EXHIBIT 1.1
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
_____________ Shares of Common Stock*
UNDERWRITING AGREEMENT
___________, 1997
XXXXXX XXXXXX & COMPANY, INC.
X.X. XXXXXXX & SONS, INC.
XXXXXXX, XXXXXX & CO.
As Representatives of the
Several Underwriters
named in Schedule II hereto
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Keystone Automotive Industries, Inc., a California corporation (the
"Company"), and the several shareholders of the Company named in Schedule I
hereto (collectively, the "Selling Shareholders") propose to sell to the several
underwriters named in Schedule II hereto (collectively, the "Underwriters")
__________ shares and __________ shares, respectively (collectively, the "Firm
Shares") of the Company's common stock ("Common Stock"), as set forth in
Schedule II hereto. The Firm Shares are to be sold to each Underwriter, acting
severally and not jointly, in such amounts as are set forth in Schedule II
opposite the name of such Underwriter. In addition, for the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, the
Company and Selling Shareholders propose to grant to the Underwriters an option
to purchase an aggregate of up to ___________ additional shares (collectively,
the "Option Shares") of Common Stock. The Firm Shares and any Option Shares
purchased pursuant to this Agreement are herein referred to as the "Shares."
You have advised the Company and the Selling Shareholders that you are
authorized to enter into this Agreement on behalf of the Underwriters for whom
you are acting as representatives (the "Representatives"), and that Xxxxxx
Xxxxxx & Company, Inc. has authority to execute this Agreement, bind the
Underwriters and the Representatives and take all actions on behalf of the
Representatives referenced in this Agreement.
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/*/ Plus an option to purchase from the Company and the Selling Shareholders an
aggregate of up to ______ additional shares to cover over-allotments.
1. Representations and Warranties of the Company. The Company represents
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and warrants to, and agrees with, each Underwriter and each Selling Shareholder
that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in conformity with the requirements of
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-1 (No. 333-______), including a preliminary prospectus, subject to
completion, relating to the Shares. The registration statement, as amended at
the time it becomes effective and, in the event any post-effective amendment
thereto becomes effective prior to the Closing Date (as hereinafter defined), as
so amended, including financial statements and exhibits and the information (if
any) contained in a prospectus that is deemed to be a part of the registration
statement at the time of its effectiveness pursuant to Rule 430A under the Act,
is hereinafter referred to as the "Registration Statement," and the prospectus
in the form first used to confirm sales of the Shares is hereinafter referred to
as the "Prospectus."
(b) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus or any
preliminary prospectus has been issued and no proceedings for that purpose are
pending, threatened or, to the knowledge of the Company, contemplated by the
Commission; no stop order suspending the sale of the Shares in any jurisdiction
designated by you pursuant to Section 5(d) hereof has been issued and no
proceedings for that purpose are pending, threatened or, to the knowledge of the
Company, contemplated; and any request of the Commission and each securities
authority or agency of each other jurisdiction for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) has been
complied with.
(c) Each preliminary prospectus in the form filed as part of the
Registration Statement as originally filed or filed as part of any amendment
thereto, or, if different, in the form used in connection with the offering of
the Shares, complied fully in all material respects when so filed or used with
the Act, and when the Registration Statement becomes effective and at all times
subsequent thereto, the Registration Statement (including, if applicable, the
information deemed to be part of the Registration Statement at the time it was
declared effective pursuant to Rule 430A under the Act) and the Prospectus and
any supplements or amendments thereto, shall comply in all material respects
with the provisions of the Act and the Registration Statement and any such
amendment thereto at the time such Registration Statement or such amendment
becomes effective will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Prospectus and any supplements or
amendments thereto, will not at any such time contain any untrue statement of
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a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the foregoing shall not apply to statements
in, or omissions from, any such document, in reliance upon, and in conformity
with, written information furnished to the Company by you, specifically for use
in the preparation thereof. The Company and the Selling Shareholders
acknowledge for all purposes under this Agreement (including this paragraph and
Section 9 hereof) that the statements appearing in any preliminary prospectus,
the Prospectus or the Registration Statement in the _____, ______ and ______
paragraphs and the sentence of the ______ paragraph under the caption
"Underwriting", the last paragraph on the cover page and the inside front cover
concerning stabilization and overallotment by the Underwriters constitute the
only written information furnished to the Company by you for use in the
Registration Statement or the Prospectus or any preliminary prospectus (or any
amendment or supplement thereto). There is no contract or document required to
be described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(d) Ernst & Young LLP, whose report appears in the Prospectus, are, to
the best knowledge of the Company, independent public accountants with respect
to the Company as required by the Act. The consolidated financial statements
(including the related notes) included in the Prospectus and the Registration
Statement (and any amendments or supplements thereto) comply as to form with the
requirements of the Act, present fairly the consolidated financial condition,
the consolidated results of the operations and consolidated changes in cash
flows and equity of the entities purported to be shown thereby at the dates and
for the periods indicated and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated; and the other financial and statistical information and the
supporting schedules included in the Prospectus and the Registration Statement
(and any amendments or supplements thereto), present fairly, in all material
respects, the information required to be stated therein. No other financial
statements or schedules are required by Form S-1 or otherwise to be included in
the Registration Statement or the Prospectus.
(e) The only subsidiaries of the Company are Keystone Warehouse
Distributors, Inc., a California corporation, which is not a "significant"
subsidiary as defined under the Act, and has no assets, liabilities, employees
or operations, and North Star Plating Company, a Minnesota corporation ("North
Star"). The Company and North Star each has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to own or lease and
occupy its properties and conduct its business as it is currently being
conducted and as described in the Prospectus and, in the Company's case, to
authorize the offering of
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the Shares and to execute, deliver and perform this Agreement and to issue, sell
and deliver the Shares to be sold by it, and each of the Company and North Star
is duly qualified to do business and is in good standing in each jurisdiction in
which the character of the business conducted by it or the location of the
properties owned or leased by it makes such qualification necessary except where
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect (as defined); and the Company and North Star each holds all
licenses, certificates and permits from governmental authorities necessary for
the conduct of its business as described in the Prospectus. The expiration of
any such licenses, permits or other governmental authorizations would not
materially affect the operations of the Company or North Star, as the case may
be. Complete and correct copies of the respective articles of incorporation and
bylaws of the Company and North Star and all amendments thereto have been
delivered to you, and no changes therein will be made subsequent to the date
hereof and prior to the date of the consummation of the sale of the Shares.
(f) The capitalization of the Company is as set forth under the
caption "Capitalization" in the Prospectus, and the Common Stock conforms to all
statements relating thereto contained in the Registration Statement and the
Prospectus; the outstanding shares of Common Stock (including any Shares to be
purchased by the Underwriters from the Selling Shareholders) have been, and the
Shares that are being sold by the Company, upon issuance and delivery and
payment therefor in the manner herein described, will be, duly authorized,
validly issued, fully paid and nonassessable. Except for the capital stock of
North Star and Keystone Warehouse Distributors, Inc., neither the Company nor
North Star owns, or at the date of the consummation of the sale of the Firm
Shares will own, directly or indirectly through North Star or otherwise, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint venture,
association or other entity. The issued shares of capital stock of North Star
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned of record and beneficially by the Company, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity. There
are no preemptive or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock or any
shares of capital stock of North Star pursuant to the Company's or North Star's
respective articles of incorporation, bylaws or other governing documents or any
agreement or other instrument to which the Company or North Star is a party or
by which the Company or North Star may be bound. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
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(g) There has not been any material adverse change in, or any adverse
development which materially affects, the business, properties, financial
condition, results of operations or prospects of the Company and North Star,
taken as a whole, from the date as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
and neither the Company nor North Star has, directly or indirectly, incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, which are material to the
business of the Company and North Star, taken as a whole, and there has not been
any change in the capital stock of, or any incurrence of long-term debt or
material increase in short-term debt by, the Company or North Star, or any
issuance or grant of options, warrants or rights to purchase the capital stock
of the Company or North Star, or any declaration or payment of any dividend or
other distribution on the capital stock of the Company from the date as of which
information is given in the Registration Statement and the Prospectus.
(h) Neither the Company nor North Star is, nor with the giving of
notice or lapse of time or both would be, in violation of or in default under
its articles of incorporation or bylaws, or any material agreement, indenture or
other instrument, to which the Company or North Star is a party or by which
either of them are bound, or to which either of their properties are subject.
Neither the issuance, sale or delivery by the Company of the Shares, nor the
execution, delivery and performance of this Agreement nor the consummation by
the Company of the transactions contemplated hereby will result in a violation
of, or constitute a default under, the restated articles of incorporation or
amended and restated bylaws of the Company, or any agreement, indenture or other
instrument to which the Company or North Star is a party or by which either of
them is bound, or to which either of their properties are subject, nor will the
performance by the Company of its obligations hereunder violate any law,
ordinance, rule, administrative regulation or decree of any court or any
governmental agency or body having jurisdiction over the Company or North Star
or any of their respective properties or assets, or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company or North Star. Except for permits and similar authorizations
required under the Act and the securities or "blue sky" laws of certain
jurisdictions and for such permits and authorizations which have been obtained,
no consent, approval, authorization or order of any court, governmental agency
or body or financial institution is required in connection with the consummation
of the transactions contemplated by this Agreement.
(i) This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy, and except as enforcement
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may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to creditors' rights generally or by general
equitable principles.
(j) The Company and North Star each has good and marketable title to
its properties, free and clear of all liens, encumbrances and defects except
such as are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company or North Star, and
any real property and buildings held under lease by the Company or North Star
are held by it under valid, existing and enforceable leases with such exceptions
as are not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company or North Star and except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally or by general equitable principles. The properties of the Company and
North Star necessary to the conduct of their respective businesses (as presently
conducted and as described in the Prospectus) are in good repair (reasonable
wear and tear excepted) and are insured in accordance with industry practice and
suitable for their uses.
(k) Neither the Company nor North Star, nor any other person or entity
for whom the Company or North Star is or may be liable, is in violation of any
federal, state, local, provincial or foreign laws or regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos or asbestos-containing materials, or
polychlorinated biphenyls ("Materials of Environmental Concern"), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
(collectively, "Environmental Laws"), which violation could have a material
adverse effect on the condition, financial or otherwise, or the results of
operations, cash flow, business affairs or business prospects of the Company and
North Star, taken as a whole (a "Material Adverse Effect"). "Violation"
includes, but is not limited to, noncompliance with any permit or other
governmental authorization required under applicable Environmental Laws and
noncompliance with the terms and conditions of any such permit or authorization.
(l) Neither the Company nor North Star has received any communication
(written or oral), whether from a governmental authority, citizens' group,
employee or otherwise, alleging that the Company or North Star, any other person
or entity for whom the Company is or may be liable, is not in full compliance
with any
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Environmental Laws or permit or authorization required under applicable
Environmental Laws, and there are no circumstances that may prevent or interfere
with such full compliance in the future, except where failure to so comply would
not have a Material Adverse Effect.
(m) There is no claim, action, cause of action, investigation or
notice (written or oral) by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from (i) the presence in or release into
the environment of any Materials of Environmental Concern at any location owned,
leased or operated, now or in the past, by the Company or North Star, or any
other person or entity for whom the Company or North Star is or may be liable,
or (ii) circumstances forming the basis of any violation or alleged violation of
any Environmental Law (collectively, "Environmental Claims") pending or
threatened against the Company or North Star or to the Company's knowledge, any
other person or entity whose liability for any Environmental Claim the Company
or North Star has retained or assumed either contractually or by operation of
law.
(n) Except as set forth in the Registration Statement and Prospectus,
there are no past or present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern, that
could form the basis of any Environmental Claim against the Company or North
Star with respect to property owned, leased or operated by or for the Company or
North Star, now or in the past, or against any person or entity whose liability
for any Environmental Claim the Company or North Star has retained or assumed
either contractually or by operation of law.
(o) Except as would not, singly or in the aggregate, have a Material
Adverse Effect, neither the Company nor North Star has (A) violated any
applicable federal, state, provincial or foreign law relating to employment or
employment practices or the terms and conditions of employment, including,
without limitation, discrimination in the hiring, promotion or pay of employees,
wages, hours of work, plant closings and layoffs, collective bargaining, and
occupational safety and health, or any provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the rules and regulations promulgated
thereunder or any other applicable law (whether foreign or domestic) relating to
or governing the operation or maintenance of any plan or arrangement falling
within the definition of an "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) or any other employee benefit plan or arrangement, nor
(B) engaged in any unfair labor practice. There is (i) no unfair labor practice
charge or complaint pending or threatened against the Company before the
National Labor Relations Board or any corresponding state, local,
7.
provincial or foreign agency, and no grievance or arbitration proceeding arising
out of or under any collective bargaining agreement is so pending or threatened
against the Company or North Star which would, singly or in the aggregate, have
a Material Adverse Effect; and (ii) no union representation claim pending with
respect to the employees of the Company or North Star and to the Company's
knowledge, no union organizing activities taking place. No labor dispute
involving the employees of the Company or North Star is pending or is threatened
or to the Company's knowledge, is imminent which could singly or in the
aggregate have a Material Adverse Effect; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any
principal suppliers, manufacturers or contractors of the Company or North Star
which could singly or in the aggregate have a Material Adverse Effect.
(p) There is no legal or governmental proceeding to which the Company
or North Star is a party or to which any of their respective properties are
subject or which is pending or, to the Company's knowledge, threatened or
contemplated against the Company or North Star which could result in any
Material Adverse Effect or which is required to be disclosed in the Registration
Statement or the Prospectus.
(q) Neither the Company nor North Star is in violation of any law,
ordinance, rule, administrative regulation or decree known to the Company of any
court or governmental agency or body having jurisdiction over the Company or
North Star or any of their respective properties or assets, which violation
could have a Material Adverse Effect.
(r) The Company has not taken, and shall not take, directly or
indirectly, any action designed to cause or result in, or which might reasonably
be expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(s) The Company and North Star have timely (giving effect to permitted
extensions) and properly prepared and filed all necessary federal, state, local
and foreign income, franchise and any other required tax returns and have paid
all taxes shown as due thereon (other than those being contested in good faith),
and neither the Company nor North Star has any knowledge of any tax deficiency
which has been or might have a Material Adverse Effect.
(t) (A) Neither the Company nor North Star or any current officers or
directors of the Company or North Star has at any time and (B) no employee or
agent acting on behalf of the Company or North Star has at any time within the
last five (5) years, (i) made any contributions to any candidate for political
office in violation of law, or failed to disclose fully any contributions to any
candidate for political office in accordance with any applicable statute, rule,
regulation or ordinance
8.
requiring such disclosure, (ii) made any payment to any local, state, federal or
foreign governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed by
applicable law, (iii) made any payment outside the ordinary course of business
to any purchasing or selling agent or person charged with similar duties of any
entity to which the Company or North Star sells or from which the Company or
North Star buys products for the purpose of influencing such agent or person to
buy products from or sell products to the Company or North Star, or (iv) engaged
in any transaction, maintained any bank account or used any corporate funds
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Company.
(u) Except as contemplated by this Agreement, the Company is not aware
of any claims for services in the nature of a finder's fee, brokerage fee or
otherwise with respect to this offering for which the Company or North Star or
any of the several Underwriters may be responsible.
(v) The Company and North Star own or possess adequate rights to use
all trademarks, service marks, trade names and copyrights necessary for the
conduct of their respective businesses described in the Prospectus and has taken
reasonable security measures to protect the secrecy, confidentiality and value
of their respective trade secrets and know-how which are valid and protectible
and are not part of the public knowledge or literature and which are necessary
for, used in, or proposed to be used in the conduct of their respective
businesses described in the Prospectus. Neither the Company nor North Star has
received any notice of infringement of or conflict with, and neither the Company
nor North Star, to the best of the Company's knowledge, is infringing or in
conflict with asserted rights of others with respect to any trademarks, service
marks, trade names, copyrights or trade secrets.
(w) There are no outstanding loans or advances or guarantees of
indebtedness by the Company or North Star to or for the benefit of any affiliate
of the Company or North Star, any of the officers or directors of the Company or
North Star, or any of the members of the families of any of the foregoing, which
are required by the Act to be described in the Registration Statement or the
Prospectus except such that are so described.
(x) The Company and North Star maintain systems of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary in order to permit preparation of
financial statements in accordance with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management's general
9.
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(y) The Company and North Star each had at all relevant times full
corporate power and authority to execute and deliver the Agreement and Plan of
Merger, dated December 6, 1996, among the Company, North Star, North Star
Merger, Inc. and Xxxxxx X. Xxxxx and Xxx X. Xxxx (the "North Star Merger
Agreement") and to carry out the transactions contemplated thereby
(collectively, the "North Star Merger"). The execution, delivery and
performance by the Company and North Star of the North Star Merger Agreement and
the consummation of the North Star Merger were duly authorized by all requisite
corporate action of the Company and North Star, and the North Star Merger
Agreement constitutes a valid and binding agreement of each of the Company and
North Star, enforceable against the Company and North Star in accordance with
its terms, except as rights to indemnity thereunder may be limited by federal or
state securities laws and the public policy underlying such laws, and except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally or by general equitable principles.
(z) Neither the execution and delivery by the Company or North Star of
the North Star Merger Agreement nor the consummation by the Company and North
Star of the North Star Merger (i) violated, conflicted with or resulted in a
breach of any provision of the respective articles of incorporation or bylaws of
the Company and North Star, (ii) violated, conflicted with or resulted in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the properties of the Company or North Star under, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract, agreement
or other instrument to which the Company or North Star, or any of their
respective properties, may be bound, (iii) violated any order, injunction,
judgment, ruling, law or regulation of any court or governmental authority
applicable to the Company or North Star or any of their respective properties,
or (iv) except for applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations promulgated thereunder, and the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"), required
any consent, approval or authorization of, or notice to, or declaration, filing
or registration with, any governmental or regulatory authority or other third
party, which, in the case of clauses (ii), (iii) and (iv) above, would have a
Material Adverse Effect.
(aa) No broker, finder or investment banker is entitled to any fee or
commission in connection with the transactions contemplated by the North Star
Merger Agreement other than as have
10.
been paid or accrued by the Company or North Star as reflected in the Company's
consolidated financial statements included in the Prospectus and the
Registration Statement.
(bb) All applicable periods for asserting any dissenter's rights or
appraisal rights in connection with the North Star Merger have expired, and no
person has asserted or, to the best knowledge of the Company has threatened to
asset, any dissenter's rights or appraisal rights under applicable law arising
from or in connection with the North Star Merger.
(cc) To the best of the Company's knowledge, no facts or circumstances
exist giving rise to any claim of the Company for indemnification pursuant to
the North Star Merger Agreement.
Any certificate signed by any duly authorized officer of the Company or by
or on behalf of the Selling Shareholders, respectively, and delivered to you or
counsel for the Underwriters shall be deemed a representation and warranty by
the Company or the Selling Shareholders, respectively, to each Underwriter as to
the matters covered thereby.
2. Representations and Warranties of the Selling Shareholders.
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(a) Each Selling Shareholder, severally and not jointly, represents
and warrants to, and agrees with, each Underwriter, the Company and the other
Selling Shareholders that:
(i) The execution, delivery and performance of this Agreement
by such Selling Shareholder, the sale of the Shares to be sold by such Selling
Shareholder, and the performance of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or result in a breach of
any of the terms or provisions, or constitute a default or cause an acceleration
of any obligation under any agreement, indenture or other instrument to which
such Selling Shareholder is a party or by which such Selling Shareholder or the
property of such Selling Shareholder is subject, nor will the performance by
such Selling Shareholder of his obligations hereunder violate any law,
ordinance, rule, administrative regulation or decree of any court or any
governmental agency or body known to such Selling Shareholder having
jurisdiction over such Selling Shareholder or any of his properties or assets,
or result in the creation or imposition of any lien, charge, claim, or
encumbrance upon any property or asset of such Selling Shareholder.
(ii) Such Selling Shareholder is, and on the applicable
Closing Date (as defined) will be, the lawful owner of the number of Shares to
be sold by such Selling Shareholder and has, and on the applicable Closing Date
will have, good and marketable title to the Shares to be sold by him to the
Underwriters hereunder, free and clear of any security interest,
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mortgage, pledge, lien, encumbrance, restriction on transfer, claim or equity
(including, without limitation, claims made by reason of community property
rights), other than those imposed by the Act, the securities or Blue Sky laws of
certain jurisdictions and the Power of Attorney and Custody Agreement, as
defined below); and upon delivery to the Underwriters of the Shares to be sold
by such Selling Shareholder hereunder and payment of the purchase price therefor
by the Underwriters as herein contemplated in good faith and without notice of
an adverse claim within the meaning of Article VII of the Uniform Commercial
Code, each of the Underwriters will receive good and marketable title to its
ratable share of the Shares purchased by it from such Selling Shareholder, free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
restriction on transfer, claim or equity (including, without limitation, claims
made by reason of community property rights), other than those imposed by the
Act and the securities or Blue Sky laws of certain jurisdictions.
(iii) All authorizations, approvals and consents necessary for
the execution, delivery and performance by such Selling Shareholder of this
Agreement, the Irrevocable Custody Agreement and Power of Attorney in the form
previously furnished to you (collectively, the "Custody Agreement") and the sale
and delivery by such Selling Shareholder to the Underwriters of the Shares to be
sold by such Selling Shareholder hereunder have been obtained and are in full
force and effect, other than those imposed by the Act and the securities or Blue
Sky laws of certain jurisdictions; and such Selling Shareholder has, and on each
applicable Closing Date will have, all requisite right, power and authority to
enter into and perform its obligations under this Agreement and to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder to the
Underwriters hereunder.
(iv) Such Selling Shareholder has not taken, and shall not
take, directly or indirectly, any action designed to cause or result in, or
which might reasonably be expected to constitute, stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of the Shares
to be sold by such Selling Shareholder, and other than as permitted by the Act,
such Selling Shareholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares.
(v) This Agreement and the Custody Agreement have each been
duly and validly authorized, executed and delivered by or on behalf of such
Selling Shareholder and each constitutes the valid and legally binding agreement
of such Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy, and except as enforcement may be limited by applicable
bankruptcy, insolvency,
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reorganization, moratorium or other similar laws relating to creditors' rights
generally or by general equitable principles.
(vi) The sale of the Shares to be sold by such Selling
Shareholder pursuant to this Agreement is neither prompted by nor based upon any
material adverse information concerning the Company known to such Selling
Shareholder that is not set forth in the Prospectus.
(vii) The information relating to such Selling Shareholder in
each preliminary prospectus in the form filed as part of the Registration
Statement as originally filed or filed as part of any amendment thereto, or, if
different, in the form used in connection with the offering of the Shares,
complied fully in all material respects when so filed or used with the Act, and
when the Registration Statement becomes effective and at all times subsequent
thereto, the information relating to the Selling Shareholder in the Registration
Statement (including, if applicable, the information deemed to be part of the
Registration Statement at the time it was declared effective pursuant to Rule
430A under the Act) and the Prospectus and any supplements or amendments
thereto, shall comply in all material respects with the provisions of the Act,
and the Registration Statement and any such information in any amendment thereto
at the time such Registration Statement or such amendment becomes effective,
will not contain any untrue statement of a material fact relating to such
Selling Shareholder or omit to state with respect to such Selling Shareholder a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus and any supplements or amendments
thereto, will not at any such time contain any untrue statement of a material
fact relating to the Selling Shareholder or omit to state with respect to the
Selling Shareholder any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Xxxxxx X. Xxxxxx XX, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xx X.
Xxxxx, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx and Xxx X. Xxxx (collectively, the
"Insider Selling Shareholders"), severally and not jointly, further represent
and warrant to, and agree with the Underwriters, the Company and the other
Selling Shareholders that the Registration Statement and any amendments thereto,
at the time such Registration Statement or such amendment becomes effective,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and the Prospectus and any amendments or supplements
thereto will not at any such time contain any untrue statement of a material
fact or omit 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.
13.
3. Sale and Delivery of the Shares to the Underwriters.
---------------------------------------------------
(a) Subject to the terms and conditions and upon the basis of the
representations and warranties herein set forth, (i) the Company agrees to sell
to the several Underwriters, at a price per share of $_____ (the "Purchase
Price"), an aggregate of ________ Firm Shares, (ii) each Selling Shareholder
agrees, severally and not jointly, to sell to the several Underwriters, at the
Purchase Price, the number of Firm Shares set forth opposite the name of such
Selling Shareholder on Schedule I hereto and (iii) each Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Shareholders, at the Purchase Price, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto.
(b) In addition, subject to the terms and conditions and upon the
basis of the representations and warranties herein set forth, (i) the Company
agrees to sell to the Underwriters, at the Purchase Price, up to __________
Option Shares, (ii) each Selling Shareholder agrees, severally and not jointly,
to sell to the several Underwriters, at the Purchase Price, up to the number of
Option Shares shown opposite such Selling Shareholder's name on Schedule II
hereto, and (iii) the Underwriters shall have the right to purchase, severally
and not jointly, from time to time for a period of 30 days from the date of the
Prospectus, up to __________ Option Shares and an aggregate of up to ___________
Option Shares, respectively, from the Company and the Selling Shareholders at
the Purchase Price. Option Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. The underwriters shall not exercise the
foregoing option granted by the Company unless and until they have first
exercised in full the foregoing option granted by the Selling Shareholders.
Subject to the foregoing sentence, if any Option Shares are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from each
Selling Shareholder in the proportion that the number of Option Shares set forth
opposite such Selling Shareholder's name on Schedule II hereto bears to the
total number of Option Shares to be purchased pursuant to the exercise, the
aggregate number of Option Shares (subject to adjustments to eliminate
fractional shares as you may determine) which bears the same proportion to the
total number of Option Shares to be purchased from the Selling Shareholders as
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II hereto bears to the total number of Firm Shares. If any Option
Shares are to be purchased in excess of the aggregate Option Shares which the
Selling Shareholders have agreed to sell, each underwriter, severally and not
jointly, agrees to purchase from the Company the aggregate number of Option
Shares (subject to adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Option Shares
to be purchased from the Company as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule II bears to the total number of Firm
Shares.
4. Delivery of and Payment for Shares. Delivery of certificates for the
----------------------------------
Firm Shares to be purchased by the Underwriters
14.
from the Company and the Selling Shareholders shall be made against payment
therefor by certified or official bank check or checks in New York Clearing
House next-day funds to the order of the Company, with respect to the Shares
purchased from the Company, or to Xx. Xxxxxxx X. Xxxxxxx or Xxxxxx X. Xxxxxx XX,
as the case may be, with respect to the Shares purchased from such Selling
Shareholders as custodian for each of the Selling Shareholders (collectively,
the "Custodians"), as the case may be. Such delivery and payment shall be made
at 9:00 A.M., local time, at the offices of Xxxxxx Xxxxxx & Company, Inc., 00
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx (or such other place as mutually may be agreed
upon by you, the Company and the Custodians), on the third full business day
following the date of the public offering as advised by you to the Company or at
such other date not more than seven full business days thereafter as shall be
determined by you, the Company and the Custodian (unless, in either case,
postponed pursuant to Section 11) (the "First Closing Date").
The option to purchase Option Shares granted in Section 3 hereof may be
exercised during the term thereof by written notice to the Company and the
Custodians from you. Such notice shall set forth the aggregate number of Option
Shares as to which the option is being exercised and the time and date, not
earlier than either the First Closing Date or the second business day after the
date on which the option shall have been exercised nor later than the seventh
business day after the date of such exercise, as determined by you, when the
Option Shares are to be delivered (the "Option Closing Date"). Delivery and
payment for such Option Shares is to be at the offices set forth above for
delivery and payment of the Firm Shares. Delivery of certificates for the
Option Shares to be purchased by the Underwriters from the Selling Shareholders
shall be made against payment therefor by certified or official bank checks
drawn upon or by a New York Clearing House bank and payable in next-day funds to
the order of the Company and the respective Custodians as provided above in this
Section 4 with respect to payment for the Firm Shares. (The First Closing Date
and the Option Closing Date are herein individually referred to as the "Closing
Date" and collectively referred to as the "Closing Dates.")
Delivery of certificates for the Shares shall be made by or on behalf of
the Company or the Selling Shareholders, as applicable, to you, or the
respective accounts of the Underwriters, against payment by you, for the several
accounts of the Underwriters, to the Company or the Selling Shareholders, as
applicable. The certificates for the Shares shall be registered in such names
and denominations as you shall have requested at least three full business days
prior to the applicable Closing Date, and shall be made available for checking
and packaging at a location as may be designated by you not later than 10:00
A.M. at least two full business days prior to such Closing Date. Time shall be
of the essence and delivery at the time and place specified in this
15.
Agreement is a further condition to the obligations of each Underwriter.
5. Offering. Upon your authorization of the release of the Firm Shares,
--------
the Underwriters propose to offer the Shares for sale to the public at the
public offering price and upon the other terms set forth in the Prospectus.
6. Covenants. The Company covenants and agrees with each Underwriter
---------
that:
(a) The Company shall use its reasonable best efforts to cause the
Registration Statement to become effective at the earliest possible time or, if
the procedure in Rule 430A of the Act is utilized, to comply with the provisions
of, and make all requisite filings with the Commission pursuant to, Rule 430A of
the Act and to notify you promptly (in writing, if requested) of all such
filings. The Company shall notify you promptly and confirm such notification in
writing, (i) when the Registration Statement has become effective (if such
Registration Statement has not otherwise become effective prior to the execution
of this Agreement), if and when any Prospectus is mailed (or otherwise sent for
filing pursuant to Rule 424 under the Act), and when any post-effective
amendment to the Registration Statement becomes effective, (ii) of the happening
of any event during the period referred to in paragraph (c) below that makes any
statement of a material fact made in the Registration Statement untrue or that
requires the making of any additions to or changes in the Registration Statement
(as amended or supplemented from time to time) in order to make the statement
therein not misleading or that makes any statement of a material fact made in
the Prospectus (as amended or supplemented from time to time) untrue or that
requires the making of any additions to or changes in the Prospectus (as amended
or supplemented from time to time) in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
(iii) of any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for additional information relating
thereto. The Company shall prepare and file with the Commission, promptly upon
your request, any amendments of or supplements to the Registration Statement or
the Prospectus which, in the opinion of counsel to the several Underwriters, may
be necessary or advisable in connection with the distribution of the Shares and
shall use every reasonable effort to cause the same to become effective as
promptly as possible; and the Company shall not file any amendment of or
supplement to the Registration Statement or the Prospectus, whether before or
after the time when the Registration Statement becomes effective, which has not
previously been submitted to you a reasonable time before the proposed filing
thereof or to which you shall reasonably object in writing thereof. The Company
shall advise you promptly after it shall receive notice thereof of the issuance
by the Commission or any State or other regulatory body of any stop order or
other order suspending the effectiveness of the
16.
Registration Statement, suspending or preventing the use of any preliminary
prospectus or the Prospectus or suspending the qualification of the Shares for
offering or sale in any jurisdiction, or of the institution or threatening of
any proceedings for any such purpose; and the Company shall use every reasonable
effort to prevent the issuance of any stop order or other such order and, should
a stop order or other such order be issued, to obtain as soon as possible the
lifting thereof.
(b) The Company shall furnish to the Underwriters, from time to time
and without charge, a reasonable number of copies of the Registration Statement
of which two for you and one for counsel to the Underwriters shall be signed and
shall include exhibits and all amendments and supplements to such Registration
Statement.
(c) Within the time during which a Prospectus relating to the Shares
is required to be delivered under the Act the Company shall furnish to each
Underwriter, at the Company's expense, as many copies of the Prospectus (and of
each amendment or supplement thereto) as such Underwriter may reasonably
request, and the Company shall comply with all requirements imposed upon it by
the Act, as now and hereafter amended, so far as is necessary to permit the
continuance of sales of or dealings in the Shares as contemplated by the
provisions hereof and the Prospectus. If during such period any event occurs as
a result of which, in the opinion of counsel for the Underwriters or in the
judgment of the Company, the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the Act, the
Company shall promptly notify you and, subject to the provisions of Section
5(a), shall amend the Registration Statement or supplement the Prospectus (at
the expense of the Company) so as to correct such statement or omission or
effect such compliance, and will furnish to each Underwriter and to such dealers
as you shall specify such number of copies as such Underwriter or dealers may
reasonably request.
(d) The Company shall use its reasonable best efforts to take or cause
to be taken all necessary action and furnish to whomever you may direct such
information as may be required in qualifying the Shares for sale under the laws
of such jurisdictions which you shall designate and to continue such
qualifications in effect for as long as may be required for the distribution of
the Shares; except that in no event shall the Company be obligated in connection
therewith to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not otherwise so subject.
The Company shall file such statements and reports as may be required by the
laws of each jurisdiction in which the Shares have been qualified as above
provided.
17.
(e) The Company shall make generally available to its security
holders, in the manner contemplated by Rule 158 under the Act, as soon as
practicable but in any event not later than 45 days after the end of its fiscal
quarter in which the first anniversary date of the effective date of the
Registration Statement occurs, an earnings statement satisfying the requirements
of Section 11(a) of the Act covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) For a period of 180 days following the date of the Prospectus, the
Company will not, without your prior written consent, (i) purchase any shares of
Common Stock or equity securities of the Company or (ii) offer, issue, sell,
contract to sell, transfer or otherwise dispose of, for value or otherwise,
directly or indirectly, any shares of Common Stock or other equity securities of
the Company or any securities convertible into or exchangeable for, or warrants
to purchase or acquire, Common Stock, except (w) pursuant to this Agreement or
(x) pursuant to the exercise of stock options outstanding as of the date of the
Prospectus and disclosed therein or (y) pursuant to sales not in the public
market, if the transferees of such non-public sales deliver to you their
agreement to be bound by the terms of this provision or (z) pursuant to the
issuance of options to employees or directors of the Company pursuant to the
Company's 1996 Employee Stock Incentive Plan, provided that such options do not
vest prior to 180 days following the date of the Prospectus.
(g) The Company shall apply the net proceeds of the sale of the Shares
sold by it in the manner specified under the caption "Use of Proceeds" in the
Prospectus.
(h) The Company shall timely complete all required filings and
otherwise fully comply in a timely manner with all provisions of the Act in
connection with the public offering of the Shares.
(i) The Company shall pay or cause to be paid (A) all expenses
(including stock transfer taxes) incurred in connection with the delivery to the
several Underwriters of the Shares, (B) all fees and expenses (including,
without limitation, fees and expenses of the Company's accountants and counsel)
in connection with the preparation, printing, filing, delivery and shipping of
the Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), each preliminary prospectus and the
Prospectus, as amended or supplemented, and the printing, delivery and shipping
of this Agreement and other underwriting documents, including Underwriters'
Questionnaires, Underwriters' Powers of Attorney, Blue Sky Memoranda, Agreements
Among Underwriters and Selected Dealer Agreements and any letters transmitting
the offering material to Underwriters or selling group members (including costs
of mailing and shipment), (C) all filing fees and reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with the
qualification of the
18.
Shares under state securities laws as provided in Section 5(d) hereof up to a
maximum of $12,500, (D) the filing fee of the National Association of Securities
Dealers, Inc., (E) any applicable listing fees, including the fee for listing
the Company's Common Stock on the Nasdaq National Market of the National
Association of Securities Dealers Automated Quotation System ("The Nasdaq
National Market"), (F) the cost of printing certificates representing the
Shares, (G) the cost and charges of any transfer agent or registrar, (H) the
costs and expenses of all pre-closing and post-closing advertisements relating
to the offering of the Shares, (I) the costs related to travel and lodging
incurred by the Company and its representatives relating to meetings with and
presentations to prospective purchasers of the Shares and (J) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise provided for in this section. If this Agreement is terminated for
any reason whatsoever (other than by reason of a default by any of the
Underwriters), the Company shall pay the several Underwriters on demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) incurred by the Underwriters in reviewing the Registration Statement
and the Prospectus and in connection with the investigation, preparing to market
and marketing of the Shares or in contemplation of performing their obligations
hereunder. The provisions of this Section are intended to relieve the
Underwriters from payment of the expenses and the costs that the Company and the
Selling Shareholders agree to pay, and shall not affect any agreements that the
Company and the Selling Shareholders may make, or may have made, for the sharing
of any such expenses and costs.
(j) The Company, at its expense, shall furnish to its shareholders an
annual report (including financial statements prepared in accordance with
generally accepted accounting prin ciples audited by independent certified
public accountants), and, as soon as practicable after the end of each of the
first three quarters of each fiscal year, a statement of operations of the
Company for such quarter (which may be in summary form), all in reasonable
detail, and during the five-year period after the date hereof, at its expense,
will furnish you (i) concurrently with providing such reports to its
shareholders, a balance sheet of the Company and any subsidiaries as and at the
end of such fiscal year, together with statements of income or operations,
shareholders' equity and cash flows of the Company and any consolidated
subsidiaries, and of any non-consolidated significant subsidiaries, for such
fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent certified public accountants; (ii)
as soon as they are available, a copy of all reports (financial or other) mailed
to security holders; (iii) as soon as they are available, a copy of all periodic
reports and financial statements furnished to or filed with the Commission, any
securities exchange or the NASD; and (iv) such other information of a public
nature concerning the Company as you may from time to time reasonably request.
In addition, during
19.
such five-year period the Company shall furnish you, concurrently with its
release, every material press release and every material news item or article in
respect of the Company or its affairs that is released or prepared by the
Company.
(k) So long as the Company has an active subsidiary or subsidiaries,
the financial statements provided for in Section 5(j) shall be on a consolidated
basis to the extent the accounts of the Company and its subsidiary or
subsidiaries are consolidated in reports furnished to its shareholders
generally. Separate financial statements shall be furnished for any
subsidiaries whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the Act.
(l) At or before the First Closing Date, you shall receive from each
Selling Shareholder and from each officer and director of the Company and North
Star a written agreement not to offer, sell, contract to sell, transfer or
otherwise dispose of, directly or indirectly, for value or otherwise, any shares
of Common Stock or other equity securities of the Company or any securities
convertible into or exchangeable for, or warrants to purchase or acquire, Common
Stock, now owned or hereafter acquired by such person, for a period of 180 days
from the date of the Prospectus, except (i) pursuant to sales not in the public
market or (ii) pursuant to bona fide gifts or (iii) with your prior written
consent, provided that, in the case of (i) and (ii), the transferees of such
non-public sales or bona fide gifts, as applicable, deliver to you their
agreement to be bound by the terms of this provision.
(m) The Company and North Star shall continue to maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary in order to
permit preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(n) The Company shall comply with all registration, filing and
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which may from time to time be applicable to the Company.
(o) The Company shall make all filings required, including
registration under the Exchange Act, to obtain and maintain the listing of the
Common Stock on the Nasdaq National Market concurrently with the effective date
of the Registration Statement.
20.
(p) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(q) If at any time when a prospectus is required by law to be
delivered any rumor, publication or event relating to or affecting the Company
shall occur as a result of which in your opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus), the Company shall, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of, and if deemed appropriate by the Company and its
counsel in consultation with you and your counsel disseminate, a press release
or other public statement reasonably satisfactory to you responding to or
commenting on such rumor, publication or event.
(r) The Company's Board of Directors shall include at least two
independent directors.
(s) The Company is familiar with the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder (collectively, the "1940
Act") and has in the past conducted its affairs, and will in the future conduct
its affairs, in such a manner so as to ensure that the Company was not and will
not be an "investment company" within the meaning of the 1940 Act.
(t) The Company will supply the Underwriters with copies of all
correspondence to and from and all documents issued to and by the Commission or
the Commission's staff in connection with the registration of the Shares under
the Act.
7. Conditions to the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and each Closing Date (as if made at such Closing Date), of the
representations and warranties of the Company and the Selling Shareholders
contained herein or in certificates of any officer of the Company or Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholders of their respective obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 5:30 P.M., eastern time, on
the date following the date of this Agreement or, with your consent, at a later
time and date as you may agree in writing; all filings required by Rule 424 and
Rule 430A of the Act shall have been made; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceedings for the issuance of such an order
shall have been commenced or shall be
21.
pending, or, to the knowledge of the Company, threatened or contemplated by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been disclosed to you and complied with to your satisfaction; and no stop
order suspending the sale of the Shares in any jurisdiction shall have been
issued, and no proceeding for that purpose shall have been instituted, or, to
the knowledge of the Company, threatened or contemplated.
(b) On each Closing Date (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Act and shall
conform in all material respects to the Act, the Company shall have complied in
all material respects with Rule 430A (if it shall have elected to rely thereon)
and neither the Registration Statement nor the Prospectus, as they may then be
amended or supplemented, shall 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 (with respect to the Prospectus, in the light of the
circumstances under which they were made) not misleading; (ii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the business prospects,
properties, assets, results of operation or condition (financial or otherwise)
of the Company and North Star, taken as a whole, whether or not arising in the
ordinary course of business; (iii) no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Company or any of the
Selling Shareholders, threatened against the Company that would be required to
be set forth in the Prospectus other than as set forth therein and no
proceedings shall be pending or, to the knowledge of the Company or any of the
Selling Shareholders, threatened against the Company before or by any federal,
state or other commission, board or administrative agency wherein an unfavorable
decision, ruling or finding could materially adversely affect the business,
prospects, properties, assets, results of operations or condition (financial or
otherwise) of the Company and North Star, taken as a whole, other than as set
forth in the Prospectus; (iv) the Company and the Selling Shareholders shall
have complied with all agreements and satisfied all conditions on their
respective parts to be performed or satisfied at or prior to the applicable
Closing Date, and (v) the representations and warranties of the Company set
forth in Section 1 and the representations and warranties of the Selling
Shareholders set forth in Section 2 shall be accurate as though expressly made
at and as of the applicable Closing Date. At each applicable Closing Date, you
shall have received a certificate executed by the President and the Chief
Executive Officer of the Company, dated as of the applicable Closing Date, to
such effect and with respect to the following additional matters: (A) the
Registration Statement has become effective under the Act and no stop order
suspending the effectiveness of the Registration Statement or preventing or
suspending the use of the Prospectus has
22.
been issued, and no proceedings for that purpose have been instituted or are
pending or, to the best of their knowledge, threatened under the Act; and (B)
they have carefully reviewed the Registration Statement and the Prospectus and
when the Registration Statement became effective and at all times subsequent
thereto up to the delivery of such certificate, the Registration Statement and
the Prospectus and any amendments or supplements thereto contained all
statements and information required to be included therein or necessary to make
the statements therein (with respect to the Prospectus, in the light of the
circumstances under which they were made) not misleading and neither the
Registration Statement nor the Prospectus and any amendment or supplement
thereto included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein (with respect to the Prospectus, in light of the
circumstances under which they were made) not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus that has not
been so set forth, and (C) all representations, warranties, covenants and
statements made herein by the Company are true and correct in all material
respects at such Closing Date, with the same effect as if made on and as of such
Closing Date, and all agreements herein to be performed by the Company on or
prior to such Closing Date have been duly performed. At each applicable Closing
Date, you shall have received certificates executed by each Selling Shareholder,
dated as of the applicable Closing Date, with respect to the following matters:
all representations, warranties, covenants and statements made herein by such
Selling Shareholder are true and correct in all material respects at such
Closing Date, with the same effect as if made on and as of such Closing Date,
and all agreements herein to be performed by the Company on or prior to such
Closing Date have been duly performed.
(c) On the business day immediately preceding the date of this
Agreement you shall have received from Ernst & Young LLP, a letter, dated the
date hereof in form and substance satisfactory to you, together with signed or
reproduced copies of such letter for each of the other Underwriters, confirming
that they are independent public accountants with respect to the Company within
the meaning of the Act, stating in effect that:
(i) in their opinion, the financial statements of the Company
and of North Star included in the Registration Statement and covered by their
reports therein comply as to form in all material respects with the applicable
accounting requirements of the Act;
(ii) on the basis of limited procedures (set forth in detail
in such letter and made in accordance with such procedures as may be reasonably
specified by you) not constituting an audit in accordance with generally
accepted auditing standards, consisting of (but not limited to) a reading of the
latest
23.
available internal unaudited consolidated financial statements of the Company, a
reading of minute books of the Company, inquiries of officials of the Company
responsible for financial and accounting matters, and such other inquiries and
procedures, as may be specified in such letter, nothing has come to their
attention which caused them to believe that:
(A) the unaudited financial statements and other unaudited
financial data of the Company included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the Act or are not presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration Statement;
(B) the amounts of net sales, income before income taxes, net
income and net income per share for the three fiscal years ended March 28, 1997,
included in the Prospectus under the caption "Prospectus Summary-Summary
Consolidated Financial and Operating Data" do not agree with the corresponding
amounts in the audited statements of income;
(C) at a specified date not more than five business days
prior to the date of delivery of such letter, there was any change in the
capital stock or long-term debt or obligations under capital leases of the
Company other than scheduled repayments or any decreases in total assets,
stockholders' equity or other items of the Company specified by the Underwriters
from that set forth in the consolidated balance sheet at March 28, 1997,
included in the Prospectus, except as described in the Prospectus or such
letter; or
(D) for the period from March 28, 1997, to a specified date
not more than five days prior to the date of delivery of such letter, there were
any decreases in revenue, gross profit or income before income taxes of the
Company, in each case as compared with the corresponding period of the preceding
year, except in each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in such letter; and
(iii) in addition to the procedures referred to in clause (ii)
above and the audit referred to in their report included in the Registration
Statement, they have carried out certain specific procedures, not constituting
an audit in accordance with generally accepted auditing standards, with respect
to certain amounts, percentages and financial information specified by you which
are derived from the general accounting records of the Company or North Star,
which appear in the Registration Statement or the exhibits or schedules thereto
and are specified by you, and have compared such amounts, percentages and
financial information
24.
with the accounting records of the Company or North Star and with material
derived from such records and have found them to be in agreement.
(d) At each Closing Date you shall have received from Ernst & Young
LLP a letter, in form and substance satisfactory to you and dated as of such
Closing Date, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (c) above, except that the specified date
referred to shall be a date not more than five business days prior to such
Closing Date.
(e) In the event that any of the letters to be delivered pursuant to
subsections (c) and (d) above sets forth any such changes, decreases or
increases, it shall be a further condition to your obligations that you shall
have determined, after discussions with officers of the Company responsible for
financial and accounting matters and with Ernst & Young LLP, that such changes,
decreases or increases as are set forth in such letters do not reflect a
material adverse change in the capital stock, long-term debt, obligations under
capital leases, total assets, or stockholders' equity of the Company as compared
with the amounts shown in the latest condensed consolidated balance sheet of the
Company, or a material adverse change in revenues or the total or per share
amounts of income before extraordinary items or net income, of the Company, in
each case as compared with the corresponding period of the prior year.
(f) On each Closing Date, you shall have received from Xxxx & Xxxxx
Professional Corporation, counsel for the Underwriters, such opinion or
opinions with respect to the Registration Statement, the Prospectus and other
related matters as you reasonably may require and such counsel shall have
received such papers and information as they reasonably may request to enable
them to pass upon such matters.
(g) On each Closing Date, there shall have been furnished to you the
respective opinions (addressed to the Underwriters) of Manatt, Xxxxxx &
Xxxxxxxx, LLP, counsel for the Company and the Selling Shareholders, and
Xxxxxxxxxx & Xxxxx, P.A., special counsel for North Star, each dated such
Closing Date and in form and substance reasonably satisfactory to you and
counsel for the Underwriters and stating that it may be relied upon by counsel
for the Underwriters in giving their opinion, to the effect that:
(i) The Company and North Star each has been duly organized
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to own or
lease and occupy its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business and is in good standing in each
jurisdiction in which, to such counsel's knowledge, the character of the
business conducted by it or the location of the
25.
properties owned or leased by it makes such qualification necessary, except
where the failure to so qualify would not have a Material Adverse Effect.
(ii) The authorized, issued and outstanding capital stock of
the Company conforms as to legal matters in all material respects to the
description thereof as set forth under the caption "Capitalization" in the
Prospectus. The Common Stock of the Company conforms as to legal matters in all
material respects to the description thereof contained under the caption
"Description of Capital Stock" in the Registration Statement and the Prospectus.
The outstanding shares of Common Stock (including any Shares to be purchased by
the Underwriters from the Selling Shareholders) have been, and the Shares that
are being sold by the Company, upon issuance and delivery and payment therefor
in the manner herein described will be, duly authorized, validly issued, fully
paid and nonassessable. There are no preemptive or to the knowledge of such
counsel other rights to subscribe for or to purchase, or any restrictions upon
the voting or transfer of, any shares of Common Stock or any capital stock of
North Star pursuant to the Company's or North Star's respective articles of
incorporation or bylaws, or any agreement or other instrument known to such
counsel to which the Company or North Star is a party or by which the Company or
North Star may be bound; and to such counsel's knowledge, neither the filing of
the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock. To such counsel's knowledge, neither the Company nor North Star
has any subsidiaries other than North Star and Keystone Warehouse Distributors,
Inc. All of the issued and outstanding shares of capital stock of North Star is
owned of record and beneficially by the Company, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(iii) Neither the issuance, sale or delivery by the Company and
the sale and delivery by the Selling Shareholders of the Shares, nor the
execution, delivery and performance of this Agreement by the Company and the
Selling Shareholders, nor the consummation by the Company or the Selling
Shareholders of any of the other transactions contemplated hereby will result in
a violation of, or constitute a default under, the articles of incorporation or
bylaws of the Company, or result in a material violation of or constitute a
default under any material agreement, indenture or other instrument known to
such counsel, to which the Company or any Selling Shareholder is a party or by
which any of them is bound, or to which any of their properties are subject,
nor, to such counsel's knowledge, will the performance by the Company or any
Selling Shareholder of its obligations hereunder violate any law, ordinance,
rule, administrative regulation or decree of any court or any governmental
agency or body having jurisdiction over the Company or any Selling
26.
Shareholder or any of their respective properties or assets, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company; provided, however, that no opinion need be
rendered regarding any state securities or Blue Sky laws. Except for permits
and similar authorizations required under the Act, by the NASD or under the
securities or "blue sky" laws of certain jurisdictions and for such permits and
authorizations which have been obtained, no consent, approval, authorization or
order of any court or governmental agency or body is required in connection with
the consummation by the Company or the Selling Shareholders of the transactions
contemplated by this Agreement. To such counsel's knowledge, the Company and
North Star is conducting its business so as to comply in all material respects
with all applicable statutes and regulations.
(iv) The Company is not, nor with the giving of notice or
lapse of time or both would be, in violation of or in default under its articles
of incorporation or, to such counsel's knowledge, in material violation of or in
material default under its bylaws, and neither the Company nor North Star is,
nor with the giving of notice of lapse of time or both would be, in violation of
or in default under any material agreement, indenture or other instrument known
to such counsel, to which the Company or North Star is a party or by which the
Company or North Star is bound or to which their respective properties are
subject.
(v) The Registration Statement and all post-effective
amendments thereto have become effective under the Act and, to such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending before or contemplated by the Commission and all
filings required by Rule 424 and Rule 430A of the Act have been made in a timely
manner; and the Registration Statement and the Prospectus and any amendment or
supplement thereto, as of their respective effective dates and as of each
Closing Date, complied as to form in all material respects with the requirements
of the Act (except that counsel need express no opinion on the financial or
statistical statements or other financial or statistical data contained
therein).
(vi) The statements under the captions "Business -- Government
Regulation and Environmental Hazards," "Description of Capital Stock," "Shares
Eligible for Future Sale," "Dividend Policy," "Underwriting," and "Management"
in the Prospectus and in Items 14 and 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of legal matters,
documents or proceedings referred to therein, provide a fair summary of such
legal matters, documents and proceedings; and such counsel does not know of any
contracts or documents of a character required to be summarized or described in
the
27.
Registration Statement or the Prospectus or required to be filed as exhibits to
the Registration Statement which are not so summarized, described or filed.
There are no statutes or regulations applicable to the Company or North Star or
certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained or maintained by the Company or
North Star of a character required to be disclosed in the Registration Statement
or the Prospectus which have not been so disclosed and described therein.
(vii) Except as described in the Prospectus, such counsel does
not know of any past, pending or threatened action, suit, proceeding, inquiry or
investigation before any court or before or by any public, regulatory or
governmental body or board against or involving the properties or business of
the Company or North Star or any of the Selling Shareholders of a character
required to be disclosed in the Prospectus or, as to threatened litigation, of a
character which would be required to be disclosed if filed, or in either case
which, if successful, would have a Material Adverse Effect.
(viii) Such contracts and documents as are summarized in the
Prospectus are fairly summarized in all material respects; and, to such
counsel's knowledge, each contract or document so described is in full force and
effect in accordance with its terms.
(ix) The Company has the corporate power and authority to
enter into and perform this Agreement, and to issue, sell and deliver the Shares
being issued, sold and delivered by the Company hereunder; this Agreement has
been duly authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, constitutes the valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the rights of creditors generally
and by general equitable principles, and except as rights to indemnification or
contribution may be limited under federal and state securities laws and the
public policy underlying such laws.
(x) All corporate action required in connection with the
authorization and issuance of the Shares and the sale of the Shares by the
Company in accordance with the terms of this Agreement has been taken and all
authorizations, consents, approvals, licenses or other orders of any regulatory
body, administrative agency or other governmental body or, to such counsel's
knowledge, any other person or entity required for the valid issuance, sale and
delivery of the Shares hereunder have been obtained (except that no opinion need
be expressed with respect to such authorizations, consents, approvals, licenses
or other orders as may be required by the Blue Sky or state securities laws of
any jurisdiction in connection with the sale of the Shares).
28.
(xi) To such counsel's knowledge, no consents or waivers from
the holders of the Company's capital stock are required to consummate the
transactions contemplated hereby other than such consents and waivers as have
been obtained.
(xii) The Company and North Star each had at all relevant
times the corporate power and authority to enter into and perform the North Star
Merger Agreement and to consummate the North Star Merger as consummated, and the
North Star Merger Agreement constitutes the valid and binding agreement of the
Company and North Star, enforceable against the Company and North Star in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the rights of creditors generally and by general equitable
principles, and except as rights to indemnification may be limited under federal
and state securities laws and the public policy underlying such laws.
(xiii) All corporate action each of the Company and North Star
required in connection with the authorization of the North Star Merger Agreement
and the consummation of the North Star Merger has been taken and all
authorizations, consents, approvals, licenses or other orders of any regulatory
body, administrative agency or other governmental body or, to such counsel's
knowledge, any other person or entity required for the consummation of the North
Star Merger have been timely obtained.
(xiv) No person has any dissenter's rights or appraisal rights
arising from or in connection with the North Star Merger.
(xv) Each Selling Shareholder has full legal right, power and
authority, and all consents and approvals required pursuant to any agreement,
indenture, or other instrument known to such counsel to which such Selling
Shareholder is a party or by which he or any of his property or assets are
bound, to enter into this Agreement and the Custody Agreement and to sell,
assign, transfer and deliver the Shares to be sold by him in the manner provided
in this Agreement (except that no opinion need be expressed as to permits,
consents and similar authorizations under the state securities or Blue Sky laws
of any jurisdiction in connection with the sale of the Shares).
(xvi) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by each Selling Shareholder, and is a legal,
valid and binding agreement of each Selling Shareholder, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the rights of creditors generally and by general equitable
principles, and except as rights to indemnification and
29.
contribution may be limited under federal and state securities laws and the
public policy underlying such laws.
(xvii) Upon delivery of certificates for the Shares to be
sold by each Selling Shareholder pursuant hereto and payment for such Shares as
provided herein, valid and marketable title to such Shares will pass to the
Underwriters, severally, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, restriction on transfer, claim or equity, provided
that the Underwriters are without notice of any defect in the title of such
Shares and take such Shares in good faith, without notice of any adverse claim.
(xviii) To such counsel's knowledge, (1) the Company and
North Star has obtained all material licenses, permits and other governmental
authorizations necessary to the conduct of its business as described in the
Prospectus; and (2) such licenses, permits and other governmental authorizations
are in full force and effect and the Company and North Star is in all material
respects complying therewith.
(xix) The form of certificate representing the Common Stock
and filed as an exhibit to the Registration Statement is in due and proper form
under California law.
(xx) The offer and sale of all securities of the Company
made within the last three years as set forth in Item 15 of the Registration
Statement were exempt from the registration requirements of the Act pursuant to
the provisions set forth in such Item and from the registration or qualification
requirements of all relevant state securities laws.
(xxi) The Shares have been approved for quotation on The
Nasdaq National Market, subject to official notice of issuance.
(xxii) The Company is not an "investment company" within the
meaning of the 1940 Act.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, counsel for
the Underwriters, representatives of the independent public accountants for the
Company, the Selling Shareholders, and you and your counsel, at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed and, although such counsel is not passing upon, and does not
assume responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (other
than as set forth in clause (v) above), on the basis of the foregoing, no facts
have come to such counsel's attention that lead them to believe either that the
Registration Statement at the time such Registration Statement became effective
contained an untrue statement of a material fact or omitted to
30.
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, or at the applicable
Closing Date contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that such
counsel need express no opinion with respect to the financial statements and
other financial and statistical data included in the Registration Statement or
the Prospectus.
In rendering the foregoing opinion, such counsel may rely on the following:
(A) as to matters involving the application of laws other
than the laws of the United States and the State of California in which they are
admitted, to the extent such counsel deems proper and to the extent specified in
such opinion, upon an opinion or opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel familiar with applicable
laws; and
(B) as to matters of fact, to the extent they deem proper, on
certificates of officers of the Company and the Selling Shareholders and
certificates or other written statements of officers or departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and certificates of the Company's transfer agent,
provided that copies of all such opinions, statements or certificates shall be
delivered to Underwriters' counsel, and, if written confirmation of the
Commission is not available at the time such opinion is rendered, upon the
current oral representations of members of the Commission's staff with respect
to the Registration Statement or any amendment or supplement thereto having
become effective and the lack of issuance of a stop order or institution of
proceedings for that purpose.
(h) At or prior to the First Closing Date, you shall have received the
written agreements described in Section 6(l) hereof.
(i) At the Closing Date, the Shares shall have been approved for
listing on The Nasdaq National Market, subject to official notice of issuance.
(j) The Company and the Selling Shareholders shall have furnished to
you such additional documents and certificates as you may reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and to counsel for the Underwriters. The Company
shall furnish you with such conformed copies of such opinions, certificates,
letters and other
31.
documents as you shall reasonably request for each of the Underwriters. If any
of the conditions specified in this Section 6 shall not have been fulfilled when
and as required by this Agreement, this Agreement and all obligations of the
Underwriters hereunder may be cancelled at, or at any time prior to, each
Closing Date, by you. Any such cancellation shall be without liability of the
Underwriters to the Company. Notice of such cancellation shall be given to the
Company in writing, or by telegraph or telephone and confirmed in writing.
8. Agreements of the Selling Shareholders. Each Selling Shareholder,
--------------------------------------
severally and not jointly, agrees with the Underwriters and the Company:
(a) To pay or cause to be paid his own underwriting discounts and
commissions.
(b) To take all reasonable actions in cooperation with the Company and
the Underwriters to cause the Registration Statement to become effective at the
earliest possible time, to do and perform all such things to be done and
performed relating to such Selling Shareholder under this Agreement prior to
each Closing Date, and to satisfy all conditions precedent to the delivery of
the Shares pursuant to this Agreement relating to such Selling Shareholder.
(c) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the securities or Blue Sky Laws of such jurisdictions as you
may reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification, provided, however that no Selling
-------- -------
Shareholder shall be required to take any action that would subject him to the
general service of process in any jurisdiction where he is not now so subject.
(d) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, to deliver to the Underwriters
prior to or at the First Closing Date a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
9. Indemnification.
---------------
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject
32.
under the Act, specifically including but not limited to losses, claims, damages
or liabilities related to negligence on the part of any Underwriter, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any breach of any warranty or covenant of the
Company herein contained or any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or in any
"blue sky" application or other document executed by the Company or based upon
any information furnished in writing by the Company, filed in any jurisdiction
in order to qualify any or all of the Shares under the securities laws thereof
("Blue Sky Application"), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements (with respect to the Prospectus, in the
light of the circumstances under which they were made) therein not misleading;
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, such preliminary prospectus or the Prospectus, or such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by you or by any
Underwriter through you expressly for use therein; provided, further, that the
Company will not be liable for any such losses, claims, damages, or liabilities
arising from the sale of the Shares to any person if a copy of the Prospectus
(as first filed pursuant to Rule 424(b)) or the Prospectus as amended or
supplemented by all amendments or supplements thereto which has been furnished
to the Underwriters shall not have been sent, mailed or given to such person, at
or prior to the written confirmation of the sale of such Shares to such person,
but only if and to the extent that such Prospectus, if so sent or delivered,
would have cured the defect giving rise to such losses, claims, damages or
liabilities. In addition to its other obligations under this Section 9(a), the
Company agrees that, as an interim measure during the pendency of any such
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 9(a), it will reimburse the Underwriters on a monthly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters for such expense and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. This
indemnity agreement shall be in addition to any liabilities that the Company may
otherwise have.
33.
(b) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company and the Selling Shareholders against any losses,
claims, damages or liabilities to which the Company or the Selling Shareholders
may become subject, under the Act specifically including but not limited to
losses, claims, damages or liabilities related to negligence on the part of the
Company and the Selling Shareholders, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
breach of any warranty or covenant by you herein contained or any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, such preliminary prospectus or the
Prospectus, or such amendment or supplement or any Blue Sky Application, in
reliance upon and in conformity with information furnished to the Company by
such Underwriter expressly for use therein; and will reimburse the Company and
the Selling Shareholders for any legal or other expenses reasonably incurred by
the Company or the Selling Shareholders in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to
their other obligations under this Section 9(b), the Underwriters agree that, as
an interim measure during the pendency of any such claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 9(b),
they will reimburse the Company and the Selling Shareholders on a monthly basis
for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding notwithstanding the absence of a judicial determination as to
the propriety and enforceability of their obligation to reimburse the Company or
the Selling Shareholders for such expense and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
This indemnity agreement shall be in addition to any liabilities which the
Underwriters may otherwise have.
The indemnity agreement in this Section 9(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer and
director or partner of the Company or of a Selling Shareholder and each person,
if any, who controls the Company or a Selling Shareholder within the meaning of
the Act to the same extent as such agreement applies to the Company or the
Selling Shareholder.
(c) The Selling Shareholders, severally and not jointly, shall
indemnify and hold harmless the Company and the Underwriters
34.
against any losses, claims, damages or liabilities to which the Company or the
Underwriters may become subject, under the Act specifically including but not
limited to losses, claims, damages or liabilities related to negligence on the
part of the Company or the Underwriters, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any breach of any warranty or covenant by the Selling Shareholders herein
contained or any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or any Blue Sky Application
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, such preliminary
prospectus or the Prospectus, or such amendment or supplement or any Blue Sky
Application, in reliance upon and in conformity with information furnished to
the Company by such Selling Shareholder expressly for use therein, it being
understood that for all purposes of this Agreement that the statements appearing
in any preliminary prospectus, the Prospectus or the Registration Statement
under the caption "Principal and Selling Shareholders" constitute the only
written information furnished to the Company by the Selling Shareholders (other
than the Insider Selling Share holders), for use in the Registration Statement
or the Prospectus or any preliminary prospectus (or any amendment or supplement
thereto); and will reimburse the Company and the Underwriters for any legal or
other expenses reasonably incurred by the Company or the Underwriters in
connection with investigating or defending any such loss, claim, damage,
liability or action. In addition to their other obligations under this Section
9(c), the Selling Shareholders agree that, as an interim measure during the
pendency of any such claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in this Section 9(c), they will reimburse the Company and
the Underwriters on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of their
obligation to reimburse the Company or the Underwriters for such expense and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement shall be in
addition to any liabilities which the Selling Shareholders may otherwise have.
The indemnity agreement in this Section 9(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer and
director of the Company and each person, if
35.
any, who controls the Company within the meaning of the Act to the same extent
as such agreement applies to the Company.
(d) Within ten days after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; no indemnification provided in Section
9(a), 9(b) or 9(c) shall be available to any party who shall fail to give notice
as provided in this Section 9(d) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party otherwise than under this Section 9 or
to the extent that it is not prejudiced as a proximate result of such failure.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it shall elect by written notice delivered to the indemnified party,
jointly with any other indemnifying party, similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized by the indemnifying party, (ii) the indemnified party shall have been
advised by such counsel that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party shall not in fact have employed counsel to assume the
defense of such action, in any of which events such fees and expenses shall be
borne by the indemnifying party. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Section 9(a), 9(b) and 9(c)
hereof, including the amounts of any
36.
requested reimbursement payments, the method of determining such amounts and the
basis on which such amounts shall be apportioned among the indemnifying parties,
shall be settled by arbitration conducted pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or a written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 9(a), 9(b) and 9(c)
hereof and will not resolve the ultimate propriety or enforce ability of the
obligation to indemnify for expenses that is created by the provisions of
Sections 9(a), 9(b) and 9(c).
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 9 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Selling Shareholders and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity incurred by the Company, the Selling Shareholders and one or more
of the Underwriters, as incurred, in such proportions that (i) the Underwriters
are responsible pro rata for that portion represented by the underwriting
discount appearing on the cover page of the Prospectus bears to the public
offering price (before deducting expenses) appearing thereon, and (ii) the
Company and the Selling Shareholders are responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation; provided,
however, that if the allocation provided above is not permitted by applicable
law, the Company, the Selling Shareholders and the Underwriters shall contribute
to the aggregate losses in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company, the Selling Shareholders and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, by the Selling Shareholders or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages or liabilities referred to
37.
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (f), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of this
Section 9(f), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same 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 a Selling Shareholder within the meaning of Section 15 of the Act
shall have the same rights to contribution as the Company or such Selling
Shareholder.
(g) The parties to this Agreement acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including without
limitation, the provisions of this Section 9, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 9
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the Act. The
parties are advised that federal or state public policy, as interpreted by the
courts in certain jurisdictions, may be contrary to certain of the provisions
of this Section 9, and the parties hereto hereby expressly waive and relinquish
any right or ability to assert such public policy as a defense to a claim under
this Section 9 and further agree not to attempt to assert any such defense.
In no event shall any of the Selling Shareholders, as such, be required
pursuant to the indemnity agreement under this Section 9 or otherwise under this
Agreement to pay a total amount in excess of the net amount received by such
Selling Shareholder hereunder for the sale of Shares to the Underwriters.
10. Representations and Agreements to Survive Delivery. The
--------------------------------------------------
representations, warranties, indemnities, agreements and other statements of the
Underwriters, the Selling Shareholders, the Company or its officers set forth in
or made pursuant to this Agreement will remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Company, the
Selling Shareholders or any Underwriter or controlling person, with respect to
an Underwriter or the Company and will survive delivery of and payment for the
Shares or termination of this Agreement.
38.
11. Effective Date of Agreement and Termination.
-------------------------------------------
(a) This Agreement shall become effective (i) if at the time of
execution of this Agreement the Registration Statement has not become effective,
at 10:00 A.M. eastern time on the first full business day following the
effectiveness of the Registration Statement, or (ii) if at the time of execution
of this Agreement, the Registration Statement has been declared effective, at
10:00 A.M. eastern time on the first full business day following the date of
execution of this Agreement; but this Agreement shall nevertheless become
effective at such earlier time after the Registration Statement becomes
effective as you may determine on and by notice to the Company or by release of
any of the Shares for sale to the public. For the purposes of this Section 11,
the Shares shall be deemed to have been so released upon the release for
publication of any newspaper advertisement relating to the Shares or upon the
release by you of telegrams or facsimile messages (i) advising the Underwriters
that the Shares are released for public offering, or (ii) offering the Shares
for sale to securities dealers, whichever may occur first. By giving notice
before the time this Agreement becomes effective, you, as the Representatives of
the several Underwriters, or the Company, may prevent this Agreement from
becoming effective, without liability of any party to any other party, except
that the Company shall remain obligated to pay costs and expenses to the extent
provided in Section 6(i) hereof.
(b) You may terminate this Agreement by notice to the Company and the
Selling Shareholders at any time at or prior to the Closing Date (i) in
accordance with the last paragraph of Section 7 of this Agreement; or (ii) if
there has been, since the respective dates as of which information is given in
the Registration Statement, any material adverse change, or any development
which might reasonably be viewed as resulting in a material adverse change in or
affecting the assets, properties, results of operation, financial condition or
business prospects of the Company, whether or not arising in the ordinary course
of business, including without limitation, any failure of refusal for any reason
of any Selling Shareholder to sell Shares in the Offering as contemplated in the
Registration Statement and any preliminary prospectus disseminated in connection
with the Offering; or (iii) if there has occurred or accelerated any outbreak of
hostilities or other national or international calamity or crisis or change in
economic or political conditions the effect of which on the financial markets of
the United States is such as to make it, in your judgment, impracticable to
market the Shares or enforce contracts for the sale of the Shares; or (iv) if
trading in any securities of the Company has been suspended by the Commission or
by the NASD or the Nasdaq National Market, or if trading generally on the New
York Stock Exchange or in the over-the-counter market has been suspended, or
limitations on prices for trading (other than limitations on hours or numbers of
days of trading) have been fixed, or maximum ranges for prices for securities
have been required, by such exchange or the NASD or by order of the
39.
Commission or any other governmental authority; or (v) if a banking moratorium
has been declared by federal or New York, California or Tennessee authorities;
or (vi) any federal or state statute, regulation, rule or order of any court or
other governmental authority has been enacted, published, decreed or otherwise
promulgated which in your reasonable opinion materially adversely affects or
will materially adversely affect the business or operations of the Company, or
(vii) any action has been taken by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in your reasonable
opinion has a material adverse effect on the securities markets in the United
States.
(c) If this Agreement is terminated pursuant to this Section 11, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 6(i). Notwithstanding any such termination,
the provisions of Section 9 shall remain in effect.
12. Default by One or More of the Underwriters.
------------------------------------------
(a) If any Underwriter shall default in its obligation to purchase the
Firm Shares which it has agreed to purchase hereunder, you shall use your best
efforts to arrange for you or another party or other parties to purchase such
Firm Shares on the terms contained herein. If within 36 hours after such
default by any Underwriter you do not arrange for the purchase of such Firm
Shares, then the Company or the Selling Shareholders shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to you to purchase such Firm Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Shareholders that you have so arranged for the purchase of such Firm
Shares, or the Company or the Selling Shareholders notifies you that it has so
arranged for the purchase of such Firm Shares, you or the Company or the Selling
Shareholders shall have the right to postpone the Closing Date for a period of
not more than seven days in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any persons substituted under this Section 11 with like effect as
if such person had originally been a party to this Agreement with respect to
such Firm Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Shareholders as provided in subsection (a) above, the
aggregate number of Firm Shares which remains unpurchased does not exceed
_______ [10% of Firm Shares] then the Company shall have the right to require
each
40.
nondefaulting Underwriter to purchase the Firm Shares which such Underwriter
agreed to purchase hereunder and, in addition, to require each nondefaulting
Underwriter to purchase its pro rata share (based on the number of Firm Shares
which such Underwriter agreed to purchase hereunder) of the Firm Shares of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Shareholders as provided in subsection (a) above, the
number of Firm Shares which remains unpurchased exceeds _________ [10% of Firm
Shares], or if the Company shall not exercise the right described in subsection
(b) above to require nondefaulting Underwriters to purchase Firm Shares of a
defaulting Underwriter or Underwriters, then the Company, the Selling
Shareholders or you shall have the right, by written notice within the next
twenty-four (24) hours, to terminate this Agreement, without liability on the
part of any nondefaulting Underwriter or the Company or the Selling Shareholders
except for the expenses to be borne by the Company and the Selling Shareholders
as provided in Section 6(i) hereof and the indemnity and contribution agreements
in Section 9 hereof, but nothing herein shall relieve a defaulting Underwriter
from liability for its default.
13. Default by the Company or the Selling Shareholders. If the Company or
--------------------------------------------------
the Selling Shareholders shall fail at the First Closing Date to sell and
deliver the respective aggregate number of Firm Shares that they are obligated
to sell, then this Agreement shall terminate without any liability on the part
of any nondefaulting party, except to the extent provided in Section 6(i) and
except that the provisions of Section 9 shall remain in effect. No action taken
pursuant to this Section shall relieve the Company or the Selling Shareholders
from liability, if any, in respect of its default.
14. Notices. Except as otherwise provided in this Agreement, (a) whenever
-------
notice is required by the provisions of this Agreement to be given to the
Company, such notice shall be in writing, addressed to the Company at 000 Xxxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, or by telecopier (confirmed in writing)
at (000) 000-0000, Attention: Xxxxxxx X. Xxxxxxx, with a copy to Manatt, Xxxxxx
& Xxxxxxxx, LLP at 00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
or by telecopier at (000) 000-0000, Attention: Xxxx X. Xxxxxx, (b) whenever
notice is required by the provisions of this Agreement to be given to the
Selling Shareholders, such notice shall be in writing addressed to the Selling
Shareholders in care of Keystone Automotive Industries, Inc., 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, or by telecopier (confirmed in writing) at
(000) 000-0000, with a copy to Manatt, Xxxxxx & Xxxxxxxx, LLP at 00000 Xxxx
Xxxxxxx Xxxxxxxxx, Xxx
00.
Xxxxxxx, Xxxxxxxxxx 00000, or by a telecopier at (000) 000-0000, Attention: Xxxx
X. Xxxxxx, and (c) whenever notice is required by the provisions of this
Agreement to be given to the several Underwriters, such notice shall be in
writing addressed to the Underwriters in care of Xxxxxx Xxxxxx & Company, Inc.,
00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, or by telecopier at (000) 000-0000,
Attention: Xxxxxxx X. Xxxxx, Xx., with a copy to Xxxx & Xxxxx Professional
Corporation at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, or by telecopier at (000) 000-0000, Attention: Xxxx X. Short, Esq.
15. Parties. This Agreement is made solely for the benefit of the several
-------
Underwriters, the Company, the Selling Shareholders, any officer, director or
controlling person referred to in Section 9 hereof, and their respective
successors and assigns, and no other person shall acquire or have any right by
virtue of this Agreement. The term "successors and assigns," as used in this
Agreement, shall not include any purchaser of any of the Shares from any of the
Underwriters merely by reason of such purchase. In all dealings with the
Company and the Selling Shareholders under this Agreement, you shall act on
behalf of each of the several Underwriters, and the Company and the Selling
Shareholders shall be entitled to act and rely upon any statement, request,
notice or agreement made or given by you jointly or by Xxxxxx Xxxxxx & Company,
Inc. on behalf of you.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Tennessee, without giving effect to the
choice of law or conflict of laws principles thereof.
17. Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
42.
Please confirm, by signing and returning to us counterparts of this
Agreement, that you are acting on behalf of yourselves and the several
Underwriters and that the foregoing correctly sets forth the Agreement among the
Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
KEYSTONE AUTOMOTIVE
INDUSTRIES, INC.
By:
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive
Officer
THE SELLING SHAREHOLDERS
By:
---------------------------
Xxxxxxx X. Xxxxxxx, as
Attorney-in-Fact
By:
---------------------------
Xxxxxx X. Xxxxxx, as
Attorney-in-Fact
Confirmed and accepted as of
the date first above mentioned
XXXXXX XXXXXX & COMPANY, INC.
X.X. XXXXXXX & SONS, INC.
XXXXXXX, XXXXXX & CO.
as Representatives of the
several Underwriters named in
Schedule II hereto
By: XXXXXX XXXXXX & COMPANY, INC.
By:
-----------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: First Vice President
43.
SCHEDULE I
Number of Number of
Firm Shares Option Shares
Name of Selling Shareholder to be Sold to be Sold
--------------------------- ----------- -------------
TOTAL...........................
=========== =============
44.
SCHEDULE II
Number of
Firm Shares
Name of Underwriter To be Purchased
------------------- ---------------
Xxxxxx Xxxxxx & Co.................................
X.X. Xxxxxxx & Sons, Inc...........................
Xxxxxxx, Xxxxxx & Co..............................
---------------
TOTAL..........................................
===============
45.
