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EXHIBIT 1
XXXXXX'X FURNITURE, INC.
4,400,000 SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE
UNDERWRITING AGREEMENT
March __, 1998
Cruttenden Xxxx Incorporated
Xxxxxx Xxxxxx Capital Group, LLC
Black & Company, Inc.
c/o Cruttenden Xxxx Incorporated
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Xxxxxx'x Furniture, Inc., a Delaware corporation (the "Company"),
proposes to sell to the Underwriters named in Schedule 1 hereto (the
"Underwriters") 2,303,889 shares (the "Shares") of the Company's common stock,
par value $0.001 per share ("Common Stock"), and Japan Omnibus Ltd. (the
"Selling Stockholder") proposes to sell to the Underwriters 2,096,011 shares of
Common Stock (the "Selling Stockholder Shares" and, collectively with the
Shares, the "Firm Shares"). In addition, the Company proposes to grant to the
Underwriters an option to purchase an additional 440,000 shares of Common Stock
(the "Option Shares") on the terms and for the purposes set forth in Section 3
hereof. The Firm Shares and the Option Shares, if purchased, are hereinafter
collectively called the "Underwritten Shares." This is to confirm the agreement
concerning the purchase of the Underwritten Shares from the Company and the
Selling Stockholder by the Underwriters.
1. Representations and Warranties of the Company. The Company represents
and warrants to and covenants with the Underwriters that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(Registration No. 333-43111) which has or will become effective, covering the
registration of the Underwritten Shares under the Securities Act of 1933, as
amended (the "1933 Act") and the rules and regulations of the Commission
thereunder (the "1933 Act Regulations"). The Commission has not issued any order
preventing or suspending the effectiveness or use of the Prospectus or the
Preliminary Prospectus (as defined below). The term "Preliminary Prospectus" as
used herein means a preliminary prospectus relating to the Underwritten Shares
as contemplated by Rule 430 or Rule 000X ("Xxxx 000X") xx xxx 0000 Xxx
Regulations included at any time as part of the Registration Statement. Copies
of such Registration Statement and amendments thereto and of each related
Preliminary
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Prospectus have been delivered to the Underwriters. If such Registration
Statement has not become effective, 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. If such Registration Statement has become effective, a
final Prospectus relating to the Underwritten Shares containing information
permitted to be omitted at the time of effectiveness by Rule 430A will be filed
by the Company with the Commission in accordance with Rule 424(b) of the 1933
Act Regulations promptly after execution and delivery of this Agreement. The
term "Registration Statement" means the registration statement as amended at the
time it became effective, including the most recent post-effective amendment
thereto at the time such post-effective amendment became or becomes effective
(the "Effective Date"), including all material incorporated by reference therein
and any information deemed to be included by Rule 430A and any additional
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations ("Rule 462(b)") with respect to the Underwritten Shares ("Rule
462(b) Registration Statement"). The term "Prospectus" means the prospectus
relating to the Underwritten Shares as first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations or, if no such filing is required,
the form of final prospectus relating to the Underwritten Shares included in the
Registration Statement at the Effective Date. Any reference herein to the
Registration Statement, the Prospectus or any Preliminary Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Form S-1 and Regulation S-K under the 1933 Act which were filed
under the Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations of the Commission thereunder (the "1934 Act Regulations"),
on or before the date of this Agreement, or the issue date of the Prospectus or
any Preliminary Prospectus, as the case may be; and any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, the Prospectus or any Preliminary Prospectus shall be deemed to refer
to and include the filing of any document under the 1934 Act after the date of
this Agreement, or the issue date of the Prospectus or any Preliminary
Prospectus, as the case may be, and deemed to be incorporated therein by
reference. For purposes of this Agreement, all references to the Registration
Statement, any Preliminary Prospectus, or any Prospectus, or any amendment or
supplement to any of the foregoing, shall be deemed to include the copy, if any,
filed with the Commission pursuant to its Electronic Data Gathering Analysis and
Retrieval system ("XXXXX").
(b) On the first date that any Preliminary Prospectus was used,
the date the Prospectus is first filed with the Commission pursuant to Rule
424(b) (if required), at all times subsequent to and including the Delivery Date
(as defined in Section 5 below) and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement, each
Preliminary Prospectus and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included in the Prospectus, did or
will comply with all applicable provisions of the 1933 Act and the 1933 Act
Regulations and did or will contain all statements required to be stated therein
in accordance with the 1933 Act and the 1933 Act Regulations. On the Effective
Date and when any post-effective amendment to the Registration Statement becomes
effective, no part of the Registration Statement or any such amendment did or
will contain any untrue statement of a material
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fact or omit 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. At the Effective Date and at the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Delivery Date the Prospectus did not or will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has not distributed any
written offering material in connection with the offering or sale of the
Underwritten Shares other than the Registration Statement, the Preliminary
Prospectus and the Prospectus. Each Registration Statement, Preliminary
Prospectus and Prospectus filed with the Commission, including those filed by
electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the 1933 Act), was identical to the copy thereof delivered
to the Underwriters for use in connection with the offer and sale of the
Underwritten Shares.
(c) Ernst & Young LLP and Xxxxxx Xxxxxxxx LLP, who have expressed
their opinion with respect to the financial statements and supporting schedules
and related notes included in the Registration Statement and the Prospectus, are
independent public accountants with respect to the Company as required by the
1933 Act and the 1933 Act Regulations.
(d) The financial statements of the Company and the related notes
thereto, included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of the Company
and its subsidiaries, Xxxxxx'x Custom Crafted Furniture Corp. (formerly Xxxxxx'x
Sofa Factory) and KMC Enterprises, Inc. (collectively, the "Subsidiaries" and
each a "Subsidiary") as of the respective dates of such financial statements,
and their consolidated statement of operations and statement of cash flows for
the respective periods covered thereby; said financial statements and related
notes have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis as certified by the independent
accountants named in subsection 3(c) above; and the supporting schedules
included in the Registration Statement present fairly the information required
to be stated therein. No other financial statements or schedules are required to
be included in the Registration Statement. The selected financial and
statistical data set forth in the Prospectus under the captions "Capitalization"
and "Selected Financial Data" fairly present the information set forth therein
on the basis stated in the Registration Statement and have been prepared on an
accounting basis consistent with the consolidated financial statements of the
Company.
(e) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise stated
therein, (i) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, business affairs, or business
prospects of the Company and the Subsidiaries, whether or not arising in the
ordinary course of business, (ii) there have been no transactions entered into
by the Company or the Subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and the Subsidiaries,
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the
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Company or the Subsidiaries on any class of their capital stock. The Company and
the Subsidiaries have no material contingent obligations which are not disclosed
in the Registration Statement.
(f) The Company and the Subsidiaries have been duly incorporated
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, with corporate power and
authority to own, lease and operate their properties and to conduct their
businesses as described in the Prospectus and, in the case of the Company, to
enter into and perform its obligations under this Agreement; the Company and the
Subsidiaries are duly qualified as foreign corporations to transact business and
are in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not, singly or
in the aggregate, have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs, results of operations or business
prospects of the Company and the Subsidiaries, taken as a whole (a "Material
Adverse Effect"). Other than in the Subsidiaries, or as disclosed in the
Registration Statement pursuant to Item 601 of Regulation S-K, the Company does
not own, directly or indirectly, any shares of capital stock or any other equity
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity.
(g) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" and
"Description of Capital Stock" (except for subsequent issuances, if any,
pursuant to this Agreement or pursuant to reservations, agreements, employee or
director benefit plans or the exercise of convertible securities referred to in
the Prospectus); the shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and have not been issued in violation of or are not otherwise
subject to any preemptive or other similar rights; the Company owns,
beneficially and of record, all of the outstanding capital stock of the
Subsidiaries; the 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 pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and fully paid and
nonassessable; the certificates evidencing the Underwritten Shares are in due
and proper form under Delaware law; the authorized capital stock of the Company,
including the Underwritten Shares, conforms to all statements relating thereto
contained in the Prospectus; and the issuance of the Underwritten Shares is not
subject to preemptive or other similar rights. There are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of capital stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of capital stock or any security convertible
into or exchangeable for capital stock, in each case other than as described in
the Prospectus.
(h) The Company and the Subsidiaries: (i) are in material
compliance with any and all applicable foreign, United States, state and local
environmental laws, rules, regulations, treaties, statutes and codes promulgated
by any and all governmental authorities relating to the protection of human
health and safety, the environment or toxic substances or wastes, pollutants or
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contaminates, and all amendments or modifications thereto ("Environmental
Laws"); (ii) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their business as currently
conducted, the absence of which would have a Material Adverse Effect; and (iii)
are in compliance in all material respects with all terms and conditions of any
such permit, license or approval. No action, proceeding, revocation proceeding,
writ, injunction or claim is pending or, to the knowledge of the Company,
threatened against the Company or the Subsidiaries relating to the Environmental
Laws or to the activities of the Company or the Subsidiaries involving Hazardous
Materials. The terms "Hazardous Materials" as used in this Agreement means any
material or substance that: (i) is prohibited or regulated by any Environmental
Laws; or (ii) has been designated or regulated by any governmental authority as
radioactive, toxic, hazardous or otherwise a danger to health, reproduction or
the environment.
(i) Where the Company or any Subsidiary is engaged in the
generation, use, manufacture, transportation or storage of any Hazardous
Materials on any of the properties or former properties of the Company or the
Subsidiaries, the Company and its Subsidiaries have complied in all material
respects with all Environmental Laws relevant to such activities. No Hazardous
Materials have been treated or disposed of on any properties of the Company or
the Subsidiaries, or on properties formerly owned or leased by the Company or
the Subsidiaries, in each case by the Company or, to the knowledge of the
Company, by any other Person, except in material compliance with Environmental
Laws. No spills, discharges, releases, deposits, emplacements, leaks or disposal
of any Hazardous Materials have occurred on or under or have emanated from any
of the Company's properties or former properties of the Company or the
Subsidiaries either as a result of actions by the Company or, to the knowledge
of the Company, by any other Person, for which the cost of remediation would
materially and adversely affect the Company.
(j) Neither the Company nor any Subsidiary is in violation of its
respective charter or bylaws or similar governing instruments or is in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, deed,
trust, note, lease, sublease, voting agreement, voting trust, or other
instrument or agreement to which the Company or the Subsidiaries are a party or
by which the Company or the Subsidiaries may be bound, or to which any of the
property or assets of the Company or the Subsidiaries are subject, unless
irrevocable waiver shall have been obtained with respect to such default and
such default and the waiver thereof shall have been disclosed in writing to the
Underwriters, and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein and compliance by the
Company with its obligations hereunder have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or the Subsidiaries
pursuant to, any contract, indenture, mortgage, loan agreement, deed, trust,
note, lease, sublease, voting agreement, voting trust or other instrument or
agreement to which the Company or the Subsidiaries is a party or by which they
may be bound, or to which any of the property or assets of the Company or the
Subsidiaries are subject, nor will such action result in any violation of the
provisions of the charter
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or bylaws of the Company or any applicable statute, law, rule, regulation,
ordinance, decision, directive or order.
(k) No labor dispute with the employees of the Company or the
Subsidiaries exists or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors.
(l) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or the
Subsidiaries, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which, singly or in the aggregate, might
result in any Material Adverse Effect or which might materially and adversely
affect the consummation of this Agreement; all pending legal or governmental
proceedings to which the Company or the Subsidiaries are a party or of which any
of their respective properties or assets is the subject which are not described
in the Registration Statement, including ordinary routine litigation incidental
to the business, are, considered in the aggregate, not material; and there are
no contracts or documents of the Company or the Subsidiaries which are required
to be filed as exhibits to the Registration Statement by the 1933 Act or by the
1933 Act Regulations which have not been so filed.
(m) No relationship, direct or indirect, exists between or among
the Company and any Subsidiary on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company and any Subsidiary on the
other hand, that is required by the 1933 Act or the 1933 Act Regulations to be
described in the Registration Statement and the Prospectus or documents
incorporated by reference therein that is not described as so required.
(n) The Company and the Subsidiaries own or are licensed to use
all patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service xxxx
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other similar intangible
property and assets (herein called the "Proprietary Rights") which are material
to the businesses of the Company or the Subsidiaries as now conducted and as
proposed to be conducted, in each case as described in the Prospectus. The
description of the Proprietary Rights is correct in all material respects and
fairly and correctly describes the Company's rights with respect thereto.
Neither the Company nor any Subsidiary has any knowledge of, and neither the
Company nor any Subsidiary has given or received any notice of, any pending
conflicts with or infringement of the rights of others with respect to any
Proprietary Rights or with respect to any license of Proprietary Rights. No
action, suit, arbitration, or legal, administrative or other proceeding, or
investigation is pending, or, to the knowledge of the Company, threatened, which
involves any Proprietary Rights. Neither the Company nor any Subsidiary is
subject to any judgment, order, writ, injunction or decree of any court or any
Federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or any
arbitrator, or has entered into or is a party to any contract
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which restricts or impairs the use of any such Proprietary Rights in a manner
which would adversely affect the use of any of the material Proprietary Rights.
To the knowledge of the Company, no Proprietary Rights used by the Company or
the Subsidiaries, and no services or products sold by the Company or the
Subsidiaries, conflict with or infringe upon any proprietary rights available to
any third party. The Company has not received written notice of any pending
conflict with or infringement upon such third party proprietary rights. Neither
the Company nor any Subsidiary has entered into a consent, indemnification,
forbearance to xxx or settlement agreement with respect to Proprietary Rights.
No claims have been asserted against the Company by written notice or formal
proceedings or, to the knowledge of the Company, by other means, by any person
with respect to the validity of the ownership or right to use the Proprietary
Rights of the Company or the Subsidiaries and, to the knowledge of the Company,
there is no reasonable basis for any such claim to be successful. No
registration relating to the Proprietary Rights has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
proceedings, and all applications therefor are pending and are in good standing.
The Company and the Subsidiaries have complied, in all material respects, with
their respective contractual obligations relating to the protection of the
Proprietary Rights used pursuant to licenses. To the knowledge of the Company,
no person is infringing on or violating the Proprietary Rights owned or used by
the Company or the Subsidiaries.
(o) No registration, authorization, approval, qualification or
consent of any court or governmental authority or agency is necessary in
connection with the offering, issuance or sale of the Underwritten Shares
hereunder, except such as may be required under the 1933 Act or the 1933 Act
Regulations or state securities or Blue Sky laws (or such as may be required by
the National Association of Securities Dealers, Inc. ("NASD").
(p) Except as otherwise disclosed in the Prospectus, the Company
and the Subsidiaries now hold and at the Delivery Date will hold, all licenses,
certificates, approvals and permits from all state, United States, foreign and
other regulatory authorities, and any foreign regulatory authorities performing
similar functions, that are material to the conduct of the businesses of the
Company and the Subsidiaries (as such businesses are currently conducted),
except for such licenses, certificates, approvals and permits the failure of
which to hold would not have a Material Adverse Effect, all of which are in
effect (and there is no proceeding pending or, to the knowledge of the Company,
threatened which may cause any such license, certificate, approval or permit to
be withdrawn, canceled, suspended or not renewed). Neither the Company nor any
Subsidiary is in violation of any law, order, rule, regulation, writ, injunction
or decree of any court or governmental agency or body, and neither the Company
nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such permit or any circumstance which would
lead them to believe that such proceedings are, singularly or in the aggregate,
reasonably likely to have or which, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.
(q) The Company has all corporate power and authority to enter
into this Agreement and to perform its obligations hereunder, and all consents,
authorizations, approvals and
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orders required in connection herewith have been obtained, except such as may be
required under state securities or Blue Sky laws or the bylaws and rules of the
NASD and, if the Registration Statement is not effective under the 1933 Act as
of the time of execution hereof, such as may be required (and shall be obtained
as provided in this Agreement) under the 1933 Act. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws nor or hereafter in effect relating to
or affecting creditors, rights generally or by general principles of equity
relating to the availability of remedies and except as rights to indemnity and
contribution hereunder may be limited by federal or state securities laws or the
public policy underlying such laws.
(r) There are no persons with registration or other similar
rights to have any securities (i) registered pursuant to the Registration
Statement or (ii) otherwise registered by the Company under the 1933 Act, other
than, with respect to (i) and (ii) above, those rights whose holders have
received proper notice of the filing of the Registration Statement and have
declined to assert such registration rights (and who now no longer have a right
to do so), those rights which have been waived or are no longer entitled to be
asserted, or other than, with respect to (ii) above, those described in the
Prospectus.
(s) No order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus has been issued and no proceedings for that purpose
are pending, or, to the knowledge of the Company, threatened or contemplated by
the Commission; and no order suspending the offering of the Underwritten Shares
in any jurisdiction designated by the Underwriters pursuant to Section 6(f) of
this Agreement has been issued and no proceeding therefor has been instituted
or, to the knowledge of the Company, are any such proceedings threatened or
contemplated. The Company has complied to the Commission's and any state
securities commission's satisfaction with all requests of the Commission and
such state securities commission with all requests for additional or
supplemental information.
(t) The Company and the Subsidiaries have good and marketable
title to their respective properties, free and clear of all material security
interests, mortgages, pledges, liens, charges, encumbrances, claims and equities
of record, except as disclosed in the Prospectus. The properties of the Company
and the Subsidiaries are, in the aggregate, in good repair (reasonable wear and
tear excepted), and suitable for their respective uses. Any real properties held
under lease by the Company and the Subsidiaries are held by it under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the conduct of the business of the Company or the
Subsidiaries.
(u) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary 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
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general or specific authorization, and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(v) The Company and the Subsidiaries have conducted and are
conducting their businesses in material compliance with all applicable Federal,
state, local and foreign statutes, laws, rules, regulations, ordinances, codes,
decisions, decrees, directives and orders.
(w) Neither the Company nor any Subsidiary nor, to the Company's
or any Subsidiary's knowledge, any employee or agent of the Company or any
Subsidiary, has, directly or indirectly, made any payment of funds of the
Company or the Subsidiaries or received or retained any funds in violation of
any law, rule or regulation, which payment, receipt or retention of funds is of
a character required to be disclosed in the Prospectus, including, without
limitation, any unlawful contribution to any candidate for public office, or
failed to disclose fully contributions in violation of law, or other payments to
any federal, state or foreign 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, any foreign jurisdiction, or any
jurisdiction thereof.
(x) The Company is not now, and after sale of the Shares or the
Option Shares to be sold by it hereunder and application of the net proceeds
from such sale as described in the Prospectus under the caption "Use of
Proceeds" will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(y) All offers and sales of capital stock and other securities of
the Company made within the three years prior to the date hereof were at all
relevant times duly registered or exempt from the registration requirements of
the 1933 Act and were duly registered or qualified or subject to an available
exemption from the registration or qualification requirements of the applicable
state securities or Blue Sky laws. No Person who purchased a security from the
Company prior to the date hereof has any right to rescind his or her purchase or
otherwise seek recovery of the purchase price from the Company.
(z) The Common Stock is registered pursuant to Section 12(g) of
the 1934 Act. The Underwritten Shares have been accepted for listing on the
American Stock Exchange ("AMEX"). The Company has taken no action designed to,
or likely to have the effect of, terminating the registration of the
Underwritten Shares or the Common Stock under the 1934 Act or delisting the
Underwritten Shares or the Common Stock from the AMEX, nor has the Company
received any notification that the Commission or the AMEX is contemplating
terminating such registration or listing.
(aa) Neither the Company, nor, to its knowledge, any of its
officers, directors or affiliates has taken and at the Delivery Date, neither
the Company nor, to its knowledge, any of its officers, directors or affiliates
will have taken, directly or indirectly, any action which has constituted, or
might reasonably be expected to constitute, the stabilization or manipulation of
the
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price of the Common Stock to facilitate the sale or resale of the Underwritten
Shares in connection with the offering of the Underwritten Shares pursuant to
the Registration Statement.
(ab) The Company maintains insurance of the types and in amounts
that it reasonable believes are adequate for its and its Subsidiaries'
businesses and are consistent with insurance coverage maintained by similar
companies in similar businesses, including but not limited to, insurance
covering product liability and real and personal property owned or leased
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(ac) The Company and the Subsidiaries have filed all necessary
federal, state and foreign tax returns required to be filed by them and have
paid or accrued all taxes shown as due thereon, which returns are true and
correct in all material respects, and neither the Company nor any Subsidiary is
in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
(ad) To the knowledge of the Company, if any full-time employee
identified in the Prospectus has entered into any non-competition,
non-disclosure, confidentiality or other similar agreement with any party other
than the Company or any Subsidiaries, such employee is neither in violation
thereof nor is expected to be in violation thereof as a result of the business
conducted or expected to be conducted by the Company or the Subsidiaries as
described in the Prospectus or such person's performance of his obligations to
the Company or any Subsidiaries; neither the Company nor any Subsidiary has
received written notice that any consultant or employee of the Company or the
Subsidiaries is in violation of any noncompetition, non-disclosure,
confidentiality or similar agreement.
(ae) The Company has delivered or caused to be delivered to the
Underwriters an agreement in the form of Attachment A hereto (with respect to
the Company) and in the form of Attachment B hereto (with respect to the
officers, directors and certain affiliates of the Company listed on Attachment C
hereto) to the effect that neither the Company nor any of the officers,
directors or affiliates listed on Attachment C hereto will, without the prior
written consent of the Underwriters, offer, sell, or otherwise dispose of any
shares of capital stock or equity securities of the Company or securities
convertible into, or exchangeable or exercisable for, shares of capital stock of
the Company (other than the Underwritten Shares) for a period of 180 days (with
respect to the Company) and 120 days (with respect to the officers, directors
and affiliates of the Company) after the Delivery Date, subject to the
exceptions set forth in Attachment A with respect to the Company.
2. Representations, Warranties and Covenants of the Selling Stockholder.
The Selling Stockholder represents, warrants and covenants to the Company and to
the Underwriters that:
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(a) The Selling Stockholder is, and at the First Delivery Date
(as defined in Section 5 below) will be, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with
corporate power and authority to own, lease and operate its properties and to
conduct its business.
(b) The Selling Stockholder has all corporate power and authority
to enter into this Agreement and to carry out all the terms and provisions
hereof to be carried out by it. All authorizations and consents necessary for
the execution and delivery by the Selling Stockholder of this Agreement have
been given. This Agreement has been duly authorized, executed and delivered by
or on behalf of the Selling Stockholder and constitutes the valid and binding
agreement of the Selling Stockholder and is enforceable against the Selling
Stockholder in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of remedies and except
as rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws.
(c) The Selling Stockholder has placed in custody under a custody
agreement (the "Custody Agreement") with [First National Bank of Boston], as
custodian (the "Custodian"), for delivery under this Agreement, certificates in
negotiable form (with signature guaranteed by a commercial bank or trust company
having an office or correspondent in the United States or a member firm of the
New York or American Stock Exchange) representing the Firm Shares to be sold by
the Selling Stockholder hereunder.
(d) The Selling Stockholder has duly and irrevocably executed and
delivered a power of attorney (the "Power of Attorney") appointing the Custodian
and one or more other persons, as attorneys-in-fact, with full power of
substitution, and with full authority (exercisable by any one or more of them)
to execute and deliver this Agreement and to take such other action as may be
necessary or desirable to carry out the provisions hereof on behalf of the
Selling Stockholder.
(e) The Selling Stockholder has full power and authority to enter
into the Power of Attorney in the form heretofore furnished to the Selling
Stockholder and the Custody Agreement in the form heretofore furnished to the
Selling Stockholder and to carry out all the terms and provisions thereof to be
carried out by it. All authorizations and consents necessary for the execution
and delivery by the Selling Stockholder of the Power of Attorney and the Custody
Agreement have been given. Each of the Power of Attorney and the Custody
Agreement has been duly authorized, executed and delivered by the Selling
Stockholder and is enforceable against the Selling Stockholder in accordance
with the terms thereof, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect relating to
or affecting creditors' rights generally or by general principles of equity
relating to the availability of remedies.
(f) The Selling Stockholder now has, and at the First Delivery
Date will have, (i) good and marketable title to the Selling Stockholder Shares
to be sold to the Underwriters by the Selling Stockholder hereunder, free and
clear of all encumbrances and adverse claims, and (ii) full
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legal right and power, and all authorizations and approvals required by law, to
sell, transfer and deliver the Selling Stockholder Shares to the Underwriters
and to make the representations, warranties and agreements made by the Selling
Stockholder herein, and upon delivery of such Selling Stockholder Shares and
payment therefor pursuant hereto, good and marketable title to such shares, free
and clear of all encumbrances and adverse claims, will pass to the Underwriters.
(g) None of the execution, delivery or performance of this
Agreement, the Power of Attorney or the Custody Agreement or the consummation of
the transactions contemplated herein or therein by the Selling Stockholder
conflicts or will conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any encumbrance upon, any property or
assets of the Selling Stockholder pursuant to (i) the terms of its
organizational documents; (ii) the terms of any contract or other agreement to
which the Selling Stockholder is a party or by which it is bound or to which any
of its properties is subject, which conflict, breach, violation or default would
adversely affect the Selling Stockholder's ability to perform its obligations
hereunder; (iii) any statute, rule or regulation of any governmental body having
jurisdiction over the Selling Stockholder or any of its activities or
properties; or (iv) the terms of any judgment, decree or order of any
arbitration or governmental body having such jurisdiction.
(h) No consent, approval, authorization or order of, or any
filing or declaration with any governmental body is required for the
consummation by the Selling Stockholder of the transactions on its part
contemplated herein or in the Power of Attorney or Custody Agreement, except
such as may be required under the Exchange Act and applicable state securities
laws in connection with the purchase and distribution of the Underwritten Shares
by the Underwriters, and such as have been obtained under the state securities
or Blue Sky laws and under the NASD rules.
(i) The sale of the Selling Stockholder Shares proposed to be
sold by the Selling Stockholder is not prompted by the Selling Stockholder's
knowledge of any material adverse information concerning the Company or its
Subsidiaries which is not set forth or described in the Prospectus.
(j) On the Effective Date, the date of the Preliminary Prospectus
and the date of the Prospectus, and on the First Delivery Date, the information
with respect to the Selling Stockholder included therein did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.
(k) On the first date that any Preliminary Prospectus was used,
the date the Prospectus is first filed with the Commission pursuant to Rule
424(b) (if required), at all times subsequent to and including the First
Delivery Date, all information with respect to the Selling Stockholder included
in the Registration Statement, each Preliminary Prospectus and the Prospectus
(as amended or as supplemented if the Company shall have filed with the
Commission any amendment or supplement thereto), did or will comply with all
applicable provisions of the 1933 Act
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and the 1933 Act Regulations and did or will contain all statements required to
be stated therein in accordance with the 1933 Act and the 1933 Act Regulations.
(l) The Selling Stockholder has delivered to the Underwriters an
agreement in the form of Attachment B hereto to the effect that it will not,
without the prior written consent of Cruttenden Xxxx Incorporated, Black &
Company, Inc. and Xxxxxx Xxxxxx Capital Group LLC, as representatives of the
several Underwriters (the "Representatives"), offer, sell, or otherwise dispose
of any shares of capital stock or equity securities of the Company or securities
convertible into, or exchangeable or exercisable for, shares of capital stock of
the Company (excluding the Selling Stockholder Shares) for a period of 120 days
after the Delivery Date.
(m) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action which has constituted, or might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Underwritten Shares in
connection with the offering thereof pursuant to the Registration Statement.
3. Purchase of the Underwritten Shares by the Underwriters. On the basis
of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company hereby agrees to sell 2,303,889
shares of the Firm Shares and the Selling Stockholder hereby agrees to sell
2,096,111 shares of the Firm Shares, severally and not jointly, to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of the Firm Shares set opposite that Underwriter's name in
Schedule 1 hereto. Each Underwriter shall be obligated to purchase from the
Company, and from the Selling Stockholder, that number of Firm Shares which
represents the same proportion of the number of Firm Shares to be sold by the
Company, and by the Selling Stockholder, as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule 1 represents of the total
number of shares of the Firm Shares to be purchased by all of the Underwriters
pursuant to this Agreement. The respective purchase obligations of the
Underwriters with respect to the Firm Shares shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 440,000 Option Shares. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Shares and is
exercisable as provided in Section 5 hereof. Option Shares shall be purchased
severally for the account of the Underwriters in proportion to the number of
Firm Shares Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Shares shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Shares other than in 100 share
amounts. The price of both the Firm Shares and any Option Shares payable to the
Company and the Selling Stockholder, as applicable, shall be $__________ per
share.
The Company and the Selling Stockholder shall not be obligated to
deliver any of the Underwritten Shares to be delivered on the First Delivery
Date or the Second Delivery Date (as
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hereinafter defined), as the case may be, except upon payment for the
Underwritten Shares to be purchased on such Delivery Date as provided herein.
4. Offering of Stock by the Underwriters. Upon authorization by the
Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale at the public offering price set forth
on the cover page of and on the terms and conditions set forth in the
Prospectus.
5. Delivery of and Payment for the Underwritten Shares. Delivery of and
payment for the Firm Shares shall be made at the office of Xxxxxxxx & Xxxxxxxx
LLP, at 7:00 a.m., New York City time, on the third full business day following
the date of this Agreement or at such other date or place as shall be determined
by agreement between the Representatives and the Company. This date and time are
sometimes referred to as the "First Delivery Date." On the First Delivery Date,
the Company and the Selling Stockholder shall deliver or cause to be delivered
certificates representing the Firm Shares to the Representatives for the account
of each Underwriter against payment to or upon the order of the Company and the
Selling Stockholder of the purchase price by wire transfer of immediately
available (same day) funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Firm Shares
shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Shares, the Company and the Selling
Stockholder shall make the certificates representing the Firm Stock available
for inspection by the Representatives in Los Angeles, California, not later than
2:00 p.m., New York City time, on the business day prior to the First Delivery
Date. If the Representatives so elect, delivery of the Firm Shares may be made
by credit through full fast transfer to the accounts at the Depositary Trust
Company designated by the Representatives.
At any time on or before the forty-fifth day after the date of this
Agreement the option granted in Section 3 may be exercised by written notice
being given to the Company by the Representatives. Such notice shall set forth
the aggregate number of Option Shares as to which the option is being exercised,
the names in which the Option Shares are to be registered, the denominations in
which the Option Shares are to be issued and the date and time, as determined by
the Representatives, when the Option Shares are to be delivered; provided,
however, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the Option
Shares are delivered are sometimes referred to as the "Second Delivery Date,"
and the First Delivery Date and the Second Delivery Date are sometimes each
referred to as a "Delivery Date."
Delivery of and payment for the Option Shares shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 7:00 a.m., New York City time, on the
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Second Delivery Date. On the Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Shares to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer of immediately
available (same day) funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Option Shares
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Shares, the Company shall make the certificates representing the Option Shares
available for inspection by the Representatives in Los Angeles, California not
later than 2:00 p.m., New York City time, on the business day prior to the
Second Delivery Date. If the Representatives so elect, delivery of the Option
Shares may be made by credit through full fast transfer to the accounts at the
Depositary Trust Company designated by the Representatives.
6. Further Agreements of the Company and the Selling Stockholder. The
Company (as to Sections 6(a)-(l)) and the Selling Stockholder (as to Sections
6(i), 6(k), 6(m)) and 6(n) covenant and agree with the Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as, in the opinion of counsel for the
Underwriters, the Prospectus would be required by law to be delivered in
connection with sales of the Underwritten Shares by an underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Underwriters within a reasonable period of time prior to the filing thereof and
the Underwriters shall not have objected thereto in good faith.
(b) If the Registration Statement has not been declared effective
prior to the execution of this Agreement, the Company will use its best
commercial efforts to cause the Registration Statement to become effective, and
will notify the Underwriters promptly, and will confirm such advice in writing,
(1) when the Registration Statement has become effective and when any
post-effective amendment thereto becomes effective, (2) of any request by the
securities or other governmental authority (including, without limitation, the
Commission) of any jurisdiction for amendments or supplements to the
Registration Statement or the Prospectus or for additional or supplemental
information, (3) of the issuance by any securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (4) of the
happening of any event during the period mentioned in Section 6(a) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (5) of receipt by the Company or any representative or attorney of the
Company of any other communication from the securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction
relating to any of the Registration Statement, any Preliminary Prospectus or the
Prospectus. If at any time any securities or other
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governmental authority (including, without limitation, the Commission) of any
jurisdiction shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
the Underwriters promptly of all such filings. If the Company elects to rely on
Rule 462(b), the Company shall both file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) and pay the applicable filing
fees in accordance with Rule 111 of the 1933 Act Regulations by the earlier of
(A) 10:00 p.m., New York time, on the date of this Agreement and (B) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
(c) If, at any time when a Prospectus relating to the
Underwritten Shares is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus, as then amended or supplemented,
would, in the judgment of counsel to the Company or counsel to the Underwriters,
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or the Registration
Statement, as then amended or supplemented, would, in the judgment of counsel to
the Company or counsel to the Underwriters, include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, or if for any other reason it is necessary, in the
judgment of counsel to the Company or counsel to the Underwriters, at any time
to amend or supplement the Prospectus or the Registration Statement to comply
with the 1933 Act or the 1933 Act Regulations, the Company will promptly notify
the Underwriters and, subject to Section 6(a) hereof, will promptly prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance and will deliver
to the Underwriters, without charge, such number of copies thereof as the
Underwriters may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Underwriters.
(d) The Company will furnish to the Underwriters and their
counsel, without charge, (i) an aggregate of three manually signed copies of the
registration statement described in Section 3(a) hereof and each pre-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto, and any registration statement filed pursuant to Rule 462(b)
and (ii) so long as a prospectus relating to the Underwritten Shares is required
to be delivered under the 1933 Act, as many copies of each Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto as the
Underwriters may reasonably request.
(e) The Company will comply with all the undertakings contained
in the Registration Statement and shall file, on a timely basis, with the
Commission, the NASD, the AMEX and any other securities exchange on which the
securities of the Company are then listed, all periodic and other reports and
documents required to be filed under the Exchange Act.
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(f) Prior to the sale of the Underwritten Shares to the
Underwriters, the Company and the Selling Stockholder will cooperate with the
Underwriters and their counsel in connection with the registration or
qualification of the Underwritten Shares for offer and sale under the state
securities or Blue Sky laws of such jurisdictions as the Underwriters may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject. The Company will advise the Underwriters
promptly of the suspension of the qualification or registration of (or any
exemption relating to) the Underwritten Shares for offering, sale or trading in
any jurisdiction or any initiation or threat of any proceedings for such
purpose, and in the event of the issuance of any order suspending such
qualification or registration or exemption, the Company shall use its best
efforts to obtain the withdrawal thereof at the earliest possible time.
(g) During the period of three years commencing on the Effective
Date, the Company will furnish to the Underwriters: (i) as soon as practicable
after the end of each fiscal year of the Company, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the fiscal year then ended and the opinion thereon of the Company's independent
public or certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K (or
Form 10-KSB, if applicable), Quarterly Report on Form 10-Q (or Form 10-QSB, if
applicable), Current Report on Form 8-K, or other report filed by the Company
with the Commission, the NASD, the AMEX, or any other securities exchange; and
(iii) as soon as available, copies of any reports or communications of the
Company mailed generally to holders of its capital stock.
(h) As soon as practicable, but in any event not later than 45
days after the end of the 12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the Effective Date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company will make
generally available to its security holders, in the manner specified in Rule
158(b) of the 1933 Act Regulations, and to the Underwriters, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the 1933 Act and Rule 158(a) of the
19933 Act Regulations, which statement need not be audited unless required by
the 1933 Act or the 1933 Act Regulations, covering a period of at lest 12
consecutive months after the Effective Date of the Registration Statement.
(i) Neither the Company nor the Selling Stockholder will, at any
time, directly or indirectly, take any action intended, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of any of the Underwritten Shares.
(j) Prior to the Delivery Date, the Company shall furnish to the
Underwriters, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements
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of the Company, for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the Prospectus.
(k) Prior to the Delivery Date, the Company and the Selling
Stockholder will issue no press release or other communications directly or
indirectly and hold no press conferences with respect to the Company, the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company, or the offering of the Underwritten Shares, without
the prior written consent of the Underwriters unless in the opinion of legal
counsel to the Company, and after reasonable advance notification to the
Underwriters, such press release or communication is required by law.
(l) The Company will apply the net proceeds from the offering and
sale of the Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(m) The Selling Stockholder will deliver to the Representatives
prior to or on the First Delivery Date a properly completed and executed United
States Treasury Department Form W-9 or W-8, as applicable (or other applicable
form or statement specified by Treasury Department regulations in lieu thereof).
(n) The Selling Stockholder agrees that the Selling Stockholder
Shares, which are represented by certificates held in custody for the Selling
Stockholder, is subject to the interest of the Underwriters, and that the
arrangements made by the Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholder hereunder shall
not be terminated by any act of the Selling Stockholder, by operation of law, or
the occurrence of any other event.
You may waive in writing the performance by the Company of any one or
more of the foregoing covenants or extend the time for their performance.
7. Expenses.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
all accountable out-of-pocket costs and Expenses incident to the performance of
the obligations of the Company and the Underwriters under this Agreement,
including but not limited to costs and Expenses of or relating to (1) the
preparation, printing and filing of the Registration Statement (including each
pre- and post-effective amendment thereto) and exhibits thereto, any
registration statement filed pursuant to Rule 462(b), each Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
including all fees, disbursements and other charges of counsel to the Company,
(2) the preparation and delivery of certificates representing the Underwritten
Shares, (3) furnishing (including costs of shipping and mailing) such copies of
the Registration Statement (including all pre- and post-effective amendments
thereto), the Prospectus and any Preliminary Prospectus, and all amendments and
supplements to the Prospectus, as may reasonably be requested for use in
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connection with the offering and sale of the Underwritten Shares, (4) the
listing of the Common Stock on the AMEX and withdrawal of the Common Stock from
the Nasdaq SmallCap Market, (5) any filings required to be made by the
Underwriters with the NASD and the registration or qualification of the
Underwritten Shares for offer and sale under the state securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 6(f), including the
reasonable fees, disbursements and other charges of counsel to the Underwriters
in connection therewith and with the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (6) fees, disbursements and other
charges of counsel to the Company and the Company's independent public or
certified public accountants and other advisors, (7) all expenses incident to
the issuance and delivery of the Underwritten Shares (including all printing and
engraving costs), (8) all fees and expenses of the registrar and transfer agent
of the Common Stock, (9) all necessary issue, transfer and other stamp taxes in
connection with the delivery of the Underwritten Shares, and (10) all other
fees, costs and expenses referred to in Item 13 of Part II of the Registration
Statement. The Company shall reimburse the Underwriters for all their
accountable travel expenses, reasonable legal fees, disbursements and other
charges and other out-of-pocket Expenses incurred in connection with the
engagement hereunder, up to a maximum of $100,000, regardless of whether or not
the public offering of the Underwritten Shares is consummated as contemplated
hereby.
(b) The Company, in addition to its other obligations under
Section 7(a) above, and the Selling Stockholder will pay to the Representatives
(individually and not in their capacity as Representatives) a nonaccountable
expense allowance equal to 2.0% of the gross sales price of the Underwritten
Shares to the public, each to pay on a pro rata basis in proportion to the
number of the Underwritten Shares sold by each to the Underwriters. This
nonaccountable expense allowance with respect to the Firm Shares shall be paid
to the Representatives on the First Delivery Date and the nonaccountable
expenses with respect to the Option Shares, if any, shall be paid to the
Representatives on the Second Delivery Date (and shall be contingent on the
closing of the sale of the Option Shares), and liability for such payments shall
be several and not joint. The Company has previously paid to the Representatives
a fee of $____________ (the "Deposit") which shall be credited to this
nonaccountable expense allowance. If the sale of the Firm Shares is not
completed for any reason, including the failure of the Underwriters to complete
the offering contemplated by this Agreement (except if the Company prevents such
completion or if the failure to complete the offering is the result of the
breach by the Company of any representation, warranty or agreement contained
herein), the Representatives will return the Deposit, less any actual
out-of-pocket expenses incurred by the Underwriters.
(c) If, within three months after the termination of this
Agreement, the Company or the Selling Stockholders shall sell any shares of
Common Stock to investors previously identified and/or contacted by the
Underwriters in their capacity as such, as set forth on a list furnished to the
Company and the Selling Stockholder within a reasonable period of time after
such termination, then the Company and/or the Selling Stockholder, as
appropriate, shall pay the Underwriters, at the time of each such sale, an
amount equal to the underwriting discounts or commissions otherwise contemplated
with respect to the gross proceeds to the Company or the Selling Stockholder
from each such sale.
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8. Conditions of the Obligations of the Underwriters. The obligations of
the Underwriters hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Underwriters not later than 5:30 p.m., Los
Angeles time, on the date of this Agreement or at such later date and time as
shall be consented to by the Representatives and all filings required by Rule
424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Underwritten Shares under the securities or Blue Sky laws
of any jurisdiction shall be in effect and no proceeding for such purpose shall
be pending before or threatened or contemplated by any securities or other
governmental authority (including, without limitation, the Commission), (iii)
any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission or such authorities and (iv) after the date hereof no amendment
or supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Underwriters and the
Underwriters did not object thereto in good faith, and the Underwriters shall
have received certificates, dated the Delivery Date and signed by the President
and Chief Executive Officer or the Chairman of the Board of Directors of the
Company, and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii) above.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there shall not have been
a material adverse change in the general affairs, business, prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company and the Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and the
Prospectus and (ii) neither the Company nor any Subsidiary shall have sustained
any material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus, if in the judgment of the Underwriters any such development makes it
impracticable or inadvisable to consummate the sale and delivery of the
Underwritten Shares to the public at the public offering price.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or the
Subsidiaries or any of its officers or directors in their capacities as such,
before or by any Federal, state or local court, commission, regulatory body,
administrative agency
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or other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling decision or finding would have a Material
Adverse Effect.
(e) Each of the representations and warranties of the Company and
the Selling Stockholder contained herein shall be true and correct at the
Delivery Date, as if made on such date, and all covenants and agreements herein
contained to be performed on the part of the Company and the Selling Stockholder
and all conditions herein contained to be fulfilled or complied with by the
Company at or prior to the Delivery Date shall have been duly performed,
fulfilled or complied with.
(f) The Underwriters shall have received:
(i) The favorable opinion, dated as of the Delivery Date,
of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect
that:
(A) The Company and the Subsidiaries have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation.
(B) The Company and the Subsidiaries have corporate
power and authority to own their properties and carry on their
businesses as described in the Registration Statement and the
Prospectus and the Company has corporate power and authority to
enter into and perform its obligations under this Agreement.
(C) The Company is duly qualified to transact
business and is in good standing in each state of the United
States in which the conduct of its business or the ownership or
leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing
would not materially and adversely affect the Company or its
business, properties, financial condition or results of
operations.
(D) The authorized, issued and outstanding number
of shares of capital stock of the Company is as set forth under
the caption "Capitalization" in the Prospectus and in the
Preliminary Prospectus as of the dates therein. The issued and
outstanding capital stock of the Company has been duly
authorized, validly issued, fully paid and is non-assessable and
has not been issued in violation of or is not otherwise subject
to any preemptive rights set forth in the Certificate of
Incorporation, Bylaws or any agreement or other arrangement known
to counsel. All offers and sales of the Company's capital stock
or securities since January 1, 1992, including all offers and
sales of securities described in Item 15 of Part II of the
Registration Statement, were either duly registered or qualified
under the 1933 Act or were exempt from the registration
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requirements of the 1933 Act, assuming that all representations
made to the Company by any purchaser of such capital stock were
true and correct when made.
(E) Issuance and sale of the Underwritten Shares to
be sold by the Company to the Underwriters under the terms of
this Agreement have been duly authorized by the Company and, when
such shares are issued and delivered by the Company, pursuant to
the terms of this Agreement and the Company receives the
consideration recited herein, such Underwritten Shares will be
validly issued, and fully paid and non-assessable and the
issuance of the Underwritten Shares is not subject to preemptive
or, to their knowledge, other similar rights granted by the
Company.
(F) To their knowledge, except as described in the
Prospectus, (i) there are no outstanding options, warrants or
other rights granted to or by the Company to purchase shares of
Common Stock or other securities of the Company or the
Subsidiaries, and (ii) there are no commitments, plans or
arrangements to issue any shares of Common Stock or other
securities of the Company or the Subsidiaries.
(G) This Agreement has been duly authorized,
executed and delivered by the Company.
(H) The form of certificate evidencing the
Underwritten Shares is in due and proper form under Delaware law.
(I) To their knowledge, except as described in the
Registration Statement or in the Prospectus, there are no
actions, suits or proceedings pending or threatened to which the
Company or the Subsidiaries are a party that are required to be
described in the Registration Statement or the Prospectus and are
not so described.
(J) The information set forth in the Prospectus
under the captions "Risk Factors - Control by Principal
Stockholders," "Risk Factors - Potential Adverse Market Impact of
Shares Eligible for Future Sale," "Risk Factors Antitakeover
Effects of Certain Charter Provisions, and Delaware Law,"
"Business Trademarks and Patents," "Business - Governmental
Regulations," "Business - Legal Proceedings," "Management - 1997
Management Committee Incentive Award Program," "Management -
Stock Plans," "Management - Employment Agreements," "Certain
Transactions," and "Description of Capital Stock," and in Part II
of the Registration Statement under the captions "Indemnification
of Directors and Officers," and "Recent Sales of Unregistered
Securities," to the extent that they constitute a summary of
legal matters, documents or proceedings referred to therein, have
been reviewed by us and fairly present and summarize, in all
material respects, the information called for respect to such
legal matters, documents and proceedings under the 1933 Act and
the 1933 Act Regulations.
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(K) To their knowledge, there are no agreements,
contracts, leases or other documents to which the Company is a
party of a character required to be described or referred to in
the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which are not described or
referred to therein or filed as required and, to their knowledge,
the Company is not in default in the due performance or
observance of any material obligation, agreement, covenant or
condition contained in any material instrument or agreement filed
as an exhibit to the Registration Statement.
(L) No consent, approval, authorization or order of
or qualification with any court, government or governmental
agency or body having jurisdiction over the Company or over any
of its properties or operations is necessary in connection with
the consummation by the Company of the transactions contemplated
in this Agreement and the compliance by the Company with its
obligations thereunder on the Delivery Date, other than the
filing of the Registration Statement and the Prospectus with the
Commission and the issuance of an effectiveness order by the
Commission with respect to the Registration Statement, all of
which have been, or will prior to the Delivery Date be,
completed.
(M) Neither the execution and delivery nor the
performance of this Agreement by the Company (i) conflicts with
any provision of the Certificate Incorporation or Bylaws of the
Company, (ii) violates any law applicable to the Company, or
(iii) results in a breach or violation of, or constitutes a
default under, any term of any agreement or instrument filed as
an exhibit to the Registration Statement or of any order, writ or
decree, of which they have knowledge, of any court, governmental
agency or body.
(N) To their knowledge, there are no proceedings,
pending or threatened before any regulatory body or agency, which
if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
(O) To their knowledge, all holders of securities
of the Company who have rights to the registration of Common
Stock or other securities because of the filing of the
Registration Statement by the Company have waived such rights or
have received proper notice of the filing of the Registration
Statement and have not asserted, and no longer have the right to
assert, such rights.
(P) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
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(Q) The Registration Statement has become effective
under the 1933 Act; any required filing of the Prospectus, and
any supplements thereto pursuant to Rule 424(b) has been made in
the manner and within the time period required; and to their
knowledge and information, no stop order suspending the
effectiveness of the Registration Statement or any part thereof
has been issued and no proceedings therefor have been instituted
or are pending or contemplated under the 1933 Act.
Following their opinions required by subsection (f)(i) of
this Section 8, Xxxxxxxx & Xxxxxxxx LLP shall additionally state that
nothing has come to their attention that leads them to believe that the
Registration Statement (except for financial statements and schedules
and other financial and statistical information included therein, as to
which counsel need make no 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, in light of the circumstances under which they were
made, not misleading or that the Prospectus (except for financial
statements and schedules and other financial and statistical information
included therein, as to which counsel need make no statement), as of its
date (unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in connection with
the offering of the Underwritten Shares which differs from the
Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is first
provided to the Underwriters for such use) or at the Delivery Date,
included or includes an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(ii) The favorable opinion, dated the Delivery Date, of
Xxxxxx X. Xxxxxx, Esquire, counsel for the Company, in form and
substance satisfactory to the Underwriters, to the effect that:
(A) Except as described in the Registration
Statement or in the Prospectus, there are no actions, suits or
proceedings pending or, to counsel's knowledge, threatened to
which the Company or the Subsidiaries are a party that are
reasonably likely to have a Material Adverse Effect.
(B) Except as disclosed in writing to the
Representatives there are no proceedings, pending or, to
counsel's knowledge, threatened before any regulatory body or
agency to which the Company is a party or otherwise involving the
Company.
(C) The Company is in compliance with and has
conducted its businesses (and the businesses of its Subsidiaries)
in material conformity with all applicable laws and regulations
relating to the operation of such businesses as described in the
Registration Statement.
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Following her opinions required by subsection (f)(ii) of
this Section 8, Xxxxxx X. Xxxxxx, Esquire shall additionally state that
nothing has come to her attention that leads her to believe that the
Registration Statement (except for financial statements and schedules
and other financial and statistical information included therein, as to
which counsel need make no 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, in light of the circumstances under which they were
made, not misleading or that the Prospectus (except for financial
statements and schedules and other financial and statistical information
included therein, as to which counsel need make no statement), as of its
date (unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in connection with
the offering of the Underwritten Shares which differs from the
Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is first
provided to the Underwriters for such use) or at the Delivery Date,
included or includes an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) The favorable opinion, dated the Delivery Date, of
Stroock & Stroock & Xxxxx LLP, counsel for the Selling Stockholder, in
form and substance satisfactory to the Underwriters, to the effect that:
(A) To such counsel's knowledge, the Selling
Stockholder has full right, power and authority to enter into
this Agreement, the Power of Attorney and the Custody Agreement;
the execution, delivery and performance of this Agreement, the
Power of Attorney and the Custody Agreement by the Selling
Stockholder and the consummation by the Selling Stockholder of
the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
statute, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which
the Selling Stockholder is a party or by which the Selling
Stockholder is bound or to which any of the property or assets of
the Selling Stockholder is subject, which breach, violation or
default is reasonably likely to have a material adverse effect on
the performance of such Selling Stockholder's obligations
hereunder, nor will such actions result in any violation of any
statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over
the Selling Stockholder or the property or assets of the Selling
Stockholder, and, except for the registration of the Selling
Stockholder Shares under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state
securities laws in connection with the purchase of the Selling
Stockholder Shares by the Underwriters and the distribution of
such shares by the
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Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental
agency or body (except for those consents, approvals,
authorizations, orders, filings or registrations, which, if not
secured, filed or registered, as applicable, would not have a
material adverse effect on the performance of such Selling
Stockholder's obligations hereunder) is required for the
execution, delivery and performance of this Agreement, the Power
of Attorney or the Custody Agreement by the Selling Stockholder
and the consummation by the Selling Stockholder of the
transactions contemplated hereby and thereby;
(B) This Agreement has been duly executed and
delivered by or on behalf of the Selling Stockholder;
(C) A Power-of-Attorney and a Custody Agreement
have been duly executed and delivered by the Selling Stockholder
and, to such counsel's knowledge, constitute valid and binding
agreements of such Selling Stockholder, enforceable in accordance
with their respective terms subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws relating to or affecting creditor's rights generally
(and court decisions with respect thereto), equitable principles
(whether considered in a proceeding in equity or at law) or an
implied covenant of good faith and fair dealing;
(D) Immediately prior to the date of this Agreement
and the First Delivery Date, the Selling Stockholder had, to such
counsel's knowledge, full right, power and authority to sell,
assign, transfer and deliver such shares to be sold by such
Selling Stockholder hereunder; and
(E) All rights of the Selling Stockholder in the
Selling Stockholder Shares have been transferred to the
Underwriters and, in addition, each Underwriter (whom such
counsel may assume to be a "protected purchaser") has acquired
its interest in the Selling Stockholder Shares to be acquired by
it free of any "adverse claim" (as such terms are defined in the
Uniform Commercial Code and interpretations thereof as in effect
in the State of New York).
Following their opinions required by subsection (f)(iii) of this
Xxxxxxx 0, Xxxxxxx & Xxxxxxx & Xxxxx XXX shall additionally state that no facts
have come to the attention of such counsel which lead it to believe that the
Registration Statement, as of the Effective Date, contained any untrue statement
of a material fact relating to the Selling Stockholder or omitted to state such
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading (other than financial statements and related
schedules and other financial and statistical information contained therein as
to which such counsel need express no opinion), or that the Prospectus contains
any untrue statement of a material fact relating to the Selling Stockholder or
omits to state such 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.
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(g) At the time of the execution of this Agreement, the
Underwriters shall have received from Ernst & Young LLP, former independent
public accountants for the Company, and from Xxxxxx Xxxxxxxx LLP, independent
accountants for the Company, as appropriate, a letter dated such date and
addressed to the Underwriters, in form and substance satisfactory to the
Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
and capital stock information contained in the Registration Statement and the
Prospectus.
(h) The Underwriters shall have received from Ernst & Young LLP,
former independent accountants for the Company, and from Xxxxxx Xxxxxxxx LLP,
independent accountants for the Company, as appropriate, a letter addressed to
the Underwriters, and in form and substance satisfactory to the Underwriters,
dated as of the Delivery Date, to the effect that they reaffirm the statements
made in the letters furnished pursuant to subsection (g) of this Section 8.
(i) At the Delivery Date, there shall be furnished to the
Underwriters a certificate, dated the date of its delivery, signed by each of
the Chief Executive Officer and the Chief Financial Officer of the company, in
form and substance satisfactory to the Underwriters, to the effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus and (i) as of the date of
such certificate, (x) the Registration Statement does not contain any
untrue statement of a material fact or omit 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 (y) the Prospectus does not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading and (ii) since the Effective Date, no event has occurred
as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue or
misleading in any material respect.
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and are,
at the time such certificate is delivered, true and correct in all
material respects.
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the date of such certificate has
been duly, timely and fully performed and each condition herein required
to be complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(iv) No stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or, to their
knowledge, are contemplated by the Commission.
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(v) Subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change
in the financial position or results of operations of the Company or the
Subsidiaries, except as set forth in or contemplated by the Prospectus.
(j) The Underwritten Shares shall be qualified for sale in such
states as the Underwriters may reasonably request, each such qualification shall
be in effect and not subject to any stop order or other proceeding on the
Delivery Date.
(k) The Common Stock (including Underwritten Shares) shall have
been approved for listing on the AMEX, and, contingent upon such approval,
withdrawn from the Nasdaq SmallCap Market.
(l) The Underwriters and counsel for the Underwriters shall have
been furnished with such documents and opinions as they may require in order to
evidence the accuracy of any of the representations or warranties or the
fulfillment of any of the conditions herein contained; and all proceedings taken
by the Company in connection with the issuance and sale of the Underwritten
Shares as herein contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters. Any certificate or document
signed by any officer of the Company and delivered to you or to your counsel
shall be deemed a representation and warranty by the Company to each of you as
to the statements made therein and such statements are true and correct except
where the inaccuracy of such statements alone or in the aggregate would not have
a Material Adverse Effect.
(m) The Selling Stockholder shall have furnished to the
Underwriters such certificates, in addition to those specifically mentioned
herein, as the Underwriters may have reasonably requested as to the accuracy and
completeness at the Delivery Date of any statement in the Registration Statement
or the Prospectus regarding the Selling Stockholder, as to the accuracy at the
Delivery Date of the representations and warranties of the Selling Stockholder,
as to the performance by the Selling Stockholder of its obligations hereunder,
or as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Underwriters.
(n) The NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and agreements.
(o) As of the date hereof the Company, its directors and
officers, and certain affiliates of the Company (as designated on Attachment C
hereto by the Company), and the Selling Stockholder, shall have furnished to the
Underwriters "lock-up" agreements substantially in the forms of Attachment A and
Attachment B hereto, and such agreements shall be in full force and effect on
the Delivery Date.
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9. Indemnification.
(a) The Company shall indemnify and hold harmless the
Underwriters and the Selling Stockholder, the directors, officers, employees and
agents of the Underwriters and the Selling Stockholder and each person, if any,
who controls the Underwriters or the Selling Stockholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act from and against any
and all losses, claims, liabilities, expenses and damages, joint or several
(including any and all investigative, reasonable legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which any of them may
become subject under the 1933 Act, the 1934 Act, or other Federal or state
statutory law or regulation, at common law or otherwise. Such indemnity shall
not, however, cover any such loss, claim, damage, liability, cost or expense
which is held in a final judgment of a court to have arisen primarily out of the
gross negligence or willful misconduct of the Underwriters, or the failure of
the Underwriters to deliver a Prospectus if it fails to correct such deficiency
under the 1933 Act. This indemnity agreement will be in addition to any
liability which the Company may otherwise have. The Company will not, without
the prior written consent of the Underwriters or the Selling Stockholder (which
consent shall not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification has been sought hereunder
(whether or not such Underwriters or the Selling Stockholder or any person who
controls such Underwriters or the Selling Stockholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act is a party to each
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Underwriters and the Selling
Stockholder and each such controlling person from all liability arising out of
such claim, action, suit or proceeding and does not impair or alter the business
or affairs of the Underwriters or the Selling Stockholder.
(b) The Selling Stockholder shall indemnify and hold harmless the
Underwriters and the Company, the directors, officers, employees and agents of
the Underwriters and the Company and each person, if any, who controls the
Underwriters or the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act from and against any and all losses, claims,
liabilities, expenses and damages, joint or several (including any and all
investigative, reasonable legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which any of them may become subject under
the 1933 Act, the 1934 Act, or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based on a breach of the terms and conditions of this
Agreement, or arise out of or are based upon the inaccuracy of any
representation made by the Selling Stockholder herein or any untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
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 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, the
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Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Selling Stockholder expressly for use therein, and provided further that, in
the event the sale of the Selling Stockholder Shares is not consummated and this
Agreement is terminated, the liability of the Selling Stockholder shall be
limited to the reimbursement of the Selling Stockholder's proportionate share of
the accountable expenses of the Underwriters as provided in Section 7 hereof.
This indemnity agreement will be in addition to any liability which the Selling
Stockholder may otherwise have. The Selling Stockholder will not, without the
prior written consent of the Underwriters or the Company (which consent will not
be unreasonably withheld), settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification has been sought hereunder (whether or not such
Underwriters or the Company or any person who controls such Underwriters or the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Underwriters and the Company and each such controlling person from all liability
arising out of such claim, action, suit or proceeding. Such indemnity shall not,
however, cover any such loss, claim, damage, liability, cost or expense which is
held in a final judgment of a court to have arisen primarily out of the gross
negligence or willful misconduct of the Underwriters or the failure of the
Underwriters to deliver a Prospectus if it fails to correct such deficiency
under the 1933 Act. This indemnity agreement will be in addition to any
liability which the Selling Stockholder may otherwise have. The liability of the
Selling Stockholder under this section shall be limited to an amount equal to
the aggregate public offering price of the Selling Stockholder Shares sold by
the Selling Stockholder.
(c) Each Underwriter will severally (and not jointly) indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement, the Selling Stockholder and each person, if any, who
controls the Company or the Selling Stockholder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act from and against any losses,
claims, liabilities, expenses and damages (including any and all investigative,
reasonable legal and other expenses reasonably incurred in connection with, and
any amount paid in settlement of, any action, suit or proceeding or any claim
asserted if such settlement is effected with the written consent of the
Underwriters), to which any of them may become subject under the 1933 Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
or alleged untrue statement of any material fact contained in the Registration
Statement, 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 in which it was 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, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or on behalf
of that Underwriter expressly for use therein. It is expressly acknowledged and
agreed by the Company and the Selling Stockholder that the only written or other
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information furnished to the Company and the Selling Stockholder by or on behalf
of the Underwriters for use in the Registration Statement, the Prospectus, or
any amendment or supplement thereto is the information set forth on the cover
page of the Prospectus with respect to the public offering price, the legend
concerning over-allotments on the inside front cover page of the Prospectus, and
the information set forth in the Prospectus under the caption "Underwriting."
The liability of each Underwriter under this section shall be limited to an
amount equal to the underwriting discounts and commissions received by it under
this Agreement.
(d) Any party that proposes to assert the right to be indemnified
under this Section 9 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 9 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by, or
otherwise prejudices, the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded that a conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party that would prevent the counsel selected by the
indemnifying party from representing the indemnified party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (3) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
paid by the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred and demand delivered
therefor. No indemnifying party will, without the prior written consent of the
indemnified parties (which consent will not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which
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indemnification has been sought hereunder (whether or not the indemnified
parties are parties to such claim, action, suit or proceeding), 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 will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Selling Stockholder
or the Underwriters, each indemnifying party will contribute to the total
losses, claims, liabilities, expenses and damages (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company from persons other than
the Underwriters such as persons who control the Company within the meaning of
the 1933 Act or the 1934 Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for
contribution) to which the Company, the Selling Stockholder and the Underwriters
may be subject in proportion to the relative benefits received by the Company,
the Selling Stockholder and the Underwriters and the relative fault of the
Company, the Selling Stockholder and the Underwriters, with respect to the
statements or omissions which resulted in such loss, claim, liability, expense
or damage, or action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. The relative benefits received by
the Company, the Selling Stockholder and the Underwriters shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting Company expenses) received by the Company and the Selling Stockholders
as set forth in the table on the cover page of the Prospectus bear to the
underwriting discounts and commissions received by the Underwriters hereunder.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, the
Selling Stockholder or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9(e) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. Notwithstanding the provisions of this
Section 9(e), the Underwriters shall not be required to contribute any amount in
excess of the underwriting discounts and commissions received by them under this
Agreement, the Selling Stockholder shall not be required to contribute any
amount in respect of which it would not have had an indemnification obligation
under Section 9(b) above, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section ll(f) of the 0000 Xxx) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9(e), any person who controls a
party to this Agreement within the meaning of the 1933 Act or the 1934 Act will
have the same rights to contribution as that party, and each director of the
Company and each officer of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject
32
33
in each case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim for contribution may be made under this
Section 9(e), will notify any such party or parties from whom contribution may
be sought, but the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it or they may
have under this Section 9(e). No party will be liable for contribution with
respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
10. Termination. The obligations of the Underwriters under this
Agreement may be terminated at any time prior to the delivery of and payment for
the Underwritten Shares, by notice to the Company from the Representatives,
without liability on the part of the Underwriters to the Company or the Selling
Stockholder if, prior to delivery and payment for the Underwritten Shares, in
the sole judgment of the Representatives (i) trading in the Common Stock of the
Company shall have been suspended by the Commission, by Nasdaq, or by the AMEX,
(ii) trading in securities generally on the New York Stock Exchange, the AMEX,
or the Nasdaq National Market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on any of such exchanges,
or additional material governmental restrictions, not in force on the date of
this Agreement, shall have been imposed upon trading in securities generally by
any of such exchanges or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by Federal or New York State authorities or (iv) any material adverse
change in the financial or securities markets in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred, the effect of any of which is such as to make it, in the sole judgment
of the Underwriters, impracticable or inadvisable to market the Underwritten
Shares on the terms and in the manner contemplated by the Prospectus.
11. Defaulting Underwriters. If, on either Delivery Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Underwritten Shares which the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions which the number of
Firm Shares set opposite the name of each remaining non-defaulting Underwriter
in Schedule 1 hereto bears to the total number of Firm Shares set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Underwritten Shares on such Delivery Date if
the total number of Underwritten Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of Underwritten Shares to be purchased on such Delivery Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of Underwritten Shares which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 5. If the foregoing maximums
are exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Underwritten Shares to be purchased on such
Delivery Date. If the remaining Underwriters or other underwriters satisfactory
to the
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Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Shares)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company or the Selling Stockholder, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Section 7.
As used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 11, purchases Underwritten
Shares which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Stockholders for damages
caused by its default. If other Underwriters are obligated or agree to purchase
the Stock of a defaulting or withdrawing Underwriter, either the Representatives
or the Company may postpone the Delivery Date for up to seven full business days
in order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
12. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 000 Xxxxx
Xxxxx Xxxxxx, Xxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxxxx X. Xxxxxx, Esquire
or (b) if to the Underwriters, at the office of Cruttenden Xxxx Incorporated,
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxxxxxx Xxxxxxxx or (c) if to the Selling Stockholder, at the
office of Worms & Co., Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xx. Xxxxxxxxx Xxxxxx. Any such notice shall be effective only upon
receipt. Any notice under Section 9 may be made by facsimile or telephone, but
if so made shall be subsequently confirmed in writing.
13. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers, the
Selling Stockholder and the Underwriters set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement shall remain in
full force and effect, regardless of (i) any investigation made by or on behalf
of the Company, any of its officers or directors, the Selling Stockholder, the
Underwriters or any controlling person referred to in Section 9 hereof and (ii)
delivery of and payment for the Underwritten Shares. The respective agreements,
covenants, indemnities and other statements set forth in Sections 7 and 9 hereof
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
14. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the Underwriters, the Selling Stockholder, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and
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35
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnification and contribution contained in Sections 9(a) and (e) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Underwriters and any person or persons who control the
Underwriters within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and (ii) the indemnification and contribution contained in Sections
9(b), (c) and (e) of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act. No
Person shall be deemed a successor because of his or its purchase of any
Underwritten Shares.
15. Headings. Section headings in this Agreement are for convenience of
reference only, do not constitute a part of this Agreement, and shall not affect
its interpretation.
16. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company, the Selling
Stockholder and the Underwriters.
17. Applicable Law. The validity and interpretations of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to any provisions relating to conflicts of laws.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURES APPEAR ON FOLLOWING PAGE; REMAINDER OF THIS
PAGE LEFT INTENTIONALLY BLANK]
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36
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement between the Company, the Selling Stockholder
and the Underwriters in accordance with its terms.
Very truly yours,
XXXXXX'X FURNITURE, INC.
By:_______________________________________________
Name:
Title:
JAPAN OMNIBUS LTD.
By:_______________________________________________
As Attorney-in Fact for the Selling Stockholder
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date first
above written.
CRUTTENDEN XXXX INCORPORATED
XXXXXX XXXXXX CAPITAL GROUP, LLC
BLACK & COMPANY, INC.
By: Cruttenden Xxxx Incorporated
By:_______________________________
Name:
Title:
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37
ATTACHMENT A
Cruttenden Xxxx Incorporated
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxx Capital Group, LLC
[ADDRESS]
Black & Company, Inc.
[ADDRESS]
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement (the "Underwriting
Agreement"), which will be executed between Xxxxxx'x Furniture, Inc., a Delaware
corporation (the "Company"), Japan Omnibus Ltd., and Cruttenden Xxxx
Incorporated, Black & Company, Inc. and Xxxxxx Xxxxxx Capital Group LLC, as
Representatives of the several Underwriters named therein (the "Underwriters").
All capitalized terms not otherwise defined herein shall have the meanings given
to such terms in the Underwriting Agreement.
In consideration of the Underwriting Agreement, the undersigned hereby
agrees not to, without the prior written consent of the Underwriters, offer,
sell or otherwise dispose of any shares of the Company's Common Stock, par value
$0.001 per share (the "Common Stock") (other than the Shares or Option Shares)
or any other equity securities of the Company, including securities convertible
into or exercisable or exchangeable for Common Stock, for a period of 180 days
after the Delivery Date, except with respect to (i) the issuance of securities
pursuant to contractual obligations of the Company in effect on November 10,
1997 to the extent disclosed in writing to the Underwriters prior to the
effective date of the Registration Statement , (ii) the issuance of shares of
Common Stock or stock options to purchase shares of Common Stock under any
employee benefit or purchase plan of the Company in effect on November 10, 1997,
or (iii) securities of the Company issued on a pro rata basis to all holders of
a class of outstanding equity securities of the Company.
It is understood that, if the Underwriting Agreement does not become
effective, the undersigned will be released from his obligations under this
letter agreement.
Dated: _____________, 1998
Very truly yours,
XXXXXX'X FURNITURE, INC.
By:_____________________________________
Name:
Title:
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38
ATTACHMENT B
Cruttenden Xxxx Incorporated
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxx Capital Group, LLC
[ADDRESS]
Black & Company, Inc.
[ADDRESS]
Ladies and Gentlemen:
Reference is made to an Underwriting Agreement (the "Underwriting
Agreement"), which will be executed between Xxxxxx'x Furniture, Inc., a Delaware
corporation (the "Company"), Japan Omnibus Ltd., and Cruttenden Xxxx
Incorporated, Black & Company, Inc. and Xxxxxx Xxxxxx Capital Group LLC, as
Representatives of the several Underwriters named therein (the "Underwriters").
All capitalized terms not otherwise defined herein shall have the meanings given
to such terms in the Underwriting Agreement.
In consideration of the Underwriting Agreement, the undersigned hereby
agrees not to, without the prior written consent of the Underwriters, offer,
sell or otherwise dispose of any shares of the Company's Common Stock, par value
$0.001 per share (the "Common Stock") (other than the Selling Stockholder
Shares), or any other equity securities of the Company, including securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of 120 days after the Delivery Date.
It is understood that, if the Underwriting Agreement does not become
effective, the undersigned will be released from his or its obligations under
this letter agreement.
Dated: _____________, 1998
Very truly yours,
By:_________________________________
Name:
Title:
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ATTACHMENT C
List of persons from whom Lock-Up Letters received:
General Electric Capital Corporation
Permal Group
Permal Capital Management, Inc.
Permal Services, Inc.
Permal Capital Partners, L.P.
Permal Asset Management
Permal Special Opportunities, Ltd.
Xxxx X. Xxxxxxx
Xxxxx Xxxxxx Xxxxxx
Xxxxxx X. XxXxxxx
Xxxxxx X. XxXxxxx and Xxxxx X. XxXxxxx
United Gulf Bank (B.S.C.) B.C.
Kuwait Investment Projects
ATCO Holdings, Ltd.
ATCO Development, Inc.
Worms & Cie
Worms & Co., Inc.
00
XXXXX OMNIBUS LTD.
(Name of Selling Stockholder -
Please Print or Type)
CUSTODY AGREEMENT AND POWER OF ATTORNEY
FOR SALE OF COMMON STOCK OF
XXXXXX'X FURNITURE, INC.
Xxxxxx'x Furniture, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx, Xxxxxxxxxx 00000-0000
[CUSTODIAN]
Ladies and Gentlemen:
Xxxxxx'x Furniture, Inc., a Delaware corporation (the "Company"),
and the undersigned, Japan Omnibus Ltd. (hereinafter sometimes referred to as
"Selling Stockholder"), propose to sell certain shares of Common Stock, $0.001
par value per share, of the Company ("Common Stock") to the Underwriters (the
"Underwriters") for whom Cruttenden Xxxx Incorporated, Black & Company, Inc. and
Xxxxxx Xxxxxx Capital Group, LLC (the "Representatives") will act as
representatives for distribution under a Registration Statement on Form S-1 (the
"Registration Statement") to the public at a price and on terms to be hereafter
determined. It is understood that at this time there is no commitment on the
part of the Underwriters to purchase any shares of Common Stock and no assurance
that an offering of Common Stock will take place. The shares of Common Stock
which the undersigned proposes to sell to the Underwriters pursuant to the
Underwriting Agreement hereinafter mentioned are referred to herein as the
"Shares."
1. Appointment and Powers of Attorneys-in-Fact.
A. The undersigned hereby irrevocably constitutes and appoints
________________ and ______________ (the "Attorneys-in-Fact"), and each of them,
as its agent and Attorneys-in-Fact, with full power of substitution, with
respect to all matters arising in connection with the public offering and sale
of the Shares, including, but not limited to, the power and authority on behalf
of the undersigned to do or cause to be done any of the following things:
(i) negotiate, determine and agree upon (a) the price at
which the Shares will be initially offered to the public by the Underwriters
pursuant to the Underwriting Agreement, as hereinafter defined, (b) the
underwriting discounts and commissions with respect to the Shares, and (c) the
price at which the Shares will be sold to the Underwriters by the Selling
Stockholder pursuant to the Underwriting Agreement;
41
(ii) prepare, execute and deliver an Underwriting
Agreement the "Underwriting Agreement"), substantially in the form agreed to by
and among the Company, the Selling Stockholder and the Underwriters, delivered
to the undersigned concurrently herewith, receipt of which is acknowledged, but
with such insertions, changes, additions or deletions as the Attorneys-in-Fact
shall approve as not materially adverse to the undersigned (which may include a
decrease, but not an increase, in the number of shares of Common Stock to be
sold by the undersigned), such approval to be conclusively evidenced by the
execution and delivery of the Underwriting Agreement by an Attorney-in-Fact,
including the exercise of all authority thereunder vested in the undersigned;
(iii) sell, assign, transfer and deliver the Shares to
the Underwriters pursuant to the Underwriting Agreement and deliver to the
Underwriters certificates for the Shares so sold;
(iv) take any and all steps deemed necessary or desirable
by the Attorneys-in-Fact in connection with the registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended, and under the securities or "Blue
Sky" laws of various states and jurisdictions, including, without limitation,
the giving or making of such undertakings, representations and agreements and
the taking of such other steps as the Attorneys-in-Fact may deem necessary or
advisable;
(v) instruct the Company and the Custodian, as hereinafter
defined, on all matters pertaining to the sale of the Shares and delivery of
certificates therefor;
(vi) provide, in accordance with the Underwriting
Agreement, for the payment of expenses of the offering and sale of the Common
Stock covered by the Registration Statement;
(vii) retain legal counsel for the Selling Stockholder,
which may also be legal counsel for the Company, in connection with all matters
contemplated hereby and by the Underwriting Agreement;
(viii) instruct the Custodian as to the number of Shares
to be sold by the Selling Stockholder (it being understood and agreed to by the
undersigned that the Custodian shall be entitled to rely on the instructions
from the Attorneys-in-Fact as to such number of Shares to be sold by the Selling
Stockholder); and
(ix) otherwise take all actions and do all things
necessary or proper, required, contemplated or deemed advisable or desirable by
the Attorneys-in-Fact in their discretion, including the execution and delivery
of any documents, and generally act for and in the name of the undersigned with
respect to the sale of the Shares to the Underwriters and the reoffering of the
Shares by the Underwriters as fully as could the undersigned if then personally
present and acting.
B. Each Attorney-in-Fact may act alone in exercising the rights
and powers conferred on the Attorneys-in-Fact by this Custody Agreement and
Power of Attorney. Each Attorney-in-Fact
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is hereby empowered to determine, in his sole and absolute discretion, the time
or times when, the purposes for which, and the manner in which, any power herein
conferred upon the Attorneys-in-Fact shall be exercised.
C. The Custodian, the Representatives, the Company and all other
persons dealing with the Attorneys-in-Fact as such may rely and act upon any
writing believed in good faith to be signed by one or more of the
Attorneys-in-Fact.
D. The Attorneys-in-Fact shall not receive any compensation for
their services rendered hereunder, except that they shall be entitled to cause
the Custodian to pay, from the proceeds payable to the undersigned, the
undersigned's proportionate share of any out-of-pocket expenses incurred under
this Custody Agreement and Power of Attorney (this "Agreement") and similar
instruments executed by the Selling Stockholder.
2. Appointment of Custodian; Deposit of Shares.
A. In connection with and to facilitate the sale of the Shares, to
the Underwriters the undersigned hereby appoints ________________________ as
custodian (the "Custodian") and herewith deposits with the Custodian one or more
certificates for Common Stock, which represent not less than the total number of
Shares to be sold by the undersigned to the Underwriters, which number is set
forth on Schedule I hereto. Each such certificate so deposited shall be in
negotiable and proper deliverable form endorsed in blank with the signature of
the undersigned thereon guaranteed by an eligible guarantor institution, such as
a bank, stockbroker, savings and loan association or credit union, with
membership in an approved medallion signature guarantee program, or shall be
accompanied by a duly executed stock power or powers in blank, bearing the
signature of the undersigned so guaranteed. The Custodian is hereby authorized
and directed, subject to the instructions of the Attorneys-in-Fact, (a) to hold
in custody the certificate or certificates deposited herewith, (b) to deliver or
to authorize the Company's Transfer Agent to deliver the certificate or
certificates deposited hereunder (or replacement certificate(s) for the Shares)
to or at the direction of the Attorneys-in-Fact in accordance with the terms of
the Underwriting Agreement and (c) to return or cause the Company's Transfer
Agent to return to the undersigned new certificate(s) for the shares of Common
Stock represented by any certificate deposited hereunder which are not sold
pursuant to the Underwriting Agreement.
B. Until the Shares have been delivered to the Underwriters
against payment therefor in accordance with the Underwriting Agreement, the
undersigned shall retain all rights of ownership with respect to the Shares
deposited hereunder, including the right to vote and to receive all dividends
and payment thereon, except the right to retain custody of or dispose of such
Shares, which right is subject to this Agreement and the Underwriting Agreement.
C. The Custodian shall assume no responsibility to any person
other than to deal with the certificates for the Shares and the proceeds from
the sale of the Shares represented thereby in accordance with the provisions
hereof, and the Selling Stockholder hereby agrees to indemnify the Custodian for
and to hold the Custodian harmless against, any and all losses, claims, damages
or liabilities incurred on its part arising out of or in connection with it
acting as the Custodian pursuant hereto, as well as the cost and expenses of
investigating and defending any such losses, claims,
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43
damages or liabilities incurred on its part arising out of or in connection with
it acting as the Custodian pursuant hereto, except to the extent such losses,
claims, damages or liabilities are due to the negligence or bad faith of the
Custodian. The Custodian's acceptance of this Agreement by the execution hereof
shall constitute an acknowledgment by the Custodian of the authorization herein
confirmed and shall evidence the Custodian's agreement to carry out and perform
this Agreement in accordance with its terms.
3. Sale of Shares; Remitting Proceeds. The Attorneys-in-Fact are hereby
authorized and directed to deliver or cause the Custodian or the Company's
Transfer Agent to deliver certificates for the Shares to the Representatives, as
provided in the Underwriting Agreement, against delivery to the
Attorneys-in-Fact for the account of the undersigned of the purchase price of
the Shares (net of the Underwriters discounts, commissions and other discounts
payable to the Underwriters), at the time and in the funds specified in the
Underwriting Agreement. The Attorneys-in-Fact are authorized, on behalf of the
undersigned, to accept and acknowledge receipt of the payment of the purchase
price for the Shares and the Attorneys-In-Fact shall promptly deposit such
proceeds with the Custodian. After reserving an amount of such proceeds for the
fees payable to the Underwriters as provided above, the Custodian shall promptly
remit to the undersigned its proportionate share of the proceeds.
4. Representations, Warranties and Agreements. The undersigned represents
and warrants to, and agrees with, the Company, the Attorneys-in-Fact, the
Custodian, the Underwriters, Xxxxxxxx & Xxxxxxxx LLP, Stroock & Stroock &
Xxxxx LLP and Xxxxx & Xxxxxx L.L.P. as follows:
A. The undersigned has full legal right, power and authority to
enter into and perform this Agreement and the Underwriting Agreement. If the
undersigned is acting as a fiduciary, officer, partner, or agent, the
undersigned is enclosing with this Agreement certified copies of the appropriate
instruments pursuant to which the undersigned is authorized to act hereunder.
B. The undersigned has reviewed the representations and warranties
to be made by the undersigned as a Selling Stockholder contained in the
Underwriting Agreement, and hereby represents, warrants and covenants that each
of such representations and warranties is true and correct as of the date hereof
and, except as the undersigned shall have notified the Attorneys-in-Fact
pursuant to paragraph E of the attached instructions, will be true and correct
at all times from the date to the Underwriters hereof through and including the
time of the closing of the sale of the Shares to the Underwriters. The
undersigned will promptly notify the Attorneys-in-Fact of any development that
would make any such representation and warranty untrue.
C. The undersigned has reviewed the Registration Statement,
including the preliminary prospectus included therein, and (i) the undersigned
has no knowledge of any material information not disclosed in the Registration
Statement or preliminary prospectus which has adversely affected in any material
respect or, insofar as it is reasonably foreseeable, could adversely affect in
any material respect the current and prospective business and operations of the
Company or its subsidiaries and (ii) the information contained in such
Registration Statement and preliminary prospectus with respect to the
undersigned is complete and accurate.
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D. Other than as previously indicated to the Company in writing in
connection with the Company public offering, the undersigned is not directly or
indirectly an affiliate of or associated with any member of the National
Association of Securities Dealers, Inc.
E. Upon execution and delivery of the Underwriting Agreement by
the Attorneys-in-Fact on behalf of the undersigned, the undersigned agrees to
indemnify and hold harmless the Underwriters, the Company, each of its directors
and each of its officers who sign the Registration Statement, and each person,
if any, who controls the Underwriters or the Company, and to contribute to
amounts paid as a result of losses, claims, damages, liabilities and expenses,
to the full extent provided in Section 9 of the Underwriting Agreement.
F. Upon execution and delivery of the Underwriting Agreement
by the Attorneys-in-Fact on behalf of the undersigned, the undersigned agrees to
be bound by and to perform each of the covenants and agreements of the
undersigned as the Selling Stockholder in the Underwriting Agreement.
G. The undersigned agrees to deliver to the Attorneys-in-Fact such
documentation as the Attorneys-in-Fact, the Company or the Underwriters or
any of their respective counsel may reasonably request in order to effectuate
any of the provisions hereof or of the Underwriting Agreement, all of the
foregoing to be in form and substance satisfactory in all respects to the
Attorneys-in-Fact.
The foregoing representations, warranties and agreements are made
for the benefit of, and may be relied upon by, the Attorneys-in-Fact, the
Company, the Custodian, the Underwriters and their respective representatives,
agents and counsel and are in addition to, and not in limitation of, the
representations, warranties and agreements of the Selling Stockholder in the
Underwriting Agreement.
5. Irrevocability of Instruments; Termination of this Agreement.
A. This Agreement, the deposit of the Shares pursuant hereto and
all authority hereby conferred, is granted, made and conferred subject to and in
consideration of (i) the interests of the Attorneys-in-Fact, the Underwriters
and the Company in and for the purpose of completing the transactions
contemplated hereunder and by the Underwriting Agreement and (ii) the completion
of the registration of Common Stock pursuant to the Registration Statement and
the other acts of the above-mentioned parties from the date hereof to and
including the execution and delivery of the Underwriting Agreement in
anticipation of the sale of Common Stock, including the Shares, to the
Underwriters; and the Attorneys-in-Fact are hereby further vested with an
estate, right, title and interest in and to the Shares deposited herewith for
the purpose of irrevocably empowering and securing to each of them authority
sufficient to consummate said transactions. Accordingly, this Agreement shall be
irrevocable prior to __________, 1998, and shall remain in full force and effect
until that date. The undersigned further agrees that this Agreement shall not be
terminated by operation of law or upon the occurrence of any event whatsoever,
including the dissolution, winding up, distribution of assets or other event
affecting the legal existence of the undersigned. If any event referred to in
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45
the preceding sentence shall occur, whether with or without notice thereof to
the Attorneys-in-Fact, the Underwriters or any other person, the
Attorneys-in-Fact shall nevertheless be authorized and empowered to deliver and
deal with the Shares deposited under the Agreement by the undersigned in
accordance with the terms and provisions of the Underwriting Agreement and
this Agreement as if such event had not occurred.
B. If the sale of the Shares contemplated by this Agreement is not
completed by [________, 1998], this Agreement shall terminate (without affecting
any lawful action of the Attorneys-in-Fact or the Custodian prior to such
termination), and the Attorneys-in-Fact shall cause the Custodian to return to
the undersigned all certificates for the Shares deposited hereunder.
6. Liability and Indemnification of the Attorneys-in-Fact and Custodian.
The Attorneys-in-Fact and the Custodian assume no responsibility or liability to
the undersigned or to any other person, other than to deal with the Shares, the
proceeds from the sale of the Shares and any other shares of Common Stock
deposited with the Custodian pursuant to the terms of this Agreement in
accordance with the provisions hereof. The undersigned hereby agrees to
indemnify and hold harmless the Attorneys-in-Fact and the Custodian, and their
respective officers, agents, successors, assigns and personal representatives
with respect to any act or omission of or by any of them in good faith in
connection with any and all matters contemplated by this Agreement or the
Underwriting Agreement.
7. Interpretation.
A. The representations, warranties and agreements of the
undersigned contained herein and in the Underwriting Agreement shall survive
the sale and delivery of the Shares and the termination of this Agreement.
B. The validity, enforceability, interpretation and construction
of this Agreement shall be determined in accordance with the laws of the State
of California applicable to contracts made and to be performed within the State
of California, and this Agreement shall inure to the benefit of, and be binding
upon, the undersigned and the undersigned's heirs, executors, administrators,
successors and assigns, as the case may be.
C. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any such provision shall be prohibited by or invalid under applicable
law, it shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
D. The use of the masculine gender in this Agreement includes the
feminine and neuter, and the use of the singular includes the plural, wherever
appropriate.
E. This Agreement may be executed in various counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
6
46
IN WITNESS WHEREOF, the undersigned has executed this Custody
Agreement and Power of Attorney this ____ day of March, 1998.
JAPAN OMNIBUS LTD.
By:
----------------------------
Its: Signature of Selling Stockholder guaranteed by:
(PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON YOUR STOCK
CERTIFICATE(S))
Name and address to which
notices and funds shall
be sent: By:
--------------------------------
------------------------------- (Note: The signature MUST BE GUARANTEED by an
(Name) eligible guarantor institution, such as a bank,
------------------------------- stock broker, savings and loan association, or
(Street) credit union, with membership in an approved
------------------------------- medallion signature program)
(City) (State) (Zip)
-------------------------------
(Country)
ACCEPTED by the Attorneys-in-Fact ACCEPTED by the Custodian as
as of the date set forth above: of the above date set forth:
[CUSTODIAN]
--------------------------------- By:
By: -----------------------------------------
Title:
-----------------------------------------
---------------------------------
By:
SEE THE ATTACHED INSTRUCTIONS
7
47
SCHEDULE I
Certificate(s) for Shares of Common/Preferred Stock of
XXXXXX'X FURNITURE, INC.
deposited under
Custody Agreement and Power of Attorney
Type of Maximum Number of
Security Number of Shares of Shares of Common Stock
Certificate (i.e., Common, Common Stock Represented from this Certificate
Number Preferred) by Certificate to be Sold*
----------- ------------- ----------------------- ----------------------
----------- ------------- ----------------------- ----------------------
----------- ------------- ----------------------- ----------------------
----------- ------------- ----------------------- ----------------------
----------- ------------- ----------------------- ----------------------
----------- ------------- ----------------------- ----------------------
----------- ------------- ----------------------- ----------------------
Total: ----------------------
*If fewer than all shares represented by a certificate are to be sold, indicate
below, if desired for income tax purposes, the date of purchase or purchase
price of the particular shares to be sold.
48
PAYMENT AUTHORIZATION
To: [CUSTODIAN]
In connection with the sale by the undersigned of shares of Common Stock
of Xxxxxx'x Furniture, Inc., the undersigned hereby authorizes [CUSTODIAN], as
custodian (the "Custodian") to pay the undersigned the proceeds from such sale,
less applicable deductions, in the following manner:
MANNER OF PAYMENT
CASHIER'S CHECK MADE PAYABLE TO: _________________________________________
To be sent to the following address:
_____________________________________
_____________________________________
_____________________________________
To be sent by: [ ] First Class Mail [ ] Overnight Delivery
(Please specify service and
account number: _________________)
WIRE TRANSFER OF FUNDS TO THE FOLLOWING ACCOUNT:
Account number: ___________________________
Bank: _____________________________________
ABA number: _______________________________
Bank address: _____________________________
Name on account: __________________________
Name and telephone number of
contact person to confirm
receipt: ________________________________
OTHER (PLEASE SPECIFY)
_____________________________________
_____________________________________
_____________________________________
The undersigned authorizes the Custodian to deduct from the proceeds of sale of
the undersigned's Common Stock any costs incurred in connection with carrying
out the foregoing instructions.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Date: _________________ , 1998
