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EXHIBIT 1.1
700,000 Shares*
PACIFIC SUNWEAR OF CALIFORNIA, INC.
Common Stock
UNDERWRITING AGREEMENT
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June __, 1997
XXXXXXXXX, XXXXXXXX & COMPANY LLC
ALEX. XXXXX & SONS INCORPORATED
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
c/x Xxxxxxxxx, Xxxxxxxx & Company LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies/Gentlemen:
Pacific Sunwear of California, Inc., a California corporation (the
"Company"), addresses you as the Underwriters (herein collectively called the
"Underwriters") and hereby confirms its agreement with you as follows:
1. Description of Shares. The Company proposes to issue and sell
700,000 shares of its authorized and unissued Common Stock, $0.01 par value
per share (the "Firm Shares") to the several Underwriters. The Company also
proposes to grant to the Underwriters an option to purchase up to 105,000
additional shares of the Company's Common Stock, $0.01 par value per share (the
"Option Shares"), as provided in Section 7 hereof. As used in this Agreement,
the term "Shares" shall include the Firm Shares and the Option Shares. All
shares of Common Stock, $0.01 par value per share, of the Company to be
outstanding after giving effect to the sales contemplated hereby, including the
Shares, are hereinafter referred to as "Common Stock."
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* Plus an option to purchase up to 105,000 additional shares
from the Company to cover over-allotments.
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2. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to and agrees with each Underwriter that:
(a) A registration statement on Form S-3 (File No. 333-______) with
respect to the Shares, including a prospectus subject to completion, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the applicable Rules and Regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act and has been filed with the Commission; such
amendments to such registration statement, such amended prospectuses subject to
completion and such abbreviated registration statements pursuant to Rule 462(b)
of the Rules and Regulations as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission; and the Company will
file such additional amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
as may hereafter be required. Copies of such registration statement and
amendments, of each related prospectus subject to completion (the "Preliminary
Prospectuses"), including all documents incorporated by reference therein, and
of any abbreviated registration statement have been delivered to you. The
Company and the transactions contemplated by this Agreement meet the
requirements for using Form S-3 under the Act.
If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare and
promptly file with the Commission the information omitted from the registration
statement pursuant to Rule 430A(a) or, if Xxxxxxxxx, Xxxxxxxx & Company LLC, on
behalf of the several Underwriters, shall agree to the utilization of Rule 434
of the Rules and Regulations, the information required to be included in any
term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and
Regulations pursuant to subparagraph (1), (4) or (7) of Rule 424(b) of the Rules
and Regulations or as part of a post-effective amendment to the registration
statement (including a final form of prospectus). If the registration statement
relating to the Shares has not been declared effective under the Act by the
Commission, the Company will prepare and promptly file a further amendment to
the registration statement, including a final form of prospectus, or, if
Xxxxxxxxx, Xxxxxxxx & Company LLC, on behalf of the several Underwriters, shall
agree to the utilization of Rule 434 of the Rules and Regulations, the
information required to be included in any term sheet filed pursuant to Rule
434(b) or (c), as applicable of the Rules and Regulations. The term
"Registration Statement" as used in this Agreement shall mean such registration
statement, including financial statements, schedules and exhibits in the form in
which it became or becomes, as the case may be, effective (including, if the
Company omitted information from the registration statement pursuant to Rule
430A(a) or files a term
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sheet pursuant to Rule 434 of the Rules and Regulations, the information deemed
to be a part of the registration statement at the time it became effective
pursuant to Rule 430A(b) or Rule 434(d) of the Rules and Regulations) and, in
the event of any amendment thereto or the filing of any abbreviated registration
statement pursuant to Rule 462(b) of the Rules and Regulations relating thereto
after the effective date of such registration statement, shall also mean (from
and after the effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration statement as so amended, together with
any such abbreviated registration statement. The term "Prospectus" as used in
this Agreement shall mean the prospectus relating to the Shares as included in
such Registration Statement at the time it becomes effective (including, if the
Company omitted information from the Registration Statement pursuant to Rule
430A(a) of the Rules and Regulations, the information deemed to be a part of the
Registration Statement at the time it became effective pursuant to Rule 430A(b)
of the Rules and Regulations); provided, however, that if in reliance on Rule
434 of the Rules and Regulations and with the consent of Xxxxxxxxx, Xxxxxxxx &
Company LLC, on behalf of the several Underwriters, the Company shall have
provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c), as
applicable, prior to the time that a confirmation is sent or given for purposes
of Section 2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus
subject to completion" (as defined in Rule 434(g) of the Rules and Regulations)
last provided to the Underwriters by the Company and circulated by the
Underwriters to all prospective purchasers of the Shares (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Rules and Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of the
Shares that differs from the Prospectus referred to in the immediately preceding
sentence (whether or not such revised prospectus is required to be filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use. If in reliance on Rule 434
of the Rules and Regulations and with the consent of Xxxxxxxxx, Xxxxxxxx &
Company LLC, on behalf of the several Underwriters, the Company shall have
provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c), as
applicable, prior to the time that a confirmation is sent or given for purposes
of Section 2(10)(a) of the Act, the Prospectus and the term sheet, together,
will not be materially different from the prospectus in the Registration
Statement. Any reference to the Registration Statement or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
Registration Statement or the Prospectus, as the case may be, and any reference
to any amendment or supplement to the Registration Statement or the Prospectus
shall be deemed to refer
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to and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used in this Agreement, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or instituted proceedings for that
purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and at the time the
Registration Statement became or becomes, as the case may be, effective and at
all times subsequent thereto up to and on the Closing Date (hereinafter defined)
and on any later date on which Option Shares are to be purchased, (i) the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter through you specifically for inclusion therein.
The Incorporated Documents heretofore filed, when they were filed (or,
if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission thereunder;
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder; no such document when it was filed
(or, if an
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amendment with respect to any such document was filed, when such amendment was
filed), contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and no such further amendment will 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.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
with full power and authority (corporate and other) to own, lease and operate
its properties and conduct its business as described in the Prospectus; the
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of properties or
the conduct of its business requires such qualification except where the failure
to be so qualified or be in good standing would not have a material adverse
effect on the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company; no proceeding has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification; the Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities which are material to the conduct of its business, all of
which are valid and in full force and effect; the Company is not in violation of
its charter or bylaws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any material
bond, debenture, note or other evidence of indebtedness or in any material
lease, contract, indenture, mortgage, loan agreement, joint venture or other
agreement or instrument to which the Company is a party or by which it or any of
its properties is bound; the Company is not in material violation of any law,
order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its properties of which it has knowledge. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity.
(d) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and is a valid
and binding agreement on the part of the Company, enforceable in accordance with
its terms, except as rights to indemnity and contribution hereunder may be
limited by applicable law or general equitable principles and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
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reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally, or by general equitable principles; the performance
of this Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and provisions of
or constitute a default under, (i) any material indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any material lease, contract or other agreement or instrument
to which the Company is a party or by which the property of the Company is
bound, (ii) the charter or bylaws of the Company, or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or over the properties of the Company. No consent, approval,
authorization or order of or qualification with any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or its properties is required for the execution and delivery of this
Agreement and the consummation by the Company of the transactions herein
contemplated, except such as may be required under the Act, the Exchange Act or
under state or other securities or Blue Sky laws, all of which requirements have
been satisfied in all material respects.
(e) There is not any pending or, to the Company's knowledge, threatened
action, suit, claim or proceeding against the Company or any of its officers or
any of their respective properties, assets or rights before any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its officers or any of their respective
properties or otherwise which (i) could reasonably be expected to result in any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or which could
reasonably be expected to materially and adversely affect their properties,
assets or rights, or (ii) could reasonably be expected to prevent consummation
of the transactions contemplated hereby or (iii) is required to be disclosed in
the Registration Statement or Prospectus and is not so disclosed; and there are
no contracts or documents of the Company that are required to be described or
referred to in the Registration Statement, Prospectus or any Incorporated
Document or to be filed as an exhibit to the Registration Statement or any
Incorporated Document by the Act or the Rules and Regulations or by the Exchange
Act or the rules and regulations of the Commission thereunder which have not
been accurately described in all material respects in the Registration Statement
or Prospectus or any Incorporated Document or filed as exhibits to the
Registration Statement or any Incorporated Document. The contracts so described
in the Prospectus are in full force and effect on the date hereof; neither the
Company, nor to the best
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of the Company's knowledge, any other party is in breach of or default under any
of such contracts.
(f) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding capital
stock of the Company conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus (and
such statements correctly state the substance of the instruments defining the
capitalization of the Company); the Firm Shares and the Option Shares have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment therefor
in accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable; and no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders exists with respect to any of the Firm Shares or Option Shares or
the issuance and sale thereof other than those described in the Registration
Statement, those that have been expressly waived prior to the date hereof and
those that will automatically expire upon the consummation of the transactions
contemplated on the Closing Date. No further approval or authorization of any
shareholder, the Board of Directors or others is required for the issuance and
sale or transfer of the Shares except as may be required under the Act, the
Exchange Act or under state or other securities or Blue Sky laws. Except as
disclosed in or contemplated by the Prospectus (including any warrants to
purchase Common Stock that are not at the date hereof exercised) and the
financial statements of the Company, and the related notes thereto, included or
incorporated by reference in the Prospectus, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth or incorporated by reference in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(g) Deloitte & Touche LLP, which has examined the financial statements,
together with the related schedules and notes, of the Company as of February 4,
1996 and January 29, 1995 and for each of the years in the three years ended
February 4, 1996 filed with the Commission as a part of the Registration
Statement, which, except for the schedules, are included in the
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Prospectus, are to the best of the Company's knowledge, independent accountants
within the meaning of the Act and the Rules and Regulations; the audited
financial statements of the Company, together with the related schedules and
notes, and the unaudited financial information, forming part of the Registration
Statement and Prospectus, fairly present the financial position and the results
of operations of the Company at the respective dates and for the respective
periods to which they apply; and all audited financial statements, together with
the related schedules and notes, and the unaudited financial information, filed
with the Commission as part of or incorporated by reference into the
Registration Statement have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
except as may be otherwise stated therein. The selected and summary financial
and statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
audited financial statements presented therein. No other financial statements or
schedules are required under the Act or the Rules and Regulations to be included
or incorporated by reference in the Registration Statement.
(h) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, and except as may be otherwise
stated in the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the business, properties or assets described or
referred to in the Registration Statement, or the results of operations,
condition (financial or otherwise), earnings, operations, business or business
prospects, of the Company, (ii) any transaction that is material to the Company,
except transactions entered into in the ordinary course of business, (iii) any
obligation that is material to the Company, direct or contingent, incurred by
the Company, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the Company,
which is material to the Company, (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or (vi) any loss or
damage (whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company.
(i) Except as set forth in the Prospectus and any Incorporated
Document, (i) the Company has good and marketable title to all properties and
material assets described in the Prospectus as owned by it, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest
other than such as are not material to the business of the Company, (ii) the
agreements to which the Company is a party described in the Prospectus and any
Incorporated Document are valid agreements, enforceable by the Company, except
as the enforcement
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thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles and, to its knowledge, the other contracting party
or parties thereto are not in material breach or material default under any of
such agreements, and (iii) the Company has valid and enforceable leases for the
properties described in the Prospectus and any Incorporated Document as leased
by them except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
(j) The Company has filed all necessary federal and state income and
franchise tax returns and have paid all taxes shown thereon as due, and there is
no tax deficiency that has been or, to the Company's knowledge, might be
asserted against the Company that could reasonably be expected to have a
material adverse effect on the Company's condition (financial or otherwise),
earnings, operations, business or business prospects; to the Company's
knowledge, all tax liabilities are adequately provided for on the books of the
Company.
(k) The Company maintains insurance of the types and in the amounts
believed by the Company adequate for its business and consistent with insurance
coverage maintained by similar companies in similar businesses, including but
not limited to, insurance covering real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
(l) To the best of the Company's knowledge, no labor disturbance by the
employees of the Company exists or is imminent; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
principal suppliers or manufacturers of its private label products that could
reasonably be expected to result in any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company. No collective bargaining agreement exists with any of the
Company's employees and, to the Company's knowledge, no such agreement is
imminent.
(m) The Company owns or possesses adequate rights to use all material
patents, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names and copyrights described or referred to in the Prospectus and
any Incorporated Document as owned or used by it or which are necessary for the
conduct of its businesses as described in the Prospectus and any Incorporated
Document; the Company has not received any notice of, and has no knowledge of,
any infringement of or conflict with asserted rights of others with respect to
any
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patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(n) The Company has not been advised, and has no reason to believe,
that it is not conducting business in compliance with all of the laws, rules and
regulations of the jurisdictions in which it is conducting business except where
failure to be so in compliance would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company.
(o) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on the Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act of delisting the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration or
listing.
(p) The Company has been advised concerning the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules and regulations thereunder,
and intends in the future to conduct, its affairs in such a manner as to ensure
that it will not become an "investment company" within the meaning of the 1940
Act and such rules and regulations. The Company in the past has not conducted
its affairs in such a manner as to have become such an "investment company".
(q) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date or on any date on which Option Shares are to
be purchased, as the case may be, and (ii) completion of the distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares other than the Prospectus, the Registration Statement and the other
materials permitted by the Act.
(r) The Company has not at any time during the last five years (i) made
any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(s) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be
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reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(t) Each officer and director of the Company and holders holding in the
aggregate ____________ or more shares of the Company's Common Stock has agreed
that such person will not, for a period of 90 days from the date that the
Registration Statement is declared effective by the Commission (the "Lock-Up
Period"), offer to sell, contract to sell, or otherwise sell, dispose of, loan,
pledge or grant any rights with respect to (collectively, a "Disposition") any
shares of Common Stock, any options or warrants to purchase any shares of Common
Stock or any securities convertible into or exchangeable for shares of Common
Stock (collectively, "Securities") now owned or hereafter acquired directly by
such person or with respect to which such person has or hereafter acquires the
power of disposition, otherwise than (i) as a bona fide gift or gifts, provided
the donee or donees thereof agree in writing to be bound by this restriction,
(ii) as a distribution to partners or shareholders of such person, provided that
the distributees thereof agree in writing to be bound by the terms of this
restriction or (iii) with the prior written consent of Xxxxxxxxx, Xxxxxxxx &
Company LLC. The foregoing restriction has been expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-Up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person has also agreed and consented to the entry
of stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by such person except in compliance with this
restriction. The Company has provided to counsel for the Underwriters a complete
and accurate list of all securityholders of the Company and the number and type
of securities held by each securityholder. The Company has provided to counsel
for the Underwriters true, accurate and complete copies of all of the agreements
pursuant to which its officers, directors and shareholders have agreed to such
or similar restrictions (the "Lock-Up Agreements") presently in effect or
effected hereby. The Company hereby represents and warrants that it will not
release any of its officers, directors or other shareholders from any Lock-Up
Agreements currently existing or hereafter effected without the prior written
consent of Xxxxxxxxx, Xxxxxxxx & Company LLC.
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(u) Except as set forth in the Prospectus and any Incorporated
Document, (i) the Company is in compliance with all rules, laws and regulations
relating to the use, treatment, storage and disposal of toxic substances and
protection of health or the environment ("Environmental Laws") which are
applicable to its business, (ii) the Company has received no notice from any
governmental authority or third party of an asserted claim under Environmental
Laws, which claim is required to be disclosed in the Prospectus and any
Incorporated Document, (iii) the Company will not be required to make future
material capital expenditures to comply with Environmental Laws and (iv) no
property which is owned, leased or occupied by the Company has been designated
as a Superfund site pursuant to the Comprehensive Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. ss.9601, et seq.), or otherwise
designated as a contaminated site under applicable state or local law.
(v) 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 authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Prospectus and any Incorporated Document.
(x) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $___ per share, the respective
number of Firm Shares as hereinafter set forth. The obligation of each
Underwriter to the Company shall be to purchase from the Company that number of
Firm Shares which is set forth opposite the name of such Underwriter in Schedule
A hereto (subject to adjustment as provided in Section 10).
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Delivery of definitive certificates for the Firm Shares to be purchased by
the Underwriters pursuant to this Section 3 shall be made against payment of the
purchase price therefor by the several Underwriters by certified or official
bank check in next-day funds, payable to the order of the Company (and the
Company agrees not to deposit any such check in the bank on which it is drawn,
and not to take any other action with the purpose or effect of receiving
immediately available funds, until the business day following the date of its
delivery to the Company, and, in the event of any breach of the foregoing, the
Company shall reimburse the Underwriters for the interest lost and any other
expenses borne by them by reason of such breach), at the offices of O'Melveny &
Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (or
at such other place as may be agreed upon among the Underwriters and the
Company), at 7:00 A.M., San Francisco time (a) on the third full business day
following the first day that Shares are traded, (b) if this Agreement is
executed and delivered after 1:30 P.M., San Francisco time, the fourth full
business day following the day that this Agreement is executed and delivered or
(c) at such other time and date not later than seven full business days
following the first day that Shares are traded as the Underwriters and the
Company may determine (or at such time and date to which payment and delivery
shall have been postponed pursuant to Section 10 hereof), such time and date of
payment and delivery being herein called the "Closing Date;" provided, however,
that if the Company has not made available to the Underwriters copies of the
Prospectus within the time provided in Section 4(d) hereof, the Underwriters
may, in their sole discretion, postpone the Closing Date until no later than two
full business days following delivery of copies of the Prospectus to the
Underwriters. The certificates for the Firm Shares to be so delivered will be
made available to you at such office or at such other location including,
without limitation, in New York City, as you may reasonably request for checking
at least one full business day prior to the Closing Date and will be in such
names and denominations as you may request, such request to be made at least two
full business days prior to the Closing Date. If Xxxxxxxxx, Xxxxxxxx & Company
LLC so elects, delivery of the Firm Shares may be made by credit through full
fast transfer to the accounts at The Depository Trust Company designated by
Xxxxxxxxx, Xxxxxxxx & Company LLC.
It is understood that Xxxxxxxxx, Xxxxxxxx & Company LLC, individually, and
not as a representative of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior to
the Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter or
Underwriters of any of its or their obligations hereunder.
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After the Registration Statement becomes effective, you intend to
offer the Firm Shares to the public as set forth in the Prospectus.
The information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), on the inside front
cover concerning stabilization and over-allotment and under "Underwriting" in
any Preliminary Prospectus and in the final form of Prospectus filed pursuant to
Rule 424(b) constitutes the only information furnished by the Underwriters to
the Company for inclusion in any Preliminary Prospectus, the Prospectus or the
Registration Statement or any Incorporated Document, and you, on behalf of the
respective Underwriters, represent and warrant to the Company that the
statements made therein are true and correct and do not fail to state any
material fact required to be stated therein in order to make such statements in
light of the circumstances in which made not misleading.
4. Further Agreements of the Company. The Company agrees with you that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules and
Regulations, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule
424(b) of the Rules and Regulations or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission; if the Company files a term sheet pursuant to Rule
434 of the Rules and Regulations, the Company will provide evidence satisfactory
to you that the Prospectus and term sheet meeting the requirements of Rule
434(b) or (c), as applicable, of the Rules and Regulations, have been filed,
within the time period prescribed, with the Commission pursuant to subparagraph
(7) of Rule 424(b) of the Rules and Regulations; if for any reason the filing of
the final form of Prospectus is required under Rule 424(b)(3) of the Rules and
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Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the time
period prescribed; it will notify you promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; promptly upon your request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of Xxxxxx, Xxxxxxxxxx
& Xxxxxxxxx LLP, ("Underwriters' Counsel"), may be necessary or advisable in
connection with the distribution of the Shares by the Underwriters; it will
promptly prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which the Prospectus
or any other prospectus relating to the Shares as then in effect would include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; in case any Underwriter is required to
deliver a prospectus nine months or more after the effective date of the
Registration Statement in connection with the sale of the Shares, it will
prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act; and it will file no amendment or supplement to the
Registration Statement or Prospectus or the Incorporated Documents, or, prior to
the end of the period of time in which a prospectus relating the Shares is
required to be delivered under the Act, file any document which upon filing
becomes an Incorporated Document, which shall not previously have been submitted
to you a reasonable time prior to the proposed filing thereof or to which you
shall reasonably object in writing, subject, however, to compliance with the Act
and the Rules and Regulations, the Exchange Act and the rules and regulations of
the Commission thereunder and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive notice
or obtain knowledge thereof of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such
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qualifications in effect for so long as may be required for purposes of the
distribution of the Shares, except that the Company shall not be required in
connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or to make any undertaking with respect to the conduct of its
business. In each jurisdiction in which the Shares shall have been qualified as
above provided, the Company will make and file such statements and reports in
each year as are or may be reasonably required by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and, in the
case of the Prospectus and any term sheet or abbreviated term sheet under Rule
434, in no event later than the first full business day following the first day
that Shares are traded, copies of the Registration Statement (three of which
will be signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section 10(a)(3) of
the Act, and the Incorporated Documents (three of which will include all
exhibits), all in such quantities as you may from time to time reasonably
request. Notwithstanding the foregoing, if Xxxxxxxxx, Xxxxxxxx & Company LLC, on
behalf of the several Underwriters, shall agree to the utilization of Rule 434
of the Rules and Regulations, the Company shall provide to you copies of a
Preliminary Prospectus updated in all respects through the date specified by you
in such quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its shareholders as
soon as practicable, but in any event not later than the 45th day following the
end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement (which will
be in reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and covering a twelve-month period beginning after
the effective date of the Registration Statement.
(f) During a period of five years after the date hereof, the Company
will furnish to its shareholders, as soon as practicable after the end of each
respective period, annual reports (including financial statements audited by
independent certified public accountants) and unaudited quarterly reports of
operations for each of the first three quarters of the fiscal year, and will
furnish to you and the other several Underwriters hereunder, upon request (i)
concurrently with furnishing such reports to its shareholders, statements of
operations of the Company for each of the first three quarters in the form
furnished to the Company's shareholders; (ii) concurrently with furnishing to
its shareholders, a balance sheet of the Company as of the end of such fiscal
year, together with statements of
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operations, of shareholders' equity, and of cash flow of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
independent certified public accountants; (iii) as soon as they are available,
copies of all reports (financial or other) mailed to shareholders: (iv) as soon
as they are available, copies of all reports and financial statements furnished
to or filed with the Commission, any securities exchange or the NASD; (v) every
material press release and every material news item or article in respect of the
Company or its affairs which was generally released to shareholders or prepared
by the Company; and (vi) any additional information of a public nature
concerning the Company, or its business which you may reasonably request. During
such five-year period, if the Company shall have active subsidiaries, the
foregoing financial statements shall be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and
shall be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(i) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, or if the Company shall
terminate this Agreement pursuant to Section 11(a) hereof, or if the
Underwriters shall terminate this Agreement pursuant to Section 11(b)(i), the
Company will reimburse the several Underwriters for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel for the several
Underwriters) incurred by the Underwriters in investigating, preparing to market
or marketing the Shares.
(j) If at any time during the 90 day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public
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statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(k) During the Lock-Up Period, the Company will not, without the prior
written consent of Xxxxxxxxx, Xxxxxxxx & Company LLC, effect the Disposition of,
directly or indirectly, any Securities other than the sale of the Firm Shares
hereunder, up to an aggregate of 50,000 shares of Common Stock as allowed under
the Lock-Up Agreements, the Company's issuance of Common Stock upon exercise of
outstanding warrants to purchase Common Stock as described in the Registration
Statement and Incorporated Documents, the Company's issuance of Common Stock
under the Company's 1986-1987 Stock Option Plan pursuant to the exercise of
outstanding options and the Company's issuance of options or Common Stock under
the Company's 1992 Stock Award Plan as described in the Prospectus and the
Incorporated Documents.
(l) During a period of 90 days from the effective date of the
Registration Statement, the Company will not file a registration statement
registering shares under any option plan or other employee benefit plan.
5. Expenses.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and the Incorporated Documents and any
amendments or supplements thereto; the printing of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreement, the Preliminary Blue Sky
Survey and any Supplemental Blue Sky Survey, the Underwriters' Questionnaire and
Power of Attorney, and any instruments related to any of the foregoing; the
issuance and delivery of the Shares hereunder to the several Underwriters,
including transfer taxes, if any, the cost of all certificates representing the
Shares and Transfer Agents' and Registrars' fees; the fees and disbursements of
counsel for the Company; all fees and other charges of the Company's independent
public accountants; the cost of furnishing to the several Underwriters copies of
the Registration Statement (including appropriate exhibits), Preliminary
Prospectus and the Prospectus and the Incorporated Documents, and any amendments
or supplements to any of the foregoing; NASD filing fees and the cost of
qualifying the Shares under the laws of such jurisdictions as you may designate
(including filing fees and fees and disbursements of Underwriters' Counsel in
connection with such NASD filings and Blue Sky qualifications); and all other
expenses directly incurred by the Company in connection with the performance of
their obligations hereunder.
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(ii) In addition to its other obligations under Section 8(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding described in Section 8(a)
hereof, it will reimburse the Underwriters on a monthly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return it to the Company together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) listed from time to time in
the Wall Street Journal which represents the base rate on corporate loans posted
by the substantial majority of the nations 30 largest banks (the "Prime Rate").
Any such interim reimbursement payments which are not made to the Underwriters
within 30 days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request.
(b) In addition to their other obligations under Section 8(b), the
Underwriters agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding described in Section 8(b)
hereof, it will reimburse the Company on a monthly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Company
shall promptly refund it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request.
(c) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 5(a)(ii) and 5(b)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock
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Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the NASD. Any
such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention to arbitrate, therein electing the
arbitration tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in Sections 5(a)(ii) and 5(b) hereof and will not resolve
the ultimate propriety or enforceability of the obligation to indemnify for
expenses which is created by the provisions of Sections 8(a) and 8(c) hereof or
the obligation to contribute to expenses which is created by the provisions of
Section 8(e) hereof.
6. Conditions of Underwriters' Obligations. The obligations of you to
purchase and pay for the Shares as provided herein, shall be subject to the
accuracy, as of the date hereof and the Closing Date and any later date on which
Option Shares are to be purchased, as the case may be, of the representations
and warranties of the Company herein, to the performance by the Company of their
respective obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 2:00 P.M., San Francisco Time, on the date following the date of this
Agreement, or such later date as shall be consented to in writing by you; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceeding for that purpose shall have been initiated or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or any Incorporated Document or otherwise) shall
have been complied with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and
the registration, authorization, issue, sale and delivery of the Shares, shall
have been satisfactory to Underwriters' Counsel, and such counsel shall have
been furnished with such papers and information as they may reasonably have
requested to enable them to pass upon the matters referred to in this
subsection.
(c) You shall have received on the Closing Date and on any later date
on which Option Shares are purchased, as the case may be, the following opinion
of O'Melveny & Xxxxx LLP, counsel for the Company, dated the Closing Date or
such later date addressed to you, to the effect that:
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(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of California;
(ii) The Company has the corporate power to own, and lease and
operate its properties and to conduct its business as described in the
Prospectus;
(iii) The Company is duly qualified to transact business as a
foreign corporation and is in good standing in all jurisdictions in which the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not have a
material adverse effect on the financial condition, earnings, operations,
business or business prospects of the Company. To such counsel's knowledge, the
Company does not own or control, directly or indirectly, any corporation;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization" as
of the dates stated therein; the issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable; no holders of outstanding shares of capital stock are
entitled to any preemptive rights to subscribe for any of the Shares and, to
such counsel's knowledge, the Shares have not been issued in violation of any,
co-sale right, right of first refusal or other similar right, except such rights
that have been waived; to such counsel's knowledge, except as set forth in the
Registration Statement, no holders of securities of the Company have
registration rights;
(v) The Firm Shares or the Option Shares, as the case may be, have
been duly authorized and will be, upon issuance and delivery against payment
therefor in accordance with the terms hereof, validly issued, fully paid and
nonassessable; provided that no opinion need be rendered concerning state
securities or Blue Sky laws;
(vi) The Company has corporate power and corporate authority to
enter into this Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by it hereunder;
(vii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
by you, is a valid and binding agreement of the Company, except as rights to
indemnity, contribution and advancement of expenses may be limited by applicable
law, and except as otherwise limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, and except
that the enforceability
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of this Agreement is subject to the effect of general principles of equity,
including without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief regardless of whether considered in a proceeding in equity
or at law;
(viii) The Registration Statement has become effective under the
Act and, to such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the Act;
(ix) The Registration Statement as of the date it was declared
effective under the Act by the Commission and the Prospectus as of its date
appeared on its face to comply in all material respects with the requirements as
to form for registration statements (and prospectuses therein) on Form S-3 under
the Act and the applicable Rules and Regulations and each of the Incorporated
Documents complied when filed pursuant to the Exchange Act as to form in all
material respects with the requirements of the Act and the Rules and Regulations
and the Exchange Act and the applicable rules and regulations of the Commission
thereunder, except that no opinion need be expressed concerning the financial
statements and notes thereto and other financial and statistical information
contained in the Registration Statement, Prospectus or any Incorporated
Document;
(x) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus and Incorporated
Documents under the caption "Description of Capital Stock," insofar as such
description constitutes a summary of provisions of the Articles of Incorporation
and Bylaws of the Company;
(xi) The information in the Prospectus and Incorporated Documents
under the caption "Description of Capital Stock," to the extent that it
constitutes matters of law or legal conclusions, has been reviewed by such
counsel and is correct, and the form of certificate evidencing the Common Stock
complies with the California General Corporations Law;
(xii) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company, the description of statutes
in the Prospectus under the captions "Description of Capital Stock -- Limitation
of Liability of Directors and Indemnification of Directors and Officers" and
"Shares Eligible For Future Sale", the description in Item 15 of Part II of the
Registration Statement of statutes, and the description of contracts in the
Prospectus under the captions "Management -- Employment Agreement," "Description
of Capital Stock -- Registration Rights" and "Limitation of Liability of
Directors and Officers and Indemnification of Directors and
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Officers" are accurate and fairly present the information required to be
presented by the Act or the Rules and Regulations;
(xiii) To such counsel's knowledge, (a) no legal or governmental
proceedings are pending to which the Company is a party that are required to be
described in the Registration Statement or the Prospectus or any Incorporated
Document, and, to the best of such counsel's knowledge, no such proceedings have
been threatened against the Company and (b) no contract or other document is
required to be described in the Registration Statement or any Incorporated
Document or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that is not described therein or filed as required;
(xiv) The performance of this Agreement and the issuance of the
Shares will not, (a) result in any violation of the Company's charter or bylaws,
or (b) result in the breach or violation of any of the terms and provisions of
any of the contracts or documents filed as exhibits to the Registration
Statement or any Incorporated Document, or (c) constitute a default of any of
the agreements identified to such counsel in an Officer's Certificate (a copy of
which shall be provided to you) and the default of which would have a material
adverse effect on the Company or (d) violate or conflict with any applicable
statute, rule or regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court or governmental agency or body
having jurisdiction over the Company, or over any of its properties or
operations; provided however, that no opinion need be rendered concerning state
securities or Blue Sky laws;
(xv) No consent, order or approval of any California or federal
court or any governmental authority or agency is required on the part of the
Company for the execution, delivery and performance of this Agreement or the
issuance and sale of the Shares, except such as have been obtained under the Act
and such as may be required under state or other securities or Blue Sky laws
governing the purchase or the distribution of the Shares;
(xvi) To such counsel's knowledge, all holders of securities of
the Company having rights to registration of such shares of Common Stock, or
other securities, because of the filing of the Registration Statement by the
Company have, with respect to the offering contemplated thereby, waived such
rights or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement, or have
included securities in the Registration Statement pursuant to the exercise of
such rights;
In addition, such counsel shall state that although they have not
verified the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the
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Prospectus, such counsel does not believe that, at the time the Registration
Statement became effective the Registration Statement and any Incorporated
Document, when such documents became effective or were filed with the Commission
(other than the financial statements and the notes thereto and other financial
and statistical information contained therein, as to which such counsel need
express no comment) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or at the Closing Date or any later date on
which the Option Shares are to be purchased, as the case may be, the
Registration Statement or the Prospectus or any Incorporated Document (except as
aforesaid) contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
fact upon representations or certificates of officers of the Company, and of
government officials, in which case their opinion is to state that they are so
relying and that they have no knowledge of any material misstatement or
inaccuracy in such representations or certificates. Copies of any,
representation or certificate so relied upon shall be delivered to you, and to
Underwriters' Counsel.
(d) You shall have received on the Closing Date and on any later date
on which Option Shares are purchased, as the case may be, the following opinion
of special real estate counsel for the Company, dated the Closing Date or such
later date, addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters, to the effect that:
(i) The performance of this Agreement and the consummation of the
transactions herein contemplated will not, result in the material breach or
violation of any of the terms and provisions, or constitute a default under, any
of the leases to which the Company is a party or by which its properties are
bound.
(ii) To such counsel's knowledge, the Company is not presently in
material breach of any lease to which the Company is a party or by which its
property is bound.
(e) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, an opinion of
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, in form and substance satisfactory to you, with
respect to the sufficiency of all such corporate proceedings and other legal
matters relating to this Agreement and the transactions
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contemplated hereby as you may reasonably require, and the Company shall have
furnished to such counsel such documents as they may have requested for the
purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, a letter from
Deloitte & Touche LLP addressed to the Company and the Underwriters, dated the
Closing Date or such later date on which Option Shares are to be purchased, as
the case may be, confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations thereunder and based upon the
procedures described in their letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), but carried
out to a date not more than five business days prior to the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be; and (ii) setting
forth any revisions and additions to the statements and conclusions set forth in
the Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of such letter, or to reflect
the availability of more recent financial statements, data or information. The
letter shall not disclose any change, or any development involving a prospective
change, in or affecting the business or properties of the Company which, in your
sole judgment, makes it impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. Also you shall have
received an Original Letter from Deloitte & Touche LLP addressed to or for the
use of the Underwriters setting forth their opinion with respect to their
examination of the balance sheet of the Company as of February 2, 1997 and
related statements of operations, shareholders' equity, and cash flow for the
twelve months ended February 2, 1997 as well as other matters agreed upon by
Deloitte & Touche LLP and you. In addition, you shall have received from
Deloitte & Touche LLP a letter addressed to the Company and made available to
you for the use of the Underwriters stating that their review of the Company's
system of internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's financial
statements as of February 2, 1997, did not disclose any weaknesses in internal
controls that they considered to be material weaknesses.
(g) You shall have received on the Closing Date and on any later date
on which Option Shares are purchased, as the case may be, a certificate of the
Company, dated the Closing Date or such later date on which Option Shares are to
be purchased, as the case may be, signed by the Chief Executive Officer and
Chief
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Financial Officer of the Company, to the effect that, and you shall be satisfied
that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or any
later date on which Option Shares are to be purchased, and the Company has
complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date or any later date on
which Option Shares are to be purchased, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus and any amendments or supplements
thereto and the Incorporated Documents when such Incorporated Documents became
effective or were filed with the Commission, contained all statements and
information required to be included therein, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto nor the
Incorporated Documents when such Incorporated Documents became effective or were
filed with the Commission included 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 in light of the circumstances in which made, not
misleading, and, since the effective date of the Registration Statement, there
has occurred no event required to be set forth in an amended or supplemented
Prospectus which has not been so set forth;
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement and Prospectus, there has not
been (A) any material adverse change in the properties or assets described or
referred to in the Registration Statement and the Prospectus and the
Incorporated Documents or in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company, (B) any transaction
which is material to the Company, except transactions entered into in the
ordinary course of business, (C) any obligation, direct or contingent, incurred
by the Company which is material to the Company, except obligations incurred in
the ordinary course of business, (D) any change in the capital stock or
outstanding indebtedness of the Company (except for the exercise of warrants
described in the Registration Statement and Prospectus) which is material to the
Company or (E) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company.
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(h) The Company shall have obtained and delivered to you an agreement
from each officer and director of the Company, and from holders of an aggregate
of ____________ shares or more of the Company's Common Stock in writing prior to
the date hereof that such person will not, during the Lock-Up Period, effect the
Disposition of any Securities now owned or hereafter acquired directly by such
person or with respect to which such person has the power of disposition
otherwise than (i) as a bona fide gift or gifts, provided the donee or donees
thereof agree in writing to be bound by this restriction or (ii) as a
distribution to partners or shareholders of such person provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of Xxxxxxxxx, Xxxxxxxx &
Company LLC. The foregoing restriction shall have been expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of Securities during the Lock-Up Period, even if such Securities
would be disposed of by someone other than such holder. Such prohibited hedging
or other transactions would include, without limitation, any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person will have also agreed and consented to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by such person except in compliance with
this restriction. Notwithstanding the foregoing, Xxxxxxxxx, Xxxxxxxx & Company
LLC agrees to allow an aggregate total of 50,000 shares of Common Stock to be
sold by certain of the officers and directors during the Lock-Up Period.
(i) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
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7. Option Shares.
--------------
(a) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a non-transferable option to purchase up to an aggregate of 105,000 Option
Shares at the purchase price per share for the Company Shares set forth in
Section 3 hereof. Such option may be exercised by Xxxxxxxxx, Xxxxxxxx & Company
LLC on behalf of you on one occasion in whole or in part during the period of
thirty (30) days from and after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company. The number of
Option Shares to be purchased by each Underwriter upon the exercise of such
option shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option as
the number of Firm Shares purchased by such Underwriter (set forth in Schedule A
hereto) bears to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by Xxxxxxxxx,
Xxxxxxxx & Company LLC in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to be
purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in next-day funds, payable to the order of the Company (and the
Company agrees not to deposit any such check in the bank on which it is drawn,
and not to take any other action with the purpose or effect of receiving
immediately available funds, until the business day following the date of its
delivery to the Company). In the event of any breach of the foregoing, the
Company shall reimburse the Underwriters for the interest lost and any other
expenses borne by them by reason of such breach. Such delivery and payment shall
take place at the offices of O'Melveny & Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 or at such other place as may be agreed
upon among the Underwriters and the Company (i) on the Closing Date, if
written notice of the exercise of such option is received by the Company at
least two full business days prior to the Closing Date or (ii) on a later date,
not later than the third full business day following the date the Company
receives written notice of the exercise of such option, if such notice is
received by the Company less than two full business days prior to the Closing
Date.
The certificates for the Option Shares so to be delivered will be
made available to you at such office or other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one full business
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day prior to the date of payment and delivery and will be in such names and
denominations as you may request, such request to be made at least two full days
prior to such date of payment and delivery. If Xxxxxxxxx, Xxxxxxxx & Company LLC
so elects, delivery of the Option Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by
Xxxxxxxxx, Xxxxxxxx & Company LLC.
It is understood that Xxxxxxxxx, Xxxxxxxx & Company LLC,
individually, and not as a representative of the Underwriters, may (but shall
not be obligated to) make payment of the purchase price on behalf of any
Underwriter or Underwriters whose check or checks shall not have been received
by you prior to the date of payment and delivery for the Option Shares to be
purchased by such Underwriter or Underwriters. Any such payment by you shall not
relieve any Underwriter or Underwriters of any of its or their obligations
hereunder.
(b) Upon exercise of any option provided for in Section 7(a) hereof
the obligations of the Underwriters to purchase such Option Shares will be
subject (as of the date hereof and as of the date of payment for such Option
Shares) to the accuracy of and compliance with the representations and
warranties of the Company, to the accuracy of the statements of the Company and
officers of the Company made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to the condition
that all proceedings taken at or prior to the payment date in connection with
the sale and transfer of such Option Shares shall be satisfactory in form and
substance to you and to Underwriters' Counsel, and you shall have been furnished
with all such documents, certificates and opinions as you may request in order
to evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants of the Company
or the compliance with any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act, the
Exchange Act or otherwise, 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 (i) any breach of any
representation, warranty, agreement or covenant of the Company 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, including any Incorporated
Document, or arise out of or are based upon the omission or alleged omission to
state therein
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a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; and agrees to reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage 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 any
such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by any Underwriter, directly or through
you, specifically for use in the preparation thereof and, provided further, that
the indemnity agreement provided in this Section 8(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any losses, claims, charges, liabilities or litigation
based upon any untrue statement or alleged untrue statement of material fact or
omission or alleged omission to state therein a material fact purchased Shares,
if a copy of the Prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected has not been sent or
given to such person within the time required by the Act and the Rules and
Regulations thereunder, unless such failure is the result of noncompliance by
the Company with Section 4(d) hereof.
The indemnity agreement in this Section 8(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of each person, if
any, who controls any Underwriter within the meaning of the Act or the Exchange
Act. This indemnity agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company may become subject under the
Act or otherwise, specifically including but not limited to losses, claims,
damages or liabilities related to negligence on the part of the Company insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any breach of any representation, warranty,
agreement or covenant of such Underwriter 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, including any Incorporated Document, 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
therein, in light of the circumstances in which made, not misleading, in each
case to the extent, but only to the extent,
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that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter, directly or through you,
specifically for inclusion therein, and will reimburse the Company for any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action.
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 of the Company and each person, if any, who controls the Company within
the meaning of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought against
any indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified parties and the indemnifying party and the
indemnified party shall have reasonably concluded based upon the advice of
counsel that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel approved by the indemnifying party, representing
all the
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indemnified parties under Section 8(a) or 8(b) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of such
settlement; provided however that such consent shall not be unreasonably
withheld.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 8
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that, the Underwriters
are responsible pro rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and the
Company is responsible for the remaining portion, provided, however, that (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter,
and (ii) no person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to a contribution from any person
who is not guilty of such fraudulent misrepresentation. This subsection (d)
shall not be operative as to any Underwriter to the extent that the Company has
received indemnity under this Section 8.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including without limitation the
provisions of this Section 8, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 8 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act. 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
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under this Section 8 and further agree not to attempt to assert any such
defense.
9. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties, covenants and agreements of the Company herein or
in certificates delivered pursuant hereto, and the indemnity and contribution
agreements contained in Section 8 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any person controlling the Underwriter within the meaning of the
Act or the Exchange Act, or by or on behalf of the Company or any of its
officers, directors or controlling persons within the meaning of the Act or the
Exchange Act, and shall survive the delivery of the Shares to the several
Underwriters hereunder or termination of this Agreement.
10. Substitution of Underwriters. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such Firm
Shares in accordance with the terms hereof, and if the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters so agreed but failed to
purchase does not exceed 10% of the Firm Shares, the remaining Underwriters
shall be obligated, severally in proportion to their respective commitments
hereunder, to take up and pay for the Firm Shares of such defaulting Underwriter
or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four hours to allow the several Underwriters the privilege of
substituting within twenty-four hours (including non-business hours) another
underwriter or underwriters (which may include any nondefaulting Underwriter)
satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid by such postponed Closing Date, the Closing Date
may, at the option of the Company, be postponed for a further twenty-four hours,
if necessary, to allow the Company the privilege of finding another underwriter
or underwriters, satisfactory to you, to purchase the Firm Shares which the
defaulting Underwriter or Underwriters so agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted underwriters to
take up the Firm Shares of the defaulting Underwriter or Underwriters as
provided in this Section, (i) the Company shall have the right to postpone the
time of delivery for
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a period of not more than seven full business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
number of Firm Shares to be purchased by the remaining Underwriters and
substituted underwriters shall be taken as the basis of their underwriting
obligation. If the remaining Underwriters shall not take up and pay for all such
Firm Shares so agreed to be purchased by the defaulting Underwriter or
Underwriters or substitute another underwriter or underwriters as aforesaid and
the Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement shall
terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section, neither the Company shall be liable to any
Underwriter (except as provided in Sections 4(i) (if applicable), 5 and 8
hereof) nor shall any Underwriter (other than an Underwriter who shall have
failed, otherwise than for some reason permitted under this Agreement, to
purchase the number of Firm Shares agreed by such Underwriter to be purchased
hereunder, which Underwriter shall remain liable to the Company and the other
Underwriters for damages, if any, resulting from such default) be liable to the
Company (except to the extent provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier of (i) 6:30
A.M., San Francisco Time, on the first full business day following the effective
date of the Registration Statement, or (ii) the time of the initial public
offering of any of the Shares by the Underwriters after the Registration
Statement becomes effective. The time of the initial public offering shall mean
the time of the release by you, for publication, of the first newspaper
advertisement relating to the Shares, or the time at which the Shares are first
generally offered by the Underwriters to dealers by letter or telegram or
telecopy, whichever shall first occur. By giving notice as set forth in Section
12 before the time this Agreement becomes effective, you, 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 Sections 4(i) (if applicable), 5
and 8 hereof.
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(b) You shall have the right to terminate this Agreement by giving
notice as hereinafter specified at any time at or prior to the Closing Date or
on or prior to any later date on which the Option Shares are to be purchased, as
the case may be, (i) if the Company shall have failed, refused or been unable,
at or prior to the Closing Date, or on or prior to any later date on which the
Option Shares are to be purchased, as the case may be, to perform any agreement
on its part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
or (ii) if trading on the New York Stock Exchange shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the New York Stock
Exchange, by the New York Stock Exchange or by order of the Commission or any
other governmental authority having jurisdiction, or if a banking moratorium
shall have been declared by federal or New York or California authorities, or
(iii) if on or prior to the Closing Date, or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, the Company shall
have sustained a loss by strike, fire, flood, earthquake, accident or other
calamity of such character as to interfere materially with the conduct of the
business and operations of the Company regardless of whether or not such loss
shall have been insured, or (iv) if there shall have been a material adverse
change in the general political or economic conditions or financial markets in
the United States as in your reasonable judgment makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Shares, or
(v) if on or prior to the Closing Date, or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, there shall have
been an outbreak or escalation of hostilities between the United States and any
foreign power or of any other insurrection or armed conflict involving the
United States or the declaration by the United States of a national emergency
which, in the reasonable opinion of the Underwriters, makes it impracticable
or inadvisable to offer or sell the Shares. Any such termination shall be
without liability of any party to any other party except as provided in Sections
4(i) (if applicable), 5 and 8 hereof and except that in the event of termination
solely pursuant to Section 11(b)(i) hereof, the Company shall remain obligated
to pay costs and expenses pursuant to Sections 4(i) and 5 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone, telecopy or telegram, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case, confirmed by letter.
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12. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to you c/x Xxxxxxxxx, Xxxxxxxx & Company LLC, 000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, telecopier
number (000) 000-0000, Attention: General Counsel; if sent to the Company, such
notice shall be mailed, delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to Pacific Sunwear of California, Inc.,
0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, telecopier number (714)
693-8166, Attention: Xxxx Xxxxxx, Chief Executive Officer.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
or corporation, other than the parties hereto and their respective executors,
administrators, successors and assigns, and the controlling persons within the
meaning of the Act or the Exchange Act, officers and directors referred to in
Section 8 hereof, any legal or equitable right, remedy or claim or in respect of
this Agreement or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or corporation.
No purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and the Company shall be entitled
to act and rely upon any statement, request, notice or agreement made or given
by you jointly or by Xxxxxxxxx, Xxxxxxxx & Company LLC, on behalf of you.
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.
15. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original.
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If the foregoing correctly sets forth the understanding among the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Company and the several Underwriters.
Very truly yours,
PACIFIC SUNWEAR OF CALIFORNIA,
INC.
By:
--------------------------
Accepted as of the date first above written:
XXXXXXXXX, XXXXXXXX & COMPANY LLC
ALEX. XXXXX & SONS INCORPORATED
THE XXXXXXXXX, XXXXXXXX & COMPANY, INC.
XXXXXXXXX, XXXXXXXX & COMPANY LLC
By XXXXXXXXX, XXXXXXXX & COMPANY LLC
By:
--------------------------------
Authorized Signatory
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SCHEDULE A
Number of
Firm Shares
Underwriters To Be Purchased
------------ ---------------
Xxxxxxxxx, Xxxxxxxx & Company LLC..................................
Alex. Xxxxx & Sons Incorporated....................................
The Xxxxxxxx-Xxxxxxxx Company, Inc.................................
---------
Total...................................................... 700,000
=========
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