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3,250,000 SHARES
COMMON STOCK
($.001 PAR VALUE)
UNDERWRITING AGREEMENT
June __, 1997
X.X. XXXXXXX & SONS, INC.
XXXXXX XXXXXX & COMPANY, INC.
As Representative of the Several Underwriters
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
The undersigned, Acorn Products, Inc., a Delaware corporation (the
"Company"), and UnionTools, Inc., a Delaware corporation (the "Subsidiary"),
hereby address you as the representatives (the "Representatives") of each of the
persons, firms and corporations listed on Schedule I hereto (collectively, the
"Underwriters") and hereby confirms its agreement with the several Underwriters
as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell to the
Underwriters 3,250,000 shares of Common Stock, par value $.001 per share of the
Company (the "Common Stock") (such 3,250,000 shares of Common Stock are herein
referred to as the "Firm Shares"). Solely for the purpose of covering
over-allotments in the sale of the Firm Shares, the Company further proposes to
grant to the Underwriters the right to purchase up to an additional 487,500
shares of Common Stock (the "Option Shares"), as provided in Section 3 of this
Agreement. The Firm Shares and the Option Shares are herein sometimes referred
to as the "Shares" and are more fully described in the Prospectus hereinafter
defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM 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 such Underwriter agrees, severally and not jointly, (a)
to purchase from the Company at a purchase price of $___ per share, the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto and (b) to purchase from the Company any additional number of Option
Shares which such Underwriter may become obligated to purchase pursuant to
Section 3 hereof.
The Company will deliver definitive certificates for the Firm Shares at
the office of X.X. Xxxxxxx & Sons, Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
("Xxxxxxx' Office"), or such other place as you and the Company may mutually
agree upon (the "Place of Closing"), for the accounts of the Underwriters
against payment by or on behalf of such Underwriter to the Company of the
purchase price for the Firm Shares sold by the Company to the several
Underwriters by wire transfer in same day funds payable to the order of the
Company at 8:00 a.m., St. Louis time, on _____________, 1997, or at such other
time and date not later
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than five full business days thereafter as you and the Company may agree, such
time and date of payment and delivery being herein called the "Closing Date."
The certificates for the Firm Shares so to be delivered will be made
available to you for inspection at Xxxxxxx' Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior to
the Closing Date and will be in such names and denominations as you may request
at least two full business days prior to the Closing Date.
It is understood that the Underwriters propose to offer the Shares to
the public upon the terms and conditions set forth in the Registration Statement
hereinafter defined.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The Company hereby
grants options to the Underwriters to purchase from the Company 487,500 Option
Shares on the same terms and conditions as the Firm Shares; provided, however,
that such options may be exercised only for the purpose of covering any
over-allotments which may be made by the Underwriters in the sale of the Firm
Shares. No Option Shares shall be sold or delivered unless the Firm Shares
previously have been, or simultaneously are, sold and delivered.
The options are exercisable on behalf of the several Underwriters by
you, as Representatives, at any time, and from time to time, before the
expiration of 30 days from the date of this Agreement, for the purchase of all
or part of the Option Shares covered thereby, by notice given by you to the
Company in the manner provided in Section 12 hereof, setting forth the number of
Option Shares as to which the Underwriters are exercising the options, and the
date of delivery of said Option Shares, which date shall not be less than three
business days nor more than five business days after such notice unless
otherwise agreed to by the parties. You may terminate the options at any time,
as to any unexercised portion thereof, by giving written notice to the Company
to such effect.
You, as Representatives, shall make such allocation of the Option
Shares among the Underwriters as may be required to eliminate purchases of
fractional Shares.
Delivery of the Option Shares with respect to which the options shall
have been exercised shall be made to or upon your order at Xxxxxxx' Office (or
at such other place as you and the Company may mutually agree upon), against
payment by you of the per share purchase price to the Company by wire transfer
payable in same day funds. Such payment and delivery shall be made at 8:00 a.m.,
St. Louis time, on the date designated in the notice given by you as above
provided for, unless some other date and time are agreed upon, which date and
time of payment and delivery are called the "Option Closing Date." The
certificates for the Option Shares so to be delivered will be made available to
you for inspection at Xxxxxxx' Office at least one full business day prior to
the Option Closing Date and will be in such names and denominations as you may
request at least two full business days prior to the Option Closing Date. On the
Option Closing Date, the Company shall provide the Underwriters such
representations, warranties, opinions and covenants with respect to the Option
Shares as are required to be delivered on the Closing Date with respect to the
Firm Shares.
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4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
(a) The Company and its Subsidiary, represent and warrant to and agree
with each Underwriter that:
(i) A registration statement (Registration No. 333-25325) on
Form S-1 with respect to the Shares, including a preliminary
prospectus, and such amendments to such registration statement as may
have been required to the date of this Agreement, has been prepared by
the Company pursuant to and in conformity with the requirements of the
Securities Act of 1933 (the "Act"), and the Rules and Regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder (except that the registration statement and
the preliminary prospectus as filed with the Commission on April 17,
1997 did not include an estimated range of the maximum offering price
and share and per share data) and has been filed with the Commission
under the Act. Copies of such registration statement, including any
amendments thereto, each related preliminary prospectus (meeting the
requirements of Rule 430 or 430A of the Rules and Regulations)
contained therein, the exhibits, financial statements and schedules
have heretofore been delivered by the Company to you. If such
registration statement has not become effective under the Act, a
further amendment to such registration statement, including a form of
final prospectus, necessary to permit such registration statement to
become effective will be filed promptly by the Company with the
Commission but no later than 9:00 a.m. on the first Business Day
following the date of this Agreement. If such registration statement
has become effective under the Act, a final prospectus containing
information permitted to be omitted at the time of effectiveness by
Rule 430A of the Rules and Regulations will be filed promptly by the
Company with the Commission in accordance with Rule 424(b) of the Rules
and Regulations. The term "Registration Statement" as used herein means
the registration statement as amended at the time it becomes or became
effective under the Act (the "Effective Date"), including financial
statements and schedules, all exhibits and any information contained in
any final prospectus filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations and, if applicable, the information deemed
to be included by Rule 430A of the Rules and Regulations. The term
"Prospectus" as used herein means (1) the prospectus as first filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or (2) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective
Date. The term "Preliminary Prospectus" as used herein shall mean a
preliminary prospectus as contemplated by Rule 430 or 430A of the Rules
and Regulations included at any time in the Registration Statement.
(ii) The Commission has not issued, and is not to the
knowledge of the Company threatening to issue, an order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus nor
instituted proceedings for that purpose. Each Preliminary Prospectus at
its date of issue, the Registration Statement and the Prospectus and
any amendments or supplements thereto contains or will contain, as the
case may be, all statements which are required to be stated therein by,
and in all material respects conform or will conform, as the case may
be, to the requirements of, the Act
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and the Rules and Regulations (except that the Preliminary Prospectus
dated April 17, 1997 did not include an estimated range of the maximum
offering price and share and per share data). Neither the Registration
Statement nor any amendment thereto, as of the applicable Effective
Date, and neither the Prospectus nor any supplement thereto contains or
will contain, as the case may be, as of its date, any untrue statement
of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representation or warranty as 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 furnished to the Company by or on behalf of the
Underwriters specifically for use in the preparation thereof.
(iii) The filing of the Registration Statement has been duly
authorized by the Board of Directors of the Company and the execution
and delivery of this Agreement has been duly authorized by the Board of
Directors of the Company and its Subsidiary; this Agreement has been
duly authorized, executed and delivered by the Company and the
Subsidiary and constitutes a valid and legally binding obligation of
the Company and the Subsidiary enforceable in accordance with its terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general principles of equity; the issue and sale of
the Shares by the Company and the consummation by the Company of the
transactions to be performed by the Company contemplated herein will
not (1) result in a violation of the Company's or the Subsidiary's
certificate of incorporation or bylaws or (2) result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or
its Subsidiary under, any indenture, mortgage, deed of trust, note,
loan agreement, sale and leaseback arrangement or other agreement or
instrument to which the Company or its Subsidiary is a party or any
existing statute, order, rule or regulation of any United States court
or governmental agency or body having jurisdiction over the Company or
its Subsidiary or their properties, except in the case of clause (2) to
such extent as does not materially adversely affect the business,
prospects, financial condition or results of operations of the Company
and its Subsidiary, taken as a whole; no consent, approval,
authorization, order, registration or qualification of or with any
United States court or governmental agency or body is required to be
obtained by the Company for the sale of the Shares to the Underwriters
or the consummation by the Company of the transaction to be performed
by the Company herein contemplated, except such as may be required by
the National Association of Securities Dealers, Inc. (the "NASD") or
any state or foreign securities laws under the Act or Rules and
Regulations.
(iv) Except as described in the Prospectus, neither the
Company nor its Subsidiary has sustained since the date of the latest
audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree (other than
losses or interferences which
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do not materially adversely affect the business, prospects, financial
condition or results of operations of the Company and the Subsidiary
taken as a whole). Except as contemplated in the Prospectus, subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company and its
Subsidiary, taken as a whole have not incurred any liabilities or
obligations, direct or contingent, other than in the ordinary course of
business, or entered into any transactions not in the ordinary course
of business, and, except for the issuance of shares of Common Stock
upon the exercise of options outstanding on the date hereof, there has
not been any change in the capital stock or increase in the long-term
debt of the Company and its Subsidiary taken as a whole or any material
adverse change in the business, prospects, financial condition or
results of operations of the Company and its Subsidiary, taken as a
whole. The Company and its Subsidiary have filed all necessary federal,
state and foreign income and franchise tax returns and paid all taxes
shown as due thereon; all tax liabilities are adequately provided for
on the books of the Company and its Subsidiary except to such extent as
would not materially adversely affect the business, prospects,
financial condition or results of operations of the Company and its
Subsidiary, taken as a whole; and the Company and its Subsidiary have
no knowledge of any tax proceeding or action pending or threatened
against the Company or its Subsidiary which could reasonably be
expected, to materially adversely affect the business, prospects,
financial condition or results of operations of the Company and the
Subsidiary, taken as a whole.
(v) Except as described in the Prospectus, there are no legal,
governmental or regulatory proceedings pending or threatened to which
the Company or the Subsidiary are a party or of which any property of
the Company or the Subsidiary is the subject which could reasonably be
expected to have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and the
Subsidiary taken as a whole; and there are no contracts or documents of
the Company or its Subsidiary which would be required to be filed as
exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been filed as exhibits to the Registration
Statement.
(vi) The outstanding shares of Common Stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights arising by or through the Company. The Shares have been
duly authorized and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and are not the subject of any
preemptive or similar rights arising by or through the Company. The
Company has an authorized, issued and outstanding capitalization as set
forth in the Registration Statement and the Prospectus. The authorized
capital stock of the Company conforms to the description thereof
contained in the Registration Statement and the Prospectus in all
material respects. Except as set forth in the Registration Statement
and the Prospectus, the Company does not have outstanding any options
to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into or exchangeable for, or any
contracts or commitments to issue or sell, any shares of its capital
stock or any such warrants,
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convertible securities or obligations. No person has any right to have
any securities of the Company held by them registered under the Act in
connection with the Offering.
(vii) The Company and its Subsidiary have been duly
incorporated and are validly existing as corporations in good standing
under the laws of the State of Delaware, with corporate power and
authority to own, lease and operate their properties and conduct their
businesses as described in the Registration Statement; the Company and
its Subsidiary are duly qualified to do business as foreign
corporations in good standing in each state or other jurisdiction in
which their ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure to be so
qualified, would not, individually or in the aggregate, materially
adversely affect the business, prospects, financial condition or
results of operations of the Company and the Subsidiary, taken as a
whole; and all of the outstanding shares of capital stock of the
Company's Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and, except as described or referred to in
the Registration Statement and Prospectus, are owned by the Company
free and clear of any mortgage, pledge, lien, encumbrance, charge or
adverse claim; no options, warrants or other rights to purchase,
agreement or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiary are outstanding.
(viii) Ernst & Young LLP, the accounting firm which has
certified the financial statements filed with the Commission as a part
of the Registration Statement, is an independent public accounting firm
within the meaning of the Act and the Rules and Regulations.
(ix) The consolidated financial statements and schedules of
the Company, including the notes thereto, filed with and as a part of
the Registration Statement and the Prospectus, present fairly the
consolidated financial position of the Company and its Subsidiary as of
the respective dates thereof and the consolidated results of operations
and statements of cash flow for the respective periods covered thereby,
all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods involved except as
otherwise disclosed in the Registration Statement or the Prospectus.
The selected financial data included in the Registration Statement and
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements in the Registration Statement and Prospectus.
(x) Each of the Company and its Subsidiary has all
governmental licenses, permits, consents, orders, approvals,
franchises, certificates and other authorizations (collectively,
"Licenses") necessary to carry on its business and own or lease its
properties as contemplated in the Registration Statement and
Prospectus, except such Licenses, the failure to so have would not have
an adverse effect on the business, prospects, financial condition or
results of operations of the Company and its Subsidiary, taken as a
whole. Each of the Company and its Subsidiary has complied in all
respects with all laws, regulations and orders applicable to it or its
business, assets and properties except for such non-compliance as could
not reasonably be expected to have a material
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adverse effect on the business, prospects, financial condition or
results of operations of the Company and the Subsidiary taken as a
whole. Each of the Company and its Subsidiary is not in breach or
default (nor has any event occurred which, with notice or lapse of time
or both, would constitute a default) in the due performance and
observation of any term, covenant or condition of any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument (collectively, a "contract or
other agreement") to which it is a party, which default could
reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its Subsidiary, taken as a
whole. Except as otherwise described in the Registration Statement and
Prospectus, there are no governmental proceedings or actions pending
or, to the Company's knowledge, threatened for the purpose of
suspending, modifying or revoking any License held by the Company or
its Subsidiary except such as could not reasonably be expected to have
a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and the Subsidiary,
taken as a whole. The Company is not in violation of any provision of
its Certificate of Incorporation or Bylaws, as amended. The Subsidiary
is not in violation of its organizational documents, as amended.
Neither the Company nor the Subsidiary has, at any time during the past
five years, (1) made any unlawful contributions to any candidate for
any political office, or failed fully to disclose any contribution in
violation of law, or (2) made any payment to any state, federal or
foreign government official, or other person charged with similar
public or quasi-public duty (other than payment required or permitted
by applicable law).
(xi) Except as described in the Prospectus, the Company and
its Subsidiary own or possess, or can acquire on reasonable terms,
adequate patents, patent licenses, trademarks, service marks and trade
names necessary to conduct the business as currently operated by them,
and neither the Company nor any subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect
to any patents, patent licenses, trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and its Subsidiary, taken as a whole.
(xii) The Company and its Subsidiary have good title to all
property owned by them, free and clear of all liens, encumbrances,
restrictions and defects except such as are described in the
Registration Statement or do not interfere with the use made and
proposed to be made of such property; and any property held under lease
or sublease by the Company or its Subsidiary is held under valid,
subsisting and enforceable leases or subleases with such exceptions as
are not material and do not interfere with the use made and proposed to
be made of such property by the Company and its Subsidiary, and neither
the Company nor any subsidiary has any notice or knowledge of any claim
of any sort which has been, or may be, asserted by anyone adverse to
the Company's or the Subsidiary's rights as lessee or sublessee under
any lease or sublease described above, or affecting or questioning the
Company's or any of its subsidiary's rights to the continued possession
of the leased or subleased premises under any such lease or sublease
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in conflict with the terms thereof except such as could not reasonably
be expected to materially adversely affect the business, prospects,
financial condition or results of operations of the Company and the
Subsidiary, taken as a whole.
(xiii) The business, operations and facilities of the Company
and its Subsidiary have been and are being conducted in compliance in
all material respects with all applicable laws, ordinances, rules,
regulations, Licenses, permits, approvals, plans, authorizations or
requirements relating to occupational safety and health, or pollution,
or protection of health or the environment (including, without
limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water,
groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in
nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States or any state or
political subdivision thereof having jurisdiction over the Company or
its Subsidiary, and all applicable judicial or administrative agency or
regulatory decrees, awards, judgments and orders relating thereto,
except for such non-compliance as could not reasonably be expected to
have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company or its Subsidiary
taken as a whole; and none of the Company or its Subsidiary has
received any notice from any governmental instrumentality or any third
party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to
natural resources), which violation could reasonably be expected to
have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its Subsidiary,
taken as a whole. The intended use and occupancy of each of the
facilities owned or operated by the Company or its Subsidiary complies
in all material respects with all applicable codes and zoning laws and
regulations except for such noncompliance as could not reasonably be
expected to have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and the
Subsidiary, taken as a whole, and there is no pending or, to the
knowledge of the Company, threatened condemnation, zoning change,
environmental or other proceeding or action that could reasonably be
expected to have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and the
Subsidiary, taken as a whole. Except as described in the Prospectus,
there is no factual basis for any action, suit or other proceeding
involving the Company or its Subsidiary or any of their material assets
for any failure of the Company or its Subsidiary, or any predecessor
thereof, to comply with any requirements of federal, state or local
regulation relating to air, water, solid waste management, hazardous or
toxic substances, or the protection of health or the environment except
such as could not reasonably be expected to have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and the Subsidiary, taken as a whole.
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(xiv) Neither the Company nor its Subsidiary is involved in
any labor dispute with its employees which could reasonably be
expected, individually or in the aggregate, to have a material adverse
effect on the business, financial condition or results of operations of
the Company and its Subsidiary, taken as a whole, nor, to the Company's
knowledge, is any such dispute threatened or imminent.
(xv) Neither the Company nor any of its directors or officers
has taken nor will he, she or it take, directly or indirectly, any
action designed to or which might reasonably be expected to cause or
result in, under the Act or otherwise, or which has constituted,
stabilization or manipulation of the price of the Company's Common
Stock to facilitate sale or resale of the shares or otherwise and the
Company is not aware of any such action taken or to be taken by any
affiliates of the Company (within the meaning of the Rules and
Regulations).
(xvi) The Company is not an "investment company" or an entity
"controlled" by an "investment company" required to be registered under
the Investment Company Act of 1940, (the "Investment Company Act") (for
purposes of this Section 4(a)(xvi), "investment company" and
"controlled" shall have the meanings ascribed to such terms in the
Investment Company Act).
(b) Any certificate signed by any officer of the Company on behalf of
the Company and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
5. ADDITIONAL COVENANTS. The Company covenants and agrees with the
several Underwriters that:
(a) If the Registration Statement is not effective under the Act, the
Company will use its reasonable best efforts to cause the Registration Statement
to become effective as promptly as possible, and it will notify you, promptly
after it shall receive notice thereof, of the time when the Registration
Statement has become effective. The Company (1) will prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations, if required,
a Prospectus containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations or otherwise; (2) will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the Underwriters
shall not previously have been advised and furnished with a copy or to which the
Underwriters shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations; and (3) will promptly notify you
after it shall have received notice thereof of the time when any amendment to
the Registration Statement becomes effective or when any supplement to the
Prospectus has been filed.
(b) The Company will advise the Underwriters promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information, or of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the use of
the Prospectus or of the institution or threatening of any
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proceedings for that purpose, and the Company will use its reasonable best
efforts to prevent the issuance of any such stop order preventing or suspending
the use of the Prospectus and to obtain as soon as possible the lifting thereof,
if issued.
(c) The Company will cooperate with the Underwriters and their counsel
in endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as they may have designated and will make such applications, file
such documents, and furnish such information as may be necessary for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a consent
or to subject itself to taxation as doing business in any jurisdiction where it
is not now so taxed. The Company will, from time to time, file such statements,
reports, and other documents, as are or may be required to continue such
qualifications in effect for so long a period as is reasonably required for the
offering, sale and distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Underwriters, without charge from time to time, as many copies of any
Preliminary Prospectus as they may reasonably request. The Company will deliver
to, or upon the order of, the Underwriters without charge as many copies of the
Prospectus, or as it thereafter may be amended or supplemented, as they may from
time to time reasonably request. The Company consents to the use of such
Prospectus by the Underwriters and by all dealers to whom the Shares may be
sold, both in connection with the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by law to be delivered
in connection with the offering or sale of the Shares. The Company will deliver
to the Underwriters at or before the Closing Date two signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Underwriters such number of copies of the
Registration Statement, without exhibits, and of all amendments thereto, as they
may reasonably request.
(e) If, during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in your reasonable judgment or in the
reasonable opinion of counsel for the Underwriters, it becomes necessary to
amend or supplement the Prospectus in order to make the statements therein, in
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with law.
(f) The Company will make generally available to its shareholders
pursuant to the Securities and Exchange Act of 1934 (the "1934 Act"), as soon as
it is practicable to do so, but in any event not later than 18 months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), a consolidated earnings statement of the Company and its Subsidiary
(which need not be audited) complying with Section 11(a) of the Act and the
Rules
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and Regulations thereunder (including Rule 158) and will advise the Underwriters
in writing when such statement has been so made available.
(g) The Company will, for a period of two years from the Closing Date,
deliver to the Underwriters at their principal executive offices a reasonable
number of copies of annual reports, quarterly reports, current reports and
copies of all other documents, reports and information furnished by the Company
to its shareholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or the
1934 Act. Any report, document or other information required to be furnished
under this paragraph (g) shall be furnished as soon as practicable after such
report, document or information becomes available.
(h) On the Closing Date, the Company will apply the net proceeds from
the sale of the Shares as set forth in the description under "Use of Proceeds"
in the Prospectus. The Company shall file such reports with the Commission with
respect to the sale of Shares and the application of the proceeds therefrom as
may be required in accordance with Rule 463 under the Act, including, without
limitation, Form SR.
(i) The Company will supply you with copies of all correspondence to
and from, and all documents issued to and by, the Commission in connection with
the registration of the Shares under the Act.
(j) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Company will furnish to you, as soon as they have been prepared,
copies of any unaudited interim consolidated financial statements of the Company
and its Subsidiary for any quarterly periods subsequent to the periods covered
by the financial statements appearing in the Registration Statement and the
Prospectus.
(k) The Company will use its reasonable best efforts to obtain approval
for, and maintain the quotation of the Shares on, the National Association of
Securities Dealers, Inc. Automated Quotation/National Market System (the
"NASDAQ/NMS").
(l) For a period of 180 days from the Effective Date, the Company will
not directly or indirectly sell, contract to sell or otherwise dispose of any
shares of the Company's Common Stock, any securities exchangeable for Common
Stock or any other rights to acquire such shares without your prior written
consent, except for the Shares sold hereunder and except for sales of shares of
Common Stock to the Company's employees pursuant to the exercise of employee or
director stock options, stock purchase or other employee benefit plans.
(m) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Company will not issue any press releases or other communications
directly or indirectly and will hold no press conferences with respect to the
Company or its Subsidiary, the financial condition, results of operations,
business, properties, assets or liabilities of the Company or its Subsidiary, or
the offering of the Shares, without your prior written consent.
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6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Shares, as provided herein, shall
be subject to the accuracy in all material respects, as of the date hereof and
as of the Closing Date (and, if applicable, the Option Closing Date), of the
representations and warranties of the Company and its Subsidiary contained
herein, to the performance in all material respects by the Company of its
covenants and obligations hereunder, and to the following additional conditions:
(a) All filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made. No stop order suspending the effectiveness of
the Registration Statement, as amended from time to time, shall have been issued
and no proceeding for that purpose shall have been initiated or, to the best
knowledge of the Company or any Underwriter, threatened or contemplated by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the reasonable satisfaction of the Underwriters.
(b) The Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact required to be stated therein or necessary to make the statements
therein not misleading and the Prospectus and all amendments or supplements
thereto, or modifications thereof, if any, shall not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On the Closing Date, the Company shall have consummated the
Exchange (as defined in the Prospectus) as described in the Prospectus under the
caption "Prospectus Summary - The Fund Transactions."
(d) On the Closing Date (and, if applicable, the Option Closing Date),
you shall have received the opinion of counsel for the Company, addressed to you
and dated the Closing Date (and, if applicable, the Option Closing Date), to the
effect that:
(i) The Company and its Subsidiary have been duly incorporated
and are validly existing as corporations in good standing under the
laws of the State of Delaware, with corporate power and authority to
own, lease and operate their properties and conduct their businesses as
described in the Registration Statement; the Company and its Subsidiary
are duly qualified to do business as foreign corporations in good
standing in each state or other jurisdiction in which their ownership
or leasing of property or conduct of business legally requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and the Subsidiary,
taken as a whole; and the outstanding shares of capital stock of the
Company's Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and, to the knowledge of such counsel, and
except as otherwise described or referred to in the Registration
Statement and the Prospectus, are owned by the Company free and clear
of any mortgage, pledge, lien, encumbrance, charge or adverse claim; to
the knowledge of such counsel, no options, warrants or other rights to
purchase, agreement or other obligations
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to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in the Subsidiary are outstanding
except as described in the Registration Statement and the Prospectus.
(ii) The Company has duly and validly authorized capital stock
as set forth under the heading "Capitalization" in the Prospectus; all
outstanding shares of Common Stock of the Company and the Shares
conform as to legal matters to the description of the Common Stock
contained in the Registration Statement and the Prospectus, and the
outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable; the Shares have
been duly authorized and, when issued and delivered to and paid for by
the Underwriters in accordance with this Agreement, will be validly
issued, fully paid and non-assessable, and to the knowledge of such
counsel, are not the subject of any preemptive rights or similar rights
arising by or through the Company.
(iii) The Registration Statement has become effective under
the Act and the Company has filed the Prospectus pursuant to Rule
424(b) under the Act and, to the knowledge of such counsel, 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 contemplated by the Commission under the Act.
(iv) No authorization, approval, consent, order, registration
or qualification of or with any United States court or governmental
body, authority or agency is required to be obtained by the Company for
the sale of the Shares to the Underwriters or the consummation by the
Company of the transactions to be performed by the Company contemplated
by this Agreement, except such as may be required under the Act or the
Rules and Regulations or as may be required by the NASD or under state
or foreign securities laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(v) This Agreement has been duly authorized, executed and
delivered by the Company and its Subsidiary. The execution, delivery
and compliance by the Company with the provisions of this Agreement and
the consummation by the Company of the transactions to be performed by
the Company herein contemplated do not and will not result in a
violation of the Company's certificate of incorporation or bylaws or
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any properties or assets of the
Company and its Subsidiary under any statute, or under any indenture,
mortgage, deed of trust, note, loan agreement, sale and leaseback
arrangement, or any other agreement or instrument filed as an exhibit
to the Registration Statement or any order, rule or regulation (other
than foreign and state securities laws, as to which such counsel need
not express an opinion, and other than federal securities laws, as to
which such counsel need not express an opinion pursuant to this
paragraph 6(d)(v)) known to such counsel of any court of the United
States or state thereof or governmental agency or body having
jurisdiction over the Company or its Subsidiary or their properties,
except, in the case of any such violation, breach, default, creation or
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imposition, to such extent could not reasonably be expected to have a
material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its Subsidiary, taken as a
whole.
(vi) To the knowledge of such counsel, (1) except as described
in the Prospectus, there are no legal, governmental or regulatory
proceedings pending or threatened to which the Company or the
Subsidiary are a party or of which any property of the Company or the
Subsidiary is the subject which could reasonably be expected to have a
material adverse effect on the business, prospects, financial condition
or results of operations of the Company or its Subsidiary taken as a
whole; and (2) there are no contracts or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
which are not described or filed as required.
(vii) The Company is not an "investment company" or a company
"controlled" by an "investment company" required to be registered under
the Investment Company Act. For purposes of this Section 6(c)(vii), the
terms "investment company" and "controlled" shall have the meanings
ascribed to such terms in the Investment Company Act.
In addition, such counsel shall state that such counsel has
participated in the preparation of the Registration Statement and the Prospectus
and in conferences with officers and other representatives of the Company,
counsel for the Company, representatives of the independent auditors of the
Company and your representatives at which the contents of the Registration
Statement and Prospectus and related matters were discussed. Such counsel also
shall state that because the purpose of their professional engagement was not to
establish or confirm factual matters and because the scope of their examination
of the affairs of the Company did not permit them to verify the accuracy,
completeness or fairness of the statements set forth in the Registration
statement or Prospectus, they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus, except as to the extent
set forth in the last sentence of this paragraph. Such counsel shall also state
that on the basis of the foregoing, and except for the financial statements and
schedules and other financial data included therein, as to which such counsel
need express no opinion or believe, (a) such counsel is of the opinion that the
Registration Statement at the time it became effective, and the Prospectus as of
the date thereof and as of the date of such opinion, appeared on their face to
be appropriately responsive in all material respects to the relevant
requirements of the Securities Act and the General Rules and Regulations
promulgated thereunder and (b) no facts have come to such counsel's attention
that lead such counsel to believe that (i) the Registration Statement at the
time it became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Prospectus as of its
date and as of the date of such opinion, contained or contains an untrue
statement of a material fact or omitted or omits 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. Such
counsel also shall state that insofar as the statements contained in the
Registration Statement and the Prospectus under the caption "Description of
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Capital Stock" constitute a summary of the documents and legal matters referred
to therein, such counsel is of the opinion that such statements fairly present
the information called for with respect to such documents and legal matters by
the Securities Act and the applicable rules and regulations of the Commission
thereunder relating to registration statements on Form S-1 and prospectuses.
In rendering the foregoing opinion, such counsel may state
that they express no opinion as to the laws of any jurisdiction other than the
State of New York, the General Corporation Law of the State of Delaware and the
federal law of the United States.
(e) You shall have received on the Closing Date (and, if applicable,
the Option Closing Date), from Xxxxx, Day, Xxxxxx & Xxxxx, counsel to the
Underwriters, such opinion or opinions, dated the Closing Date (and, if
applicable, the Option Closing Date) with respect to the incorporation of the
Company, the validity of the Shares, the Registration Statement, the Prospectus
and other related matters as you may reasonably require; the Company shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass on such matters.
(f) Immediately prior to the execution of this Agreement and on the
Closing Date (and, if applicable, the Option Closing Date), you shall have
received from Ernst & Young LLP, a letter or letters, dated the date of this
Agreement and the Closing Date (and, if applicable, the Option Closing Date),
respectively, in form and substance satisfactory to you, confirming that they
are independent public accountants with respect to the Company within the
meaning of the Act and the published Rules and Regulations, and the answer to
Item 509 of Regulation S-K set forth in the Registration Statement is correct
insofar as it relates to them, and stating to the effect set forth in Schedule
II hereto.
(g) Except as contemplated in the Prospectus, (1) neither the Company
nor its Subsidiary shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree other than such losses or interferences which do not materially
adversely affect the business, prospects, financial condition or results of
operations of the Company and the Subsidiary, taken as a whole; and (2)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company nor its
Subsidiary shall have incurred any liability or obligation, direct or
contingent, or entered into transactions other than in the ordinary course of
business, and there shall not have been any change in the capital stock (other
than pursuant to the exercise of existing stock options) or increase in the
long-term debt of the Company and its Subsidiary or any change in the financial
condition, net worth, business, affairs, management, prospects or results of
operations of the Company and its Subsidiary taken as a whole, the effect of
which, in any such case described in clause (1) or (2), is in your judgment so
material or adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered on such
Closing Date (and, if applicable, the Option Closing Date) on the terms and in
the manner contemplated in the Prospectus.
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(h) There shall not have occurred any of the following: (1) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange or the NASDAQ/NMS or the establishing on such exchange or
system by the Commission or by such exchange or system of minimum or maximum
prices which are not in force and effect on the date hereof; (2) a general
moratorium on commercial banking activities declared by either federal or New
York State authorities; (3) the outbreak or escalation of hostilities involving
the United States or the declaration by the United States of a national
emergency or war, if the effect of any such event specified in this clause (3)
in your judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner contemplated in the
Prospectus; (4) any national or international calamity or crisis, change in
national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in this clause which makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the Shares
in the manner contemplated in the Prospectus; or (5) the enactment, publication,
decree, or other promulgation of any federal or state statute, regulation, rule,
or order of any court or other governmental authority, or the taking of any
action by any federal, state or local government or agency in respect of fiscal
or monetary affairs, if the effect of any such event specified in this clause
(5) in your judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner contemplated in the
Prospectus.
(i) You shall have received certificates, dated the Closing Date (and,
if applicable, the Option Closing Date) and signed on behalf of the Company by
the President and the Chief Financial Officer of the Company stating that (1)
they have carefully examined the Registration Statement and the Prospectus as
amended or supplemented and nothing has come to their attention that would lead
them to believe that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto as of their respective effective or issue dates,
contained, and the Prospectus as amended or supplemented at such Closing Date,
contains any untrue statement of a material fact, or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and, that (2) all representations and warranties made herein by the
Company are true and correct in all material respects at such Closing Date, with
the same effect as if made on and as of such Closing Date, and all agreements
herein to be performed by the Company on or prior to such Closing Date have been
duly performed in all material respects.
(j) The Company shall not have failed, refused, or been unable, at or
prior to the Closing Date (and, if applicable, the Option Closing Date) to have
performed in all material respects any agreement on their part to be performed
or any of the conditions herein contained and required to be performed or
satisfied by them at or prior to such Closing Date.
(k) The Company shall have furnished to you at the Closing Date (and,
if applicable, the Option Closing Date) such other certificates as you may have
reasonably requested as to the accuracy, on and as of such Closing Date, of the
representations and warranties of the Company herein and as to the performance
by the Company of their obligations hereunder.
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(l) The Shares shall have been approved for trading upon official
notice of issuance on the NASDAQ/NMS.
(m) A Lock-Up Agreement substantially in the form of Schedule III
hereto dated the date hereof or earlier shall have been executed and delivered
to the Representatives by each officer, director and beneficial owner of 5% or
more of the Common Stock of the Company and by the OCM Principal Opportunities
Fund, L.P.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Xxxxx, Day, Xxxxxx & Xxxxx, counsel for the several Underwriters.
The Company will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you may reasonably request.
If any of the conditions specified above in this Section 6 shall not
have been satisfied at or prior to the Closing Date (and, if applicable, the
Option Closing Date) or waived by you in writing, this Agreement may be
terminated by you on notice to the Company.
7. INDEMNIFICATION. (a) The Company and its Subsidiary, jointly and
severally, will indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or 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 under which they were made,
not misleading; and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, or such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by you or by any
Underwriter through you, specifically for use in the preparation thereof; and
provided, further, that if any Preliminary Prospectus or the Prospectus
contained any alleged untrue statement or allegedly omitted to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading and such statement or omission shall have been corrected
in a revised Preliminary Prospectus or in the Prospectus or in an amended or
supplemented Prospectus, the Company shall not be liable to any Underwriter or
controlling person under this Subsection (a) with respect to such alleged untrue
statement or alleged omission to the extent that any such loss, claim, damage or
liability of such Underwriter or controlling person results from the fact that
such Underwriter sold Shares to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, such
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revised Preliminary Prospectus or Prospectus or amended or supplemented
Prospectus. This indemnity agreement shall be in addition to any liabilities
which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the Registration
Statement and, each person, if any, who controls the Company within the meaning
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any amendment or supplement thereto, or any Blue Sky Application or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, such amendment or supplement, or any Blue Sky Application in
reliance upon and in conformity with written information furnished to the
Company by any such Underwriter specifically for use in the preparation thereof;
and will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement shall be in addition to any liabilities which the
Underwriters may otherwise have.
(c) Any party which proposes to assert the right to be indemnified
under this Section 7 shall, within ten days after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under this Section 7,
notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not (1)
relieve such indemnifying party from any liability under paragraph (a) or (b)
above unless and to the extent it did not otherwise learn if such action and
such failure results in the forfeiture by the indemnifying party of substantive
rights and defenses or it has been materially prejudiced by such failure or (2)
relieve such indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 7. In case any such action,
suit or proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party, similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (a) the
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employment of counsel by such indemnified party at the expense of the
indemnifying party has been authorized in writing by the indemnifying party, (b)
the indemnified party shall have been advised by such counsel that there may be
a conflict of interest between the indemnifying party and the indemnified party
in the conduct of the defense, or certain aspects of the defense, of such action
(in which case the indemnifying party shall not have the right to direct the
defense of such action with respect to those matters or aspects of the defense
on which a conflict exists or may exist on behalf of the indemnified party) or
(3) the indemnifying party shall not in fact have employed counsel to assume the
defense of such action, in any of which events such fees and expenses to the
extent applicable shall be borne by the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened clam, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding. An indemnifying party shall not be liable for any settlement
of any action or claim effected without its consent. Each indemnified party, as
a condition of such indemnity, shall cooperate in good faith with the
indemnifying party in the defense of any such action or claim.
(d) If the indemnification provided for in this Section 7 is for any
reason, other than pursuant to the terms thereof, 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 to appeal) to be
unavailable to an indemnified party under Subsections (a), (b) or (c) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and its Subsidiary, on
the one hand, and the Underwriters, on the other hand, from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault, as applicable, of the Company and its Subsidiary, on the one
hand, and the Underwriters, on the other hand, in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as other relevant equitable considerations.
The relative benefits received by, as applicable, the Company and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
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purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
Subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The obligations
of the Company and its Subsidiary in this Subsection (d) to contribution are
joint and several. The Underwriters' obligations in this Subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company contained in Sections
7 and 11 herein or in certificates delivered pursuant hereto, and the agreements
of the Underwriters contained in Section 7 hereof, shall remain operative and in
full force and effect regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any Underwriter or any
controlling person, the Company or any of its officers, directors or any
controlling persons, or the Selling Shareholders, and shall survive delivery of
the Shares to the Underwriters hereunder.
9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter shall default
in its obligation to purchase the Shares which it has agreed to purchase
hereunder, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or parties
reasonably satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Shares, or the Company
notifies you that they have so arranged for the purchase of such Shares, you or
the Company shall have the right to postpone the Closing Date for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any persons substituted under this Section 9 with like effect as
if such person had originally been a party to this Agreement with respect to
such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you or the Company as
provided in Subsection (a) above, the aggregate number of Shares which remains
unpurchased does not exceed one-tenth of the total Shares to be sold on the
Closing Date, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the Shares which such Underwriter agreed
to purchase hereunder and, in addition, to require each non-defaulting
Underwriter to purchase
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its pro rata share (based on the number of Shares which such Underwriter agreed
to purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you or the Company as
provided in Subsection (a) above, the number of Shares which remains unpurchased
exceeds one-tenth of the total Shares to be sold on the Closing Date, or if the
Company shall not exercise the right described in Subsection (b) above to
require the non-defaulting Underwriters to purchase Shares of the defaulting
Underwriter or Underwriters, then this Agreement shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company
except for the expenses to be borne by the Company and the Underwriters as
provided in Section 11 hereof and the indemnity and contribution agreements in
Section 7 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. EFFECTIVE DATE AND TERMINATION. This Agreement may be terminated
pursuant to Section 9(c) or as a result of the failure of a condition set forth
in Section 6(g) or Section 6(h) by you at any time at or prior to the Closing
Date by notice to the Company. Any such termination shall be without liability
of any party to any other party except as provided in Section 7 or Section 11
hereof. If you terminate this Agreement, you shall notify the Company by
telephone or telecopy, confirmed by letter.
11. COSTS AND EXPENSES. The Company will bear and pay the costs and
expenses incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company, (b) the
preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto and the printing, delivery and shipping of this Agreement,
the Agreement Among Underwriters, the Selected Dealer Agreement, Underwriters'
Questionnaires and Powers of Attorney and Blue Sky Memoranda, (c) the furnishing
of copies of such documents to the Underwriters, (d) the registration or
qualification of the Shares for offering and sale under the securities laws of
the various states, including the reasonable fees and disbursements of
Underwriters' counsel relating to such registration or qualification, (e) the
fees payable to the NASD and the Commission in connection with their review of
the proposed offering of the Shares, (f) all printing and engraving costs
related to preparation of the certificates for the Shares, including transfer
agent and registrar fees, (g) all initial transfer taxes, if any, (h) all fees
and expenses relating to the authorization of the Shares for trading on
NASDAQ/NMS, (i) all travel expenses, including air fare and accommodation
expenses, of representatives of the Company in connection with the offering of
the Shares and (j) all of the other costs and expenses incident to the
performance by the Company of the registration and offering of the Shares;
provided, however, that the Underwriters will bear and pay the fees and expenses
of the Underwriters' counsel (other than fees and disbursements relating to the
registration or qualification of the Shares for offering and sale under the
securities laws of the various states), the Underwriters' out-of-pocket
expenses, stock transfer taxes or the resale of any Shares by
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them and any advertising costs and expenses incurred by the Underwriters
incident to the public offering of the Shares.
If this Agreement is terminated by you in accordance with the
provisions of Section 9(c), the Company shall not then be under any liability to
any Underwriter except as provided in Section 7 and Section 11, but, if for any
other reason, any Shares are not delivered by or on behalf of the Company as
provided herein, the Company shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel to the Underwriters.
12. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o X.X. Xxxxxxx & Sons, Inc. at Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Syndicate, facsimile number (314)
289-7387, or if sent to the Company shall be mailed, delivered, sent by
facsimile transmission, or telegraphed and confirmed to the Company at 000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000-0000, facsimile number (000) 000-0000,
Attention: President. Notice to any Underwriter pursuant to Section 7 shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to such Underwriter's address as it appears in the Underwriters' Questionnaire
furnished in connection with the offering of the Shares or as otherwise
furnished to the Company.
13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors
and assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, corporation or other entity, other than
the parties hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 7, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective successors and assigns and said controlling
persons and said officers and directors, and for the benefit of no other person,
corporation or other entity. No purchaser of any of the Shares from any
Underwriter shall be construed a successor or assign by reason merely of such
purchase.
In all dealings with the Company under this Agreement you shall act on
behalf of each of the several Underwriters, the Company shall be entitled to act
and rely upon any statement, request, notice or agreement on behalf of the
Underwriters, made or given by you on behalf of the Underwriters, as if the same
shall have been made or given in writing by the Underwriters.
14. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
15. PRONOUNS. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
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16. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and the Underwriters.
ACORN PRODUCTS, INC.
_____________________________________
By: Xxxx Xxxxxx
Title: President and Chief Executive Officer
Accepted in St. Louis, UNIONTOOLS, INC.
Missouri as of the date
first above written, on
behalf of ourselves and each
of the several Underwriters _____________________________________
named in Schedule I hereto. By:
Title:
X.X. XXXXXXX & SONS, INC.
______________________________
By:
Title:
XXXXXX XXXXXX & COMPANY, INC.
______________________________
By:
Title:
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SCHEDULE I
Name Number of Shares
---- ----------------
X.X. Xxxxxxx & Sons, Inc. -----
Xxxxxx Xxxxxx & Company, Inc. -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
--------------------- -----
Total -----
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SCHEDULE II
Pursuant to Section 6(g) of the Underwriting Agreement, Ernst & Young
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its Subsidiary within the meaning of the Act and the
applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any
financial schedules audited by them and included in the Prospectus or the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial statements.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
below, performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial Information,
on the interim financial statements of the Company and its Subsidiary included
in the Prospectus or the Registration Statement, inspection of the minute books
of the Company and its Subsidiary since the date of the latest audited financial
statements included in the Prospectus, inquiries of officials of the Company and
its Subsidiary responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) any material modifications should be made to the unaudited
consolidated statements of operations, consolidated balance
sheets and statements of consolidated stockholders' equity and
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles, or
the unaudited consolidated statements of operations,
consolidated balance sheets and statements of consolidated
stockholders' equity and cash flows included in the Prospectus
do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations thereunder.
(B) any other unaudited statement of operations data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus.
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(C) any unaudited pro forma financial information included in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of the unaudited pro
forma financial information.
(D) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock or any increase in the consolidated
long-term debt of the Company and its Subsidiary, or any
decreases in consolidated working capital, net current assets
or net assets or other items specified by the Representatives,
or any changes in any items specified by the Representatives,
in each case as compared with amounts shown in the latest
balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter.
(E) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in Clause (D) there were any decreases in
consolidated net sales or the total or per share amounts of
consolidated net income or any other changes in any other
items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for changes, decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter.
(iv) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraph (iii) above, they
have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company and its
Subsidiary for the periods covered by their reports and any interim or other
periods since the latest period covered by their reports, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain of such
amounts, percentages and financial information with the accounting records of
the Company and its Subsidiary and have found them to be in agreement.
II-2
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SCHEDULE III
Form of Lock-Up Agreement
X.X. XXXXXXX & SONS, INC.
XXXXXX XXXXXX & COMPANY, INC.
As Representatives of the
several Underwriters
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned understands that Acorn Products, Inc. (the
"Company") has filed a Registration Statement (the "Registration Statement")
with the Securities and Exchange Commission (the "Commission") relating to the
proposed sale of the Company's common stock, par value $.001 per share (the
"Common Stock") by the Company in a public offering (the "Offering") to be
underwritten by X.X. Xxxxxxx & Sons, Inc. ("Xxxxxxx"), Xxxxxx Xxxxxx & Company,
Inc. (the "Representatives"), and other potential underwriters (the
"Underwriters"). Xxxxxxx has requested that each director and officer of the
Company and certain stockholders of the Company enter into this Agreement
because the prospect of public sales of Common Stock by the Company's
stockholders during the period after the offering would be detrimental to the
proposed underwriting effort. The undersigned recognizes that it is in the best
financial interests of the undersigned, as an officer, director or stockholder
of the Company, that the proposed public offering be completed.
In consideration of the foregoing and with the understanding
that the Underwriters will rely hereon in connection with their commitment to
underwrite the proposed public offering, the undersigned hereby agrees for the
benefit of the Company, the Representatives and the Underwriters not to, without
the prior written consent of Xxxxxxx, directly or indirectly, offer to sell,
sell, contract to sell, grant any option to purchase or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or other disposition)
of any shares of Common Stock, or any securities convertible into or exercisable
or exchangeable for, shares of Common Stock for a period of 180 days after the
date of the Underwriting Agreement related to the Offering unless pursuant to
(a) a bona fide gift, (b) transfers made to family members, trusts or other
similar transfers, in each case for estate planning purposes, (c) transfers to
affiliated entities and (d) pledges in connection with loans; provided that any
person receiving or holding shares of Common Stock as a result of any of any
transaction pursuant to clauses (a), (b), (c) or (d) above agrees in writing
with you to be bound by the provisions of this agreement.
Dated: June , 1997
---------------------------------------
Name:
Title:
