
of the Securities to be sold by such Selling Stockholder hereunder, to
accept payment therefor, and otherwise to act on behalf of such Selling
Stockholder in connection with this Agreement. This Agreement has been
duly authorized by such Selling Stockholder and has been duly executed and
delivered by or on behalf of such Selling Stockholder. To the extent such
Selling Stockholder is or is supposed to be a party to the Exchange
Agreement, the Exchange Agreement has been authorized, executed and
delivered by such Selling Stockholder.
(v) Absence of Manipulation. Such Selling Stockholder has not taken,
and will not take, directly or indirectly, any action which is designed to
or which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities (other than
entering into the lockup agreement described in the Registration Statement
and Prospectus).
(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by such Selling Stockholder of
its obligations hereunder or in the Power of Attorney and Custody
Agreement, or, if a party thereto, the Exchange Agreement, or in
connection
13
with the sale and delivery of the Securities hereunder or the consummation
of the transactions contemplated by this Agreement, except (i) such as may
have previously been made or obtained under the 1933 Act or the 1933 Act
Regulations or the bylaws or rules of the NASD or as may be required under
state securities laws and (ii) such as have been obtained under the laws
and regulations of jurisdictions outside the United States in which the
Reserved Securities are offered.
(vii) Restriction on Sale of Securities. During the period of 180
days from the date of this Agreement, the Selling Stockholder will not,
without the prior written consent of Xxxxxxx Xxxxx, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Existing Common Stock, Common Stock,
Class B Common Stock or any securities convertible into or exchangeable or
exercisable for Existing Common Stock, Common Stock, Class B Common Stock
or other securities of the Company, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has
or hereafter acquires the power of disposition, or request that the
Company file any registration statement under the 1933 Act, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the
Existing Common Stock, Common Stock, Class B Common Stock or any other
securities of the Company, whether any such swap transaction is to be
settled by delivery of Existing Common Stock, Common Stock, Class B Common
Stock or other securities, in cash or otherwise. This Agreement shall not
be deemed to prohibit the sale of shares of Common Stock pursuant to the
Purchase Agreement or the transactions described in the letter agreement
attached hereto as Exhibit C (subject to the conditions described
therein).
(viii) Certificates Suitable for Transfer. Certificates for all of
the Securities to be sold by such Selling Stockholder pursuant to this
Agreement, in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank with
signatures guaranteed, have been placed in custody with the Custodian (in
the form of shares of pre-split Existing Common Stock) with irrevocable
conditional instructions to deliver such Shares (in the form of shares of
post-split Common Stock) to the Underwriters pursuant to this Agreement.
(ix) No Association with NASD. Neither such Selling Stockholder nor
any of his/her/its affiliates (within the meaning of NASD Conduct Rule
2720(b)(1)(a)) directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or is an
associated person (within the meaning of Article I, Section 1(q) of the
By-laws of the National Association of Securities Dealers, Inc.) of, any
member firm of the National Association of Securities Dealers, Inc., other
than as set forth on an appendix to such Selling Stockholder's Power of
Attorney and Custody Agreement or the stockholder questionnaire submitted
to the Company.
14
(x) Power and Authority. If such Selling Stockholder is a
corporation, partnership, limited partnership, limited liability company
or trust, such Selling Stockholder has been duly organized or incorporated
and is validly existing as a corporation, partnership, limited
partnership, limited liability company or trust in good standing under the
laws or its jurisdiction of incorporation or organization, as applicable,
and has the power and authority to own its property and to conduct its
business and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not result in a material adverse change in the condition (financial
or otherwise), earnings, business affairs or business prospects of such
Selling Stockholder, whether or not arising in the ordinary course of
business, or materially impair its ability to consummate the transactions
contemplated hereby.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters at the Closing Time and such Date of Delivery (if
any) shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby; and any certificate signed by or
on behalf of any of the Selling Stockholders as such and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by such Selling Stockholder to the Underwriters as
to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and each Selling Stockholder, severally and not jointly, agree to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Company and each Selling
Stockholder, at the price per share set forth in Schedule C, that proportion of
the number of Initial Securities set forth in Schedule B opposite the name of
the Company or such Selling Stockholder, as the case may be, which the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustment among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchase of
fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Stockholders, acting severally and not jointly, hereby
grant an option to the Underwriters, severally and not jointly, to purchase up
to an additional __________ shares of Common Stock as set forth in Schedule B,
at the price per share set forth in Schedule C, less an amount per share equal
to any dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time on one
15
or more occasions only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Initial Securities
upon notice by the Representatives to the Company and the Selling Stockholders
setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares. If less than all of the Option
Securities are to be sold, Option Securities will be sold by the Selling
Stockholders on a pro rata basis in accordance with the number of Option
Securities set forth in Schedule B; provided that, notwithstanding the
foregoing, up to 300,000 (pre-split) of the Option Securities to be sold by
Xxxxxx Xxxxx or members of Xxxxxx Xxxxx'x family will be sold first before any
other Option Securities.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other place as shall be agreed upon by the Representatives and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern Time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company and the Selling Stockholders.
Payment shall be made to the Company and the Selling Stockholders by wire
transfer of immediately available funds to a bank account designated by the
Company and a single bank account designated by the Custodian, against delivery
to the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of
16
Delivery, as the case may be, but such payment shall not relieve such
Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
(e) Appointment of Qualified Independent Underwriter. The Company and the
Selling Stockholders, severally and not jointly, hereby confirm their engagement
of Xxxxxxx Xxxxx as, and Xxxxxxx Xxxxx hereby confirms its agreement with the
Company and the Selling Stockholders to render services as, a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. with respect to the
offering and sale of the Securities. Xxxxxxx Xxxxx, solely in its capacity as
qualified independent underwriter and not otherwise, is referred to herein as
the "Independent Underwriter."
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b) hereof, will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the
17
Prospectus, will furnish the Representatives with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Representatives or
counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable
18
securities laws of such states and other jurisdictions (domestic or foreign) as
the Representatives may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect the listing
of the Common Stock (including the Securities) on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectus, the Company will not, without the prior written
consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Existing Common Stock, Common Stock, Class B
Common Stock or any securities convertible into or exercisable or exchangeable
for Existing Common Stock, Common Stock, Class B Common Stock or other
securities of the Company or file any registration statement under the 1933 Act
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Existing Common Stock,
Common Stock, Class B Common Stock or any other securities of the Company
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Existing Common Stock, Common Stock, Class B Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Securities to be sold hereunder, (B) any shares of
Common Stock or Class B Common Stock issued by the Company upon the exercise of
an option or warrant or the conversion of a security outstanding on the date
hereof and referred to in the Prospectus, (C) any shares of Common Stock or
Class B Common Stock issued or options to purchase Common Stock or Class B
Common Stock granted pursuant to existing employee benefit plans of the Company
referred to in the Prospectus, or (D) the consummation of the Pre-Offering
Transactions (including the issuance of shares of Class B common stock in
exchange for shares of common stock as described in the Prospectus).
19
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities, the Company agrees to reimburse the Underwriters for any expenses
(including, without limitation, legal expenses) they incur in connection with
such release.
(m) Compliance with Rule 463. The Company will file with the Commission
such information as may be required pursuant to Rule 463 of the 1933 Act
Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent, registrar or custodian for the
Securities, (ix) the filing fees incident to, and the fees and disbursements of
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the Securities, (x) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange,
(xi) all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, in connection with matters
related to the Reserved Securities which are designated by the Company
20
for sale to Reserved Share Invitees and (xii) the fees and expenses of the
Independent Underwriter.
(b) Expenses of the Selling Stockholders. The Selling Stockholders,
severally and not jointly, will pay all expenses incident to the performance of
their respective obligations under and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholders may make for
the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of any Selling Stockholder, to the
performance by the Company and the Selling Stockholders of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission under the 1933 Act or
proceedings therefor initiated or, to the Company's knowledge, threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been filed
with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Representatives
shall have received the opinion, dated as of Closing Time, of Xxxxxxxx Xxxxxxxxx
Professional Corporation, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the Underwriters
may reasonably request.
21
(c) Opinion of Counsel for each of the Selling Stockholders. At Closing
Time, the Representatives shall have received the opinion, dated as of the
Closing Time, of counsel for each of the Selling Stockholders, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit B hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the opinion, dated as of Closing Time, of
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (v),
(vi) (solely as to preemptive or other similar rights arising by operation of
law or under the charter or by-laws of the Company), (viii), (x) and (xi), and
the penultimate paragraph of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York, the federal law of the United States and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition (financial
or otherwise), earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Representatives shall have received a
certificate of the Chief Executive Officer of the Company and of the Chief
Administrative Officer and Chief Financial Officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) 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 are, to our knowledge, contemplated by the
Commission.
(f) Certificate of Chief Financial Officer. At Closing Time, the
Representatives shall have received a certificate of the Chief Administrative
Officer and Chief Financial Officer of the Company, dated as of the Closing
Time, as to the financial information relating to the 1997 fiscal year included
in the Registration Statement, which certificate shall be in form and substance
satisfactory to the Representatives and in the form attached hereto as Exhibit
E.
(g) Certificate of Selling Stockholders. At Closing Time, the
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Stockholder, dated as of the Closing Time, to the effect
that (i) the representations and warranties of each Selling Stockholder
contained in Section 1(b) hereof are true and correct in all respects with the
same
22
force and effect as though expressly made at and as of Closing Time and (ii)
each Selling Stockholder has complied with all agreements and all conditions on
its part to be performed under this Agreement at or prior to Closing Time.
(h) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche LLP a
letter in the form of Exhibit D hereto, dated such date, in form and substance
reasonably satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(i) Bring-down Comfort Letter At Closing Time, the Representatives shall
have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (g) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(j) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.
(k) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(l) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed on Schedule D hereto. The Company represents and
warrants that Schedule D includes a complete list of all directors, executive
officers, stockholders and optionholders (who hold more than 4,680 (post-split)
options each) of the Company as of the date hereof and as of the Closing Time.
(m) Pre-Offering Transactions. At Closing Time, the Pre-Offering
Transactions as described in the Prospectus shall have been consummated in a
manner satisfactory to the Underwriters.
(n) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company and the Selling Stockholders contained herein and the statements
in any certificates furnished by the Company, any subsidiary of the Company and
the Selling Stockholders hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives shall have
received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Chief Executive Officer of the Company and of the Chief
Administrative Officer and Chief Financial Officer of the Company
confirming that the certificate delivered at the
23
Closing Time pursuant to Section 5(e) hereof remains true and correct as
of such Date of Delivery.
(ii) Certificate of Chief Financial Officer. A certificate, dated
such Date of Delivery, of the Chief Administrative Officer and Chief
Financial Officer of the Company confirming that the certificate delivered
at Closing Time pursuant to Section 5(f) remains true and correct as of
such Date of Delivery.
(iii) Certificate of Selling Stockholders. A certificate, dated such
Date of Delivery, of an Attorney-in-Fact on behalf of each Selling
Stockholder confirming that the certificate delivered at Closing Time
pursuant to Section 5(g) remains true and correct as of such Date of
Delivery.
(iv) Opinion of Counsel for Company. The opinion of Xxxxxxxx
Xxxxxxxxx Professional Corporation, counsel for the Company, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(v) Opinion of Counsel for each of the Selling Stockholders. The
opinion of counsel for each of the Selling Stockholders, in form and
substance satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(vi) Opinion of Counsel for Underwriters. The opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(vii) Bring-down Comfort Letter. A letter from Deloitte & Touche
LLP, in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(h) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than three days prior to such Date of
Delivery.
(o) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of enabling them to pass
upon the issuance and sale of the Securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Stockholders in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Representatives and counsel for the Underwriters;
and the Company shall have obtained all
24
consents and/or waivers which may be required in order to consummate the
issuance and sale of the Securities as herein contemplated.
(p) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. (1) The Company and (other than with
respect to clause (ii) below) the Selling Stockholders, severally and not
jointly, agree to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of foreign jurisdictions where Reserved
Securities have been offered and (B) any untrue statement or alleged
untrue statement of a material fact included in the supplement or
prospectus wrapper material distributed in connection with the reservation
and sale of the Reserved Securities to Reserved Share Invitees or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, when considered in conjunction with the
Prospectus or preliminary prospectus, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation
of the nature referred to in Section 6(a)(1)(ii)(A) hereof, provided that
(subject
25
to Section 6(d) below) any such settlement is effected with the written
consent of the Company (and, with respect to indemnification by an Other
Selling Stockholder, the consent of such Other Selling Stockholder, which
shall not be unreasonably withheld); and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission or in connection with any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof, to the extent that any such expense is not
paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); provided, further, however,
that the liability of any Selling Stockholder under this Section shall not
exceed the product of the number of Securities sold by such Selling Stockholder
(including any Option Securities) and the initial public offering price of the
Securities as set forth in the Prospectus (net of underwriting discounts and
commissions); provided, further, however, that in the case of any Other Selling
Stockholder this indemnity agreement shall only apply to any loss, liability,
claim, damage or expense if such loss, liability, claim, damage or expense
arises out of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished in
writing by or on behalf of any Other Selling Stockholder expressly for use in
the Registration Statement (or any amendment thereto), or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(2) In addition to and without limitation of the Company's
obligation to indemnify Xxxxxxx Xxxxx as an Underwriter, the Company also agrees
to indemnify and hold harmless the Independent Underwriter and each person, if
any, who controls the Independent Underwriter within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, from and against any and all
loss, liability, claim, damage and expense whatsoever, as incurred, incurred as
a result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. in connection with the
offering of the Securities.
(b) Indemnification of Company, Directors, Officers and Selling
Stockholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and
26
each Selling Stockholder and each person, if any, who controls any Selling
Stockholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a)(1) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through Xxxxxxx
Xxxxx expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company and the Selling
Stockholders, as the case may be. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances; provided that, if indemnity is sought pursuant to
Section 6(a)(2), then, in addition to the fees and expenses of such counsel for
the indemnified parties, the indemnifying party shall be liable for the fees and
expenses of not more than one counsel (in addition to any local counsel)
separate from its own counsel and that of the other indemnified parties for the
Independent Underwriter in its capacity as a "qualified independent underwriter"
and all persons, if any, who control the Independent Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of 1934 Act in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances if, in
the reasonable judgment of the Independent Underwriter, there may exist a
conflict of interest between the Independent Underwriter and the other
indemnified parties. Any such separate counsel for the Independent Underwriter
and such control persons of the Independent Underwriter shall be designated in
writing by the Independent Underwriter. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or
27
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or claim
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel pursuant to the terms hereof,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(1)(iii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a request
in writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of Reserved Share Invitees to pay for and accept delivery
of Reserved Securities which, by the end of the first business day following the
date of this Agreement, were subject to a properly confirmed agreement to
purchase.
(f) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Stockholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions, or in connection with any
violation of the nature referred to in Section 6(a)(1)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total
28
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling Stockholders
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholders on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or any
violation of the nature referred to in Section 6(a)(1)(ii)(A) hereof.
The Company, the Selling Stockholders and the Underwriters agree that
Xxxxxxx Xxxxx will not receive any additional benefits hereunder for serving as
the Independent Underwriter in connection with the offering and the sale of the
Securities. The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission. Notwithstanding the
provisions of this Section 7, no Other Selling Stockholder shall be required to
contribute any amount, together with amounts paid pursuant to Section 6, in
excess of the product of the number of Securities sold by such Other Selling
Stockholder (including any Option Securities) and the initial public offering
price of the Securities set forth in the Prospectus (net of underwriting
discounts and commissions).
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same
29
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company or any Selling Stockholder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Company or such Selling Stockholder, as
the case may be. The Underwriters' respective obligations to contribute pursuant
to this Section 7 are several in proportion to the number of Initial Securities
set forth opposite their respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Stockholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or any of the Selling Stockholders submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or controlling person, or by or on
behalf of the Company or any of the Selling Stockholders, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus (exclusive of any supplement thereto), any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or a material disruption has occurred
in commercial banking or securities settlement or clearance securities in the
United States, or (iv) if a banking moratorium has been declared by either
Federal or New York authorities.
30
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters reasonably acceptable to the Company, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Selling Stockholders to sell the Option
Securities to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Selling Stockholders to sell the relevant
Option Securities, as the case may be, either (i) the Representatives or (ii)
the Company and any Selling Stockholder shall have the right to postpone Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Default by one or more of the Selling Stockholders or the
Company. (a) If a Selling Stockholder shall fail at Closing Time or at a Date of
Delivery to sell and deliver the number of Securities which such Selling
Stockholder is obligated to sell hereunder, and the remaining Selling
Stockholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Securities to be sold by them hereunder to the total
number to be sold by all Selling Stockholders as set forth in Schedule B hereto,
then the Underwriters may, at
31
option of the Representatives, by notice from the Representatives to the Company
and the non-defaulting Selling Stockholders, either (a) terminate this Agreement
without any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or
(b) elect to purchase the Securities which the non-defaulting Selling
Stockholders and the Company have agreed to sell hereunder. No action taken
pursuant to this Section 11 shall relieve any Selling Stockholder so defaulting
from liability, if any, in respect of such default.
In the event of a default by any Selling Stockholder as referred to in
this Section 11, each of the Representatives, the Company and the non-defaulting
Selling Stockholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectus or in any other documents or
arrangements.
(b) If the Company shall fail at Closing Time or at the Date of Delivery
to sell the number of Securities that it is obligated to sell hereunder, then
this Agreement shall terminate without any liability on the part of any
nondefaulting party; provided, however, that the provisions of Sections 1, 4, 6,
7 and 8 shall remain in full force and effect. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication (including, without
limitation, email or facsimile). Notices to the Underwriters shall be directed
to the Representatives at Xxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000, attention of Equity Capital Markets; with a copy to Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
attention of Xxxxxxx Xxxx Jacob, Esq.; notices to the Company shall be directed
to it at Dick's Sporting Goods, Inc., 000 Xxxxxxxx Xxxxx, XXXX Xxxx Xxxx,
Xxxxxxxxxx, XX 00000, attention of Xxxxxx Xxxxx, with a copy to Xxxxxxxx
Ingersoll Professional Corporation, One Oxford Centre, 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, attention Xxxxx X. Xxxxx, Xx., Esq.; and
notices to the Selling Stockholders shall be directed to them c/o Xxxxxx Xxxxx,
as Attorney-in-Fact, c/o Dick's Sporting Goods, Inc., 000 Xxxxxxxx Xxxxx, XXXX,
with a copy to Xxxxxx Pepper & Shefelman PLLC, 0000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx 00000, attention Xxxxx Xxxxxxx, Esq.
SECTION 13. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Underwriters, the Company and the Selling Stockholders and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and the Selling Stockholders and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and the Selling Stockholders and
32
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
33
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the Underwriters,
the Company and the Selling Stockholders in accordance with its terms.
Very truly yours,
DICK'S SPORTING GOODS, INC.
By:
---------------------------------
Name:
Title:
[NAMES OF SELLING SHAREHOLDERS]
By:
---------------------------------
Name:
Title: Attorney-in-fact
34
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXX, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
-------------------------------------
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
35
SCHEDULE A
Number of
Initial
Name of Underwriters Securities
-------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated...............
Xxxxxxx, Sachs & Co.............................
Banc of America Securities LLC..................
Xxxxxxx Xxxxx & Company, L.L.C. ................
Total...........................................
==========
Sch A-1
SCHEDULE B
Number of Initial Maximum Number of Option
Securities to be Sold Securities to be Sold
--------------------- ---------------------
Dick's Sporting Goods, Inc.
Selling Stockholders
Total ......................
Sch B-1
SCHEDULE C
DICK'S SPORTING GOODS, INC.
__________ Shares of Common Stock
($.01 Par Value Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in Section 2, shall be $__________.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $__________, being an amount equal to the initial
public offering price set forth above less $__________ per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities.
Sch C-1
SCHEDULE D
