KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
2,700,000 Shares of Common Stock
UNDERWRITING AGREEMENT
June 20, 1996
XXXXXX XXXXXX & COMPANY, 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 (the "Selling Shareholders") propose to sell to the several underwriters
named in Schedule II hereto (collectively, the "Underwriters") an aggregate of
2,700,000 shares (the "Firm Shares") of the Company's common stock (the "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 Selling Shareholders propose to grant to the Underwriters an
option to purchase up to an additional 405,000 shares (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 several 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 Representatives and take all actions on behalf of the
Representatives referenced in this Agreement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
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 accordance with the provisions of the
Securities Act of 1933, as amended, and the
Exhibit 10.33
rules and regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-1 (No. 333-3994), including a preliminary
prospectus, subject to completion, relating to the Shares. The registration
statement, as amended at the time it becomes effective, 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 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 8 hereof) that the statements
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appearing in any preliminary prospectus, the Prospectus or the Registration
Statement in the first, second and sixth paragraphs and the penultimate sentence
of the eighth 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 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 financial condition, the results of
the operations and 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 subsidiary of the Company is Keystone Warehouse
Distributors, Inc., a California corporation (the "Subsidiary"). The Subsidiary
is not a "significant" subsidiary as defined under the Act, and has no assets,
liabilities, employees or operations. The Company has been duly organized and
is validly existing as a corporation in good standing under the laws of
California, 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 to authorize the offering of the Shares and
to execute, deliver and perform this Agreement and to issue, sell and deliver
the Shares to be sold by it, and 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 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
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operations of the Company. Complete and correct copies of the restated articles
of incorporation and bylaws of the Company 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
the Subsidiary, the Company does not own, and at the date of the consummation of
the sale of the Firm Shares will not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity. 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 pursuant to the Company's restated articles of incorporation,
bylaws or other governing documents or any agreement or other instrument to
which the Company is a party or by which it 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.
(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 the Subsidiary,
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 the Subsidiary 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 the Subsidiary, 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 any issuance or grant
of options, warrants or rights to purchase the capital stock of the Company, 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) 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
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the restated articles of incorporation or bylaws of the Company, or any material
agreement, indenture or other instrument, to which the Company is a party or by
which it is bound, or to which its 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 bylaws of
the Company or the Subsidiary, or any agreement, indenture or other instrument
to which the Company or the Subsidiary is a party or by which either of them is
bound, or to which either of their properties is 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 the
Subsidiary 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. 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
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 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, and any real property and buildings held under
lease by the Company 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 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
necessary to the conduct of its business (as presently conducted and as
described in the Prospectus) are in good repair (reasonable wear and tear
excepted)
5.
insured in accordance with industry practice and suitable for their uses.
(k) Neither the Company nor the Subsidiary nor any other person or
entity for whom the Company or the Subsidiary 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 earnings, cash flow, business affairs or business prospects of
the Company (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) The Company has not received any communication (written or oral),
whether from a governmental authority, citizens' group, employee or otherwise,
alleging that the Company or any other person or entity for whom the Company is
or may be liable is not in full compliance with any 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 any other person or
entity for whom the Company 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 to the Company's knowledge, any other person or entity whose liability for
any Environmental Claim the Company has retained or assumed either contractually
or by operation of law.
6.
(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 with respect
to property owned, leased or operated by or for the Company, now or in the past,
or against any person or entity whose liability for any Environmental Claim the
Company 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, the Company has not (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, 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 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 and to the Company's knowledge, no union organizing
activities taking place. No labor dispute involving the employees of the
Company 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 which could singly or in the aggregate have a Material Adverse Effect.
(p) There is no legal or governmental proceeding to which the Company
is a party or to which any of its property is subject or which is pending or, to
the Company's knowledge, threatened or contemplated against the Company which
could result in any Material Adverse Effect or which is required to be disclosed
in the Registration Statement or the Prospectus.
(q) The Company is not in violation of any law, ordinance, rule,
administrative regulation or decree known to the Company of any court or
governmental agency or body having
7.
jurisdiction over the Company or any of its 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 the Subsidiary 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 the Subsidiary has any knowledge of
any tax deficiency which has been or might have a Material Adverse Effect.
(t) (A) Neither the Company nor any existing officers or directors
has at any time and (B) no employee or agent acting on behalf of the Company 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 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
sells or from which the Company buys products for the purpose of influencing
such agent or person to buy products from or sell products to the Company, 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 any of the
several Underwriters may be responsible.
(v) The Company owns or possesses adequate rights to use all
trademarks, service marks, trade names and copyrights necessary for the conduct
of its business as described in the Prospectus and has taken reasonable security
measures to protect the secrecy, confidentiality and value of its 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 its business as described in the Prospectus. The Company
has not received any notice of
8.
infringement of or conflict with, and the Company, to the best of its knowledge,
is not 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 to or for the benefit of any affiliate of the
Company, any of the officers or directors of the Company, 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 maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary 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.
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.
(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
9.
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, 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 Custody Agreement in the form previously furnished to you (the
"Custody Agreement") and the Power of Attorney in the form previously furnished
to you (the "Power of Attorney") 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.
10.
(v) This Agreement, the Power of Attorney 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, 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.
(b) Xxxxxx X. Xxxxxx XX ("Xxxxxx") further represents and warrants
to, and agrees 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.
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 $8.37 (the "Purchase
Price"), an aggregate of 1,500,000 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) Subject to the terms and conditions and upon the basis of the
representations and warranties herein set forth, (i) the Selling Shareholders
agree, severally and not jointly, to sell to the Underwriters up to 405,000
Option Shares at the Purchase Price, and (ii) 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 an aggregate of 405,000
11.
Option Shares from 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. If any Option Shares are to be purchased, each Underwriter, severally
and not jointly, agrees to purchase from the Selling Shareholders, in proportion
to the number of Firm Shares purchased from such Selling Shareholder, 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 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.
4. DELIVERY OF AND PAYMENT FOR SHARES. Delivery of certificates for the
Firm Shares to be purchased by the Underwriters 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.
Xxxxxx X. Xxxxxx XX, with respect to the Shares purchased from such Selling
Shareholder as custodian for each of the Selling Shareholders (the "Custodian"),
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 Custodian), 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
Custodian 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 Custodian. (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.")
12.
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 Agreement is
a further condition to the obligations of each Underwriter.
5. 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,
13.
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 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
14.
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.
(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 270 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 and warrants
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 270 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. The Company shall file with the Commission a Report or Reports
of Sales of Securities and Use of Proceeds therefrom in accordance with Rule 463
of the Act.
(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
15.
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 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 principles 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
16.
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 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
of the Company's officers, directors and shareholders (other than the Company's
Employee Stock Ownership Plan) 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 270 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 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.
17.
(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.
(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 any time during the 25-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company 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) Commencing as of the First Closing Date, 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.
6. 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
18.
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 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, 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, 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
19.
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 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 Shareholders
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:
20.
(i) in their opinion, the consolidated financial statements
included in the Registration Statement and covered by their report 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 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 revenue, income before income
taxes, net income and net income per share for the five fiscal years ended March
31, 1996, included in the Prospectus under the caption "Prospectus
Summary-Summary Financial 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 specified by the Underwriters from that set
forth in the consolidated balance sheet at March 31, 1996, included in the
Prospectus, except as described in the Prospectus or such letter; or
(D) for the period from March 31, 1996, 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 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 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
21.
(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,
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 with the accounting records of the Company 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
opinion (addressed to the Underwriters) of Manatt, Xxxxxx & Xxxxxxxx, LLP,
counsel for the Company and the Selling Shareholders, 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:
22.
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of
California, 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 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 pursuant to the Company's
restated articles of incorporation, bylaws or any agreement or other instrument
known to such counsel to which the Company is a party or by which it 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, the Company has no subsidiaries other than the
Subsidiary.
(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 restated 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
Shareholder or any of
23.
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 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 the restated
articles of incorporation of the Company or, to such counsel's knowledge, in
material violation of or in material default under the bylaws of the Company, or
any material agreement, indenture or other instrument known to such counsel, to
which the Company is a party or by which it is bound or to which its 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 "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 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 certificates, permits or other authorizations from
governmental regulatory officials or bodies required to be obtained or
maintained by
24.
the Company 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 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 or may be
contrary to public policy.
(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 have 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).
(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.
25.
(xii) 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, the Power of Attorney 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).
(xiii) This Agreement, the Power of Attorney 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
contribution may be limited under federal and state securities laws and the
public policy underlying such laws.
(xiv) 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.
(xv) To such counsel's knowledge, (1) the Company 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 is in all material respects complying therewith.
(xvi) 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.
(xvii) 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.
(xviii) The Shares have been approved for quotation on The
Nasdaq National Market, subject to official notice of issuance.
26.
(xix) 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 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.
27.
(h) At or prior to the First Closing Date, you shall have received
the written agreements described in Section 5(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 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.
7. 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
28.
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).
8. 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 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
29.
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
8(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 8(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.
(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 8(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 8(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
30.
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 8(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 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 Xxxxxx), 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 8(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
31.
or based upon any statement or omission, or any alleged statement or omission,
described in this Section 8(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 8(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 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
8(a), 8(b) or 8(c) shall be available to any party who shall fail to give notice
as provided in this Section 8(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 8 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
32.
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 8(a), 8(b) and 8(c)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the 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 8(a), 8(b) and 8(c) hereof and will not resolve
the ultimate propriety or enforceability of the obligation to indemnify for
expenses that is created by the provisions of Sections 8(a), 8(b) and 8(c).
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 8 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
33.
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 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 8(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 8, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the Act. 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 8, 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 8 and further agree not to attempt to assert any such defense.
34.
In no event shall any of the Selling Shareholders, as such, be required
pursuant to the indemnity agreement under this Section 8 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.
9. 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.
10. 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 10,
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 5(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 6 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;
35.
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 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 10, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 5(i). Notwithstanding any such termination,
the provisions of Section 8 shall remain in effect.
11. 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
36.
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
270,000 then the Company shall have the right to require each 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 270,000, 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
5(i) hereof and the indemnity and contribution agreements in Section 8 hereof,
but nothing herein shall relieve a defaulting Underwriter from liability for its
default.
12. 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 5(i) and
except that the provisions of Section 8 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.
13. 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,
37.
addressed to the Company at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, or
by telecopier (confirmed in writing) at ____________________, 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 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 (310)
201-4746, Attention: Xxxxx Xxxxxxxx, Esq.
14. 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 8 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.
15. 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.
16. 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.
38.
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:/S/ XXXXXX X. XXXXXX XX
---------------------------
Name: Xxxxxx X. Xxxxxx XX
Title: Chief Executive
Officer
THE SELLING SHAREHOLDERS
By:/S/ XXXXXX X. XXXXXX XX
---------------------------
as Attorney in Fact
Confirmed and accepted as of
the date first above mentioned
XXXXXX XXXXXX & COMPANY, INC.
XXXXXXX, XXXXXX & CO.
as Representatives of the
several Underwriters named in
Schedule II hereto
By: XXXXXX XXXXXX & COMPANY, INC.
By:/S/ XXXXXXX X. XXXXX, XX.
-------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: First Vice President
39.
SCHEDULE I
Number of
Firm Shares
Name of Selling Shareholder To be Sold
--------------------------- ----------
Xxxxxx X. Xxxxxx XX 500,000
JFJ Partners Ltd. 604,699
Xxxxxxxx Xxxxxx 22,301
Xxxxxx X. Xxxxxx 33,454
Xxxxxx X. Xxxxxx 28,992
Xxxxx Xxxxxx 10,554
---------
TOTAL . . . . . . . . . . . . . . . 1,200,000
---------
---------
40.
SCHEDULE II
Number of
Firm Shares
Name of Underwriter To be Purchased
------------------- ---------------
Xxxxxx Xxxxxx & Co.. . . . . . . . . . . . . . . . . . . . . . . . 660,000
Xxxxxxx, Xxxxxx & Co.. . . . . . . . . . . . . . . . . . . . . . . 660,000
CS First Boston Corporation. . . . . . . . . . . . . . . . . . . . 60,000
Xxxxxx, Read & Co. Inc.. . . . . . . . . . . . . . . . . . . . . . 60,000
X.X. Xxxxxxx & Sons, Inc.. . . . . . . . . . . . . . . . . . . . . 60,000
Xxxxxx Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . 60,000
Xxxxxxxxxx Securities. . . . . . . . . . . . . . . . . . . . . . . 60,000
Xxxxxxxxxxx & Co., Inc.. . . . . . . . . . . . . . . . . . . . . . 60,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . 60,000
Prudential Securities Incorporated . . . . . . . . . . . . . . . . 60,000
Xxxxx Xxxxxx Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Advest Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxxxx X. Xxxxx & Co. Incorporated . . . . . . . . . . . . . . . . 30,000
Xxxxxxx Xxxxx & Company, L.L.C.. . . . . . . . . . . . . . . . . . 30,000
X.X. Xxxxxxxx & Co.. . . . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxxx Xxxxxx, Xxxxxx Securities, Inc.. . . . . . . . . . . . . . . 30,000
Xxxxx & Company. . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxx Xxxxxxxx Incorporated . . . . . . . . . . . . . . . . . . . . 30,000
Xxxxxxxx & Xxxxxxxx, Incorporated. . . . . . . . . . . . . . . . . 30,000
Everen Securities, Inc.. . . . . . . . . . . . . . . . . . . . . . 30,000
First of Michigan Corporation. . . . . . . . . . . . . . . . . . . 30,000
Xxxxxx Xxxx Incorporated . . . . . . . . . . . . . . . . . . . . . 30,000
Interstate/Xxxxxxx Xxxx Corporation. . . . . . . . . . . . . . . . 30,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated . . . . . . . . . . . . . . . 30,000
XxXxxxxx & Company Securities, Inc.. . . . . . . . . . . . . . . . 30,000
The Ohio Company . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Principal Financial Securities, Inc. . . . . . . . . . . . . . . . 30,000
Xxxxxxxx Xxxxxx Refsnes, Inc.. . . . . . . . . . . . . . . . . . . 30,000
Xxxxxxx Xxxxx & Associates, Inc. . . . . . . . . . . . . . . . . . 30,000
The Xxxxxxxx-Xxxxxxxx Company, Inc.. . . . . . . . . . . . . . . . 30,000
Xxxxx & Xxxxxxxxxxxx, Inc. . . . . . . . . . . . . . . . . . . . . 30,000
The Xxxxxxx Companies Incorporated . . . . . . . . . . . . . . . . 30,000
Xxxxxxxx Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxxxx, Xxxxxxxx & Company, Incorporated . . . . . . . . . . . . . 30,000
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxxxx Xxxxxxx Incorporated. . . . . . . . . . . . . . . . . . . . 30,000
Vector Securities International, Inc.. . . . . . . . . . . . . . . 30,000
Wedbush Xxxxxx Securities Inc. . . . . . . . . . . . . . . . . . . 30,000
Wheat First Butcher Singer . . . . . . . . . . . . . . . . . . . . 30,000
---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700,000
---------
---------
41.
AMENDMENT TO UNDERWRITING AGREEMENT
July _____, 1996
XXXXXX XXXXXX & COMPANY, INC.
XXXXXXX, XXXXXX & CO.
As Representatives of the
Several Underwriters
named on Schedule I hereto
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated June 20, 1996, by and
among Xxxxxx Xxxxxx & Company, Inc. and Xxxxxxx, Xxxxxx & Co. as Representatives
of the several Underwriters named on Schedule II to the Underwriting Agreement
(as amended by paragraph number 3(b), below), and Keystone Automotive
Industries, Inc., a California corporation. The Underwriting Agreement is
amended as set forth herein. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Underwriting Agreement.
1. The second sentence of the second paragraph of Section 3 of the
Underwriting Agreement is hereby amended to read in its entirety as follows:
If any Option Shares are to be purchased, each Underwriter, severally
and not jointly, agrees to purchase from Xxxxxx X. Xxxxxx XX half of the
aggregate number of Option Shares (subject to adjustments to eliminate
fractional shares as you may determine) and from the remaining Selling
Shareholders, in proportion to the number of Firm Shares purchased from
such Selling Shareholder, the remaining half of 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 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.
2. The Underwriting Agreement, as amended, hereby, shall remain in full
force and effect.
3. This Amendment to the Underwriting Agreement shall be construed in
accordance with and governed by the laws of
the State of California as applied to contracts made and performed within the
State of California without regard to principles of conflicts of laws.
4. This Amendment to the Underwriting Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm the foregoing correctly sets forth the agreement
between each of the several Underwriters and the Company.
Very truly yours,
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By: /s/ Xx X. Xxxxx
---------------------------------
Xx X. Xxxxx
Executive Vice President, Secretary
and Director
Confirmed as of the date
first above mentioned:
XXXXXX XXXXXX & COMPANY, INC.
XXXXXXX, XXXXXX & CO.
Acting on behalf of themselves
and as Representatives of the
other several Underwriters
named in Schedule I attached
hereto.
XXXXXX XXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Xxxxxxx X. Xxxxx, Xx.
First Vice President
XXXXXXX, XXXXXX & CO.
by: /s/ Xxxxxxx X. XxXxxx
--------------------------
Xxxxxxx X. XxXxxx
Partner
