Fossil, Inc.
2,150,000 Shares of Common Stock,
$.01 Par Value Per Share
Underwriting Agreement
New York, New York
May 5, 1998
Xxxxx Xxxxxx Inc.
Xxxxxxxxx & Xxxxx LLC
X.X. Xxxxxxxx & Co.
Southwest Securities, Inc.
As Representatives of the several Underwriters,
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Fossil, Inc., a Delaware corporation (the "Company"), proposes to sell
to the several underwriters named in Schedule I hereto (the "Underwriters"),
for whom you (the "Representatives") are acting as representatives, 215,000
shares of common stock, $.01 par value per share ("Common Stock") of the
Company, and the persons named in Schedule II hereto (the "Selling
Stockholders") propose to sell to the several Underwriters 1,935,000 shares
of Common Stock (said shares to be issued and sold by the Company and shares
to be sold by the Selling Stockholders collectively being hereinafter called
the "Underwritten Securities"). Xx. Xxx Xxxxxxxxx, one of the Selling
Stockholders named in Schedule II hereto, also proposes to grant to the
Underwriters an option to purchase up to 322,500 additional shares of Common
Stock to cover over-allotments (the "Option Securities;" the Option
Securities, together with the Underwritten Securities, being hereinafter
called the "Securities").
To the extent there are no additional Underwriters listed on Schedule I
other than you, the term Representatives as used herein shall mean you, as
Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. In addition, to the
extent that there is not more than one Selling Stockholder named in Schedule
II, the term Selling Stockholder shall mean either the singular or plural.
The use of the neuter in this Agreement shall include the feminine and
masculine wherever appropriate. Any reference herein to the Registration
Statement, a Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the Exchange Act on or before
the Effective Date of the Registration Statement or the issue date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration
Statement, or the issue date of any Preliminary Prospectus or the Prospectus,
as the case may be, deemed to be incorporated therein by reference. Certain
terms used herein are defined in Section 17 hereof.
1. REPRESENTATIONS AND WARRANTIES.
(i)The Company and the Selling Stockholders jointly and severally
represent and warrant to, and agree with, each Underwriter as set forth below
in this Section 1.
(a) The Company meets the requirements for use of Form S-3 under
the Act and has prepared and filed with the Commission a registration
statement (file number 333-49699) on Form S-3, including a related
preliminary prospectus, for registration under the Act of the offering
and sale of the Securities. The Company may have filed one or more
amendments thereto, including a related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file
with the Commission one of the following: either (1) prior to the
Effective Date of such registration statement, a further amendment to
such registration statement, (including the form of final prospectus) or
(2) after the Effective Date of such registration statement, a final
prospectus in accordance with Rules 430A and 424(b). In the case of
clause (2), the Company has included in such registration statement, as
amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be included
in such registration statement and the Prospectus. As filed, such
amendment and form of final prospectus, or such final prospectus, shall
contain all Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date
on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date and any settlement date,
the Prospectus (together with any supplement thereto) will not, include
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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; PROVIDED,
HOWEVER, that the Company and Selling Stockholders make no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished herein or in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation or limited
partnership, as the case may be, in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
or partnership power and authority to own or lease, as the case may be,
and to operate its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation or partnership, as the case may be, and is in good standing
under the laws of each jurisdiction which requires such qualification,
except where the failure to be so qualified would not, individually or
in the aggregate, have a material adverse effect on the Company.
(d) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus, all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest or any other security
interests, claims, liens or encumbrances, except for the security
interests of the Company's lender in the shares of Fossil Europe B.V.
and Fossil (East), Ltd.
(e) the Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock (including the
Securities being sold hereunder by the Selling Stockholders) have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold hereunder by the Company have
been duly and validly authorized, and, when issued and delivered to and
paid for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities being sold by the Selling
Stockholders are duly listed, and admitted and authorized for trading,
on the Nasdaq National Market and the Securities being sold hereunder by
the Company are duly listed, and admitted and authorized for trading,
subject to official notice of issuance; the certificates for the
Securities are in valid and sufficient form; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities; and, except as set forth
in the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock
of or ownership interests in the Company are outstanding;
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(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
(h) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required by the NASD and under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, (1) the charter or by-laws of the Company or any of its
subsidiaries, (2) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or
any of its subsidiaries is a party or bound or to which its or their
property is subject, or (3) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its subsidiaries or any of its or their
properties.
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(l) The consolidated historical financial statements and schedules
of the Company and its consolidated subsidiaries included in the
Prospectus and the Registration Statement present fairly in all material
respects the financial condition, results of operations and cash flows
of the Company as of the dates and for the periods indicated, comply as
to form with the applicable accounting requirements of the Act and have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as otherwise noted therein). The selected financial data set
forth under the caption "Selected Financial Information"
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in the Prospectus and Registration Statement fairly present, on the
basis stated in the Prospectus and the Registration Statement, the
information included therein.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (1) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (2) could reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto).
(n) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(o) Neither the Company nor any subsidiary is in violation or
default of (1) any provision of its charter or bylaws, (2) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (3) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or such subsidiary or any of its properties, as
applicable except for violations or defaults which would not,
individually or in the aggregate, have a material adverse effect on the
Company.
(p) Deloitte & Touche, LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(q) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale by the
Company of the Securities.
(r) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto)
and has paid all taxes required to be paid by it and any other
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assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith or as would
not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto).
(s) No labor problem or dispute with the employees of the Company
or any of its subsidiaries exists or is threatened or imminent, and the
Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or its subsidiaries' principal suppliers,
contractors or customers, that could have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(t) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock, from repaying to
the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as described in
or contemplated by the Prospectus.
(u) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's
general or specific authorizations; (2) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in accordance
with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
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(w) The Company has not taken, directly or indirectly, any action
designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(x) The Company and its subsidiaries are (1) in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (2) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (3) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or
contaminants, except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or
liability would not, individually or in the aggregate, have a material
adverse change in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto). Except as set
forth in the Prospectus, neither the Company nor any of the subsidiaries
has been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended.
(y) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly
or in the aggregate, have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(z) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000
xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of
the Company and its subsidiaries are eligible to participate and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. The Company and its subsidiaries have
7
not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(aa) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
the Company's business as now conducted or as proposed in the Prospectus
to be conducted. Except as set forth in the Prospectus (1) to the
Company's knowledge, there are no rights of third parties to any such
Intellectual Property; (2) to the Company's knowledge, there is no
material infringement by third parties of any such Intellectual
Property; (3) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property other than
actions, suits, proceedings or claims which would not, individually or
in the aggregate, have a material adverse effect on the Company, and the
Company is unaware of any facts which would form a reasonable basis for
any such claim; (4) to the Company's best knowledge, there is no pending
or threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property other than
actions, suits, proceedings or claims which would not, individually or
in the aggregate, have a material adverse effect on the Company, and the
Company is unaware of any facts which would form a reasonable basis for
any such claim; (5) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others other than actions, suits,
proceedings or claims which would not, individually or in the aggregate,
have a material adverse effect on the Company, and the Company is
unaware of any other fact which would form a reasonable basis for any
such claim; (6) to the Company's knowledge, there is no U.S. patent or
published U.S. patent application which contains claims that dominate or
may dominate any Intellectual Property described in the Prospectus as
being owned by or licensed to the Company or that interferes with the
issued or pending claims of any such Intellectual Property; and (7)
there is no prior art of which the Company is aware that may render any
U.S. patent held by the Company invalid or any U.S. patent application
held by the Company unpatentable which has not been disclosed to the
U.S. Patent and Trademark Office.
(ab) The Company and its subsidiaries are implementing a
comprehensive, detailed program to analyze and address the risk that the
computer hardware and software used by them may be unable to recognize
and properly execute date-sensitive functions involving certain dates
prior to and any dates after December 31, 1999 (the "Year 2000
Problem"), and reasonably believes that such risk will be remedied on a
timely basis without material expense and will not have a material
adverse effect upon the financial condition and results of operations of
the Company and its subsidiaries, taken as a whole; and the Company
believes, after due inquiry, that each supplier, vendor, customer or
8
financial service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year 2000
Problem, except to the extent that a failure to remedy by any such
supplier, vendor, customer or financial service organization would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole. The Company is in compliance with the Commissions staff legal
bulletin No. 5 dated January 12, 1998 related to Year 2000 compliance.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by
the Company, as to matters covered thereby, to each Underwriter.
(ii) Each Selling Stockholder represents and warrants to, and
agrees with, each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the Securities
to be sold by such Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Securities, as provided herein, such
Selling Stockholder will convey to the Underwriters good and marketable
title to such Securities, free and clear of all liens, encumbrances,
equities and claims whatsoever.
(b) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(c) Certificates in negotiable form for such Selling Stockholder's
Securities have been placed in custody, for delivery pursuant to the
terms of this Agreement, under a Custody Agreement and Power of Attorney
executed and delivered by such Selling Stockholder, in the form
heretofore furnished to you (the "Custody Agreement") with Fossil, Inc.
as Custodian (the "Custodian"); the Securities represented by the
certificates so held in custody for each Selling Stockholder are subject
to the interests hereunder of the Underwriters; the arrangements for
custody and delivery of such certificates, made by such Selling
Stockholder hereunder and under the Custody Agreement, are not subject
to termination by any acts of such Selling Stockholder, or by operation
of law, whether by the death or incapacity of such Selling Stockholder
or the occurrence of any other event; and if any such death, incapacity
or any other such event shall occur before the delivery of such
Securities hereunder, certificates for the Securities will be delivered
by the Custodian in accordance with the terms and conditions of this
Agreement and the Custody Agreement as if such death, incapacity or
other event had not occurred, regardless of whether or not the Custodian
shall have received notice of such death, incapacity or other event.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the
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transactions contemplated herein, except such as may have been obtained
under the Act and such as may be required by the NASD and under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals as have been obtained.
(e) Neither the sale of the Securities being sold by such Selling
Stockholder nor the consummation of any other of the transactions herein
contemplated by such Selling Stockholder or the fulfillment of the terms
hereof by such Selling Stockholder will conflict with, result in a
breach or violation of, or constitute a default under any law or the
terms of any indenture or other agreement or instrument to which such
Selling Stockholder is a party or bound, or any judgment, order or
decree applicable to such Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder.
Any certificate signed by any Selling Stockholder and delivered to the
Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by
such Selling Stockholder, as to matters covered thereby, to each Underwriter.
2. PURCHASE AND SALE.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company and the
Selling Stockholders agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholders, at a purchase
price of $____ per share, the amount of the Underwritten Securities set
forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, Xxx Xxxxxxxxx, a
Selling Stockholder named in Schedule II hereto, hereby grants an option
to the several Underwriters to purchase, severally and not jointly, up
to 322,500 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may
be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of the Prospectus upon written or
telegraphic notice by the Representatives to such Selling Stockholder
setting forth the number of shares of the Option Securities as to which
the several Underwriters are exercising the option and the settlement
date. The maximum number of Option Securities which such Selling
Stockholder agrees to sell is set forth in Schedule II hereto. The
number of Option Securities to be purchased by each Underwriter shall be
the same percentage of the total number of shares of the Option
Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
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3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section
2(b) hereof shall have been exercised on or before the third Business Day
prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
May 12, 1998, or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which
date and time may be postponed by agreement among the Representatives, the
Company and the Selling Stockholders or as provided in Section 9 hereof (such
date and time of delivery and payment for the Securities being herein called
the "Closing Date"). Delivery of the Securities shall be made to the
Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of
the respective aggregate purchase prices of the Securities being sold by the
Company and each of the Selling Stockholders to or upon the order of the
Company and the Selling Stockholders by wire transfer payable in same-day
funds to the accounts specified by the Company and the Selling Stockholders.
Delivery of the Underwritten Securities and the Option Securities shall be
made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
Each Selling Stockholder will pay all applicable state transfer taxes,
if any, involved in the transfer to the several Underwriters of the
Securities to be purchased by them from such Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved
in further transfers.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Selling Stockholder named
in Schedule II hereto will deliver the Option Securities (at the expense of
the Company) to the Representatives on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the
purchase price thereof to or upon the order of the Selling Stockholders named
in Schedule II by wire transfer payable in same-day funds to the accounts
specified by the Selling Stockholder named in Schedule II hereto. If
settlement for the Option Securities occurs after the Closing Date, such
Selling Stockholder will deliver to the Representatives on the settlement
date for the Option Securities, and the obligation of the Underwriters to
purchase the Option Securities shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date
the opinions, certificates and letters delivered on the Closing Date pursuant
to Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set
forth in the Prospectus.
5. AGREEMENTS.
(i) The Company agrees with the several Underwriters that:
11
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will cause the
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory
to the Representatives of such timely filing. The Company will promptly
advise the Representatives (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when
the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(3) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any
additional information, (5) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose and
(6) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as practicable the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the Commission,
subject to the second sentence of paragraph (i)(a) of this Section 5, an
amendment or supplement which will correct such statement or omission or
effect such compliance and (3) supply any supplemented Prospectus to you
in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
12
(d) The Company will furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of each Preliminary Prospectus and
the Prospectus and any supplement thereto as the Representatives may
reasonably request. The Company will pay the expenses of printing or
other production of all documents relating to the offering.
(e) The Company will arrange, if necessary, for the qualification
of the Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Securities and
will pay any fee of the National Association of Securities Dealers,
Inc., in connection with its review of the offering; 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 that
would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
Xxxxx Xxxxxx Inc. for a period of 120 days following the Execution Time,
offer, sell or contract to sell, or otherwise dispose of (or enter into
any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by
the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other shares of Common
Stock or any securities convertible into, or exchangeable for, shares of
Common Stock; provided, however, that the Company may issue and sell
Common Stock pursuant to any employee stock option plan, stock ownership
plan or dividend reinvestment plan of the Company in effect at the
Execution Time and the Company may issue Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding at the
Execution Time.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(ii) Each Selling Stockholder agrees with the several Underwriters
that:
(a) Such Selling Stockholder will not, without the prior written
consent of Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, or file (or participate in the filing of) a
registration statement with the Commission in respect of, or establish
or increase a put equivalent position or liquidate or decrease a call
equivalent
13
position within the meaning of Section 16 of the Exchange Act with
respect to, any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for such capital stock,
or publicly announce an intention to effect any such transaction, for a
period of 120 days after the date of this Agreement, other than shares
of Common Stock disposed of as bona fide gifts approved by Xxxxx Xxxxxx
Inc.
(b) Such Selling Stockholder will not take any action designed to
or which has constituted or which might reasonably be expected to cause
or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(c) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Securities by an underwriter or
dealer may be required under the Act, of (i) any material change in the
Company's condition (financial or otherwise), prospects, earnings,
business or properties, (ii) any change in information in the
Registration Statement or the Prospectus relating to such Selling
Stockholder or (iii) any new material information relating to the
Company or relating to any matter stated in the Prospectus which comes
to the attention of such Selling Stockholder.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject: (i) to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein, to the extent such representations and warranties
are subject to materiality, and to the extent not so subject, to the material
accuracy of such representations and warranties, as of the Execution Time,
the Closing Date and any settlement date pursuant to Section 3 hereof; (ii) to
the accuracy of the statements of the Company and the Selling Stockholders made
in any certificates pursuant to the provisions hereof, to the extent such
statements are subject to materiality, and to the extent not so subject, to the
material accuracy of such statements; and (iii) to the performance by the
Company and the Selling Stockholders of their respective obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later
than (i) 6:00 PM New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to
3:00 PM New York City time on such date or (ii) 9:30 AM on the Business
Day following the day on which the public offering price was determined,
if such determination occurred after 3:00 PM New York City time on such
date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) (A) The Company shall have caused foreign counsel acceptable
to the Representatives for the following foreign subsidiaries, Fossil
Europe, B.V., Fossil Europe GMBH, Fossil Italia S.R.L., Fossil Spain
S.A., Fossil (East), Ltd., Pulse Time, New
14
Time, Amazing Time, Trilink and Fossil Japan, to provide their opinion
dated the Closing Date and addressed to the Representatives, with
respect to certain matters regarding such foreign subsidiaries. (B) The
Company shall have caused Jenkens & Xxxxxxxxx, P.C., counsel for the
Company, to have furnished to the Representatives their opinion, dated
the Closing Date and addressed to the Representatives, to the effect
that:
(1) each of the Company and its subsidiaries, including
Fossil Stores I, Inc., Fossil Stores II, Inc., Fossil Intermediate,
Fossil Trust, Fossil Partners, L.P., (individually a "Subsidiary"
and collectively the "Subsidiaries") has been duly incorporated or
organized and is validly existing as a corporation, individually or
in the aggregate, in good standing under the laws of the
jurisdiction in which it is chartered or organized, with requisite
corporate or partnership power and authority to own or lease, as
the case may be, and to operate its properties and conduct its
business as described in the Prospectus, and is duly qualified to
do business as a foreign corporation or partnership as the case may
be and is in good standing under the laws of each jurisdiction
which requires such qualification, except where such failure to be
so qualified would not, individually or in the aggregate, have a
material adverse effect on the Company;
(2) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, any other security
interest, claim, lien or encumbrance;
(3) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms
in all material respects to the description thereof contained in
the Prospectus; the outstanding shares of Common Stock (including
the Securities being sold hereunder by the Selling Stockholders)
have been duly and validly authorized and issued and are fully paid
and nonassessable; the Securities being sold hereunder by the
Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities
being sold by the Selling Stockholders are duly listed, and
admitted and authorized for trading, on the Nasdaq National Market
and the Securities being sold hereunder by the Company are duly
listed, and admitted and authorized for trading, subject to
official notice of issuance; the certificates for the Securities
are in valid and sufficient form; the holders of outstanding shares
of capital stock of the Company are not entitled to statutory
preemptive rights, or to the knowledge of such counsel, contractual
preemptive or other similar rights to subscribe for the Securities;
and, except as set forth in the Prospectus to the knowledge of such
counsel, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into
15
or exchange any securities for, shares of capital stock of or
ownership interests in the Company are outstanding;
(4) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries or its or their property of
a character required to be disclosed in the Registration Statement
which is not adequately disclosed in the Prospectus, and to the
knowledge of such counsel, there is no franchise, contract or other
document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit
thereto, which is not described or filed as required;
(5) the Registration Statement has become effective under
the 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 by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or overtly threatened and the
Registration Statement and the Prospectus (other than the exhibits
and the financial statements and other financial information
contained therein or incorporated therein by reference, as to which
such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder;
(6) this Agreement has been duly authorized, executed and
delivered by the Company;
(7) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as defined in the Investment Company Act of
1940, as amended;
(8) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such
as have been obtained under the Act and such as may be required by
the NASD and under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by
the Underwriters in the manner contemplated in this Agreement and
in the Prospectus and such other approvals (specified in such
opinion) as have been obtained;
(9) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated
nor the fulfillment of the terms hereof will conflict with, result
in a breach or violation of or imposition of
16
any lien, charge or encumbrance upon any property or assets of the
Company or its subsidiaries pursuant to, (i) the charter or by-laws
of the Company or its subsidiaries, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or its
subsidiaries is a party or bound or to which its or their property
is subject, and which has been certified by the Company to such
counsel, or (iii) any statute, law, rule, regulation, or, to the
knowledge of such counsel, judgment, order or decree applicable to
the Company or its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or its subsidiaries
or any of its or their properties and
(10) to the knowledge of such counsel, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and, although such counsel is
not passing upon and does not assume any responsibility for and have not
verified the accuracy, completeness or fairness of the statements contained
in the Registration Statement and the Prospectus, and have not made any
independent check or verification thereof, on the basis of the foregoing
(relying as to materiality to a large extent upon facts provided by officers
and other representatives of the Company) no facts have come to the attention
of such counsel that lead such counsel to believe that either the
Registration Statement at the time it became effective (including the
information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b), if applicable), or any amendment
thereof made prior to the Closing Date as of the date of such amendment,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or
any amendment thereof or supplement thereto made prior to the Closing Date as
of the date of such amendment or supplement) and as of the Closing Date
contained or contains an untrue statement of a material fact or omitted or
omits to state any 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 (it being understood that such counsel need
express no belief or opinion with respect to the financial statements and
other financial and statistical data included therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States
of Texas and Delaware and the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact,
to the extent they deem
17
proper, on certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include any
supplements thereto at the Closing Date.
(c) The Selling Stockholders shall have caused Jenkens &
Xxxxxxxxx, P.C., counsel for the Selling Stockholders, to have furnished
to the Representatives their opinion dated the Closing Date and
addressed to the Representatives, to the effect that:
(1) this Agreement and the Custody Agreement and Power of
Attorney have been duly executed and delivered by the Selling
Stockholders, the Custody Agreement is valid and binding on the
Selling Stockholders and each Selling Stockholder has full legal
right and authority to sell, transfer and deliver in the manner
provided in this Agreement and the Custody Agreement the Securities
being sold by such Selling Stockholder hereunder;
(2) the delivery by each Selling Stockholder to the several
Underwriters of certificates for the Securities being sold
hereunder by such Selling Stockholder against payment therefor as
provided herein, will pass good and marketable title to such
Securities to the several Underwriters, free and clear of all
liens, encumbrances, equities and claims whatsoever to each of the
Underwriters who have purchased such Securities in good faith and
without notice of any such liens, encumbrances, equities and claims;
(3) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by
any Selling Stockholder of the transactions contemplated herein,
except such as may have been obtained under the Act and such as may
be required by the NASD and under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters and such other approvals
(specified in such opinion) as have been obtained; and
(4) neither the sale of the Securities being sold by any
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by any Selling Stockholder or the
fulfillment of the terms hereof by any Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the terms of any indenture or other
agreement or instrument certified to such counsel by such Selling
Stockholder and to which any Selling Stockholder is a party or
bound, or any judgment, order or decree certified to such counsel
by such Selling Stockholder to be applicable to any Selling
Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over any
Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States
of Texas and Delaware and the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who are
18
satisfactory to counsel for the Underwriters, and (B) as to matters of fact,
to the extent they deem proper, on certificates of the Selling Stockholders.
(d) The Representatives shall have received from Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., counsel for the Underwriters, such
opinion or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectus (together with
any supplement thereto) and other related matters as the Representatives
may reasonably require, and the Company and each Selling Stockholder
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(1) the representations and warranties of the Company in this
Agreement are true and correct, to the extent such representations
and warranties are subject to materiality, and to the event not so
subject are true and correct in all material respects, on and as
of the Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(2) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(3) since the date of the most recent financial statements
included or incorporated by reference in the Prospectus (exclusive
of any supplement thereto), there has been no material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(f) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by such Selling Stockholder, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that the
representations and warranties of such Selling Stockholder in this
Agreement are true and correct in all material respects on and as of the
Closing Date to the same effect as if made on the Closing Date.
(g) The Company shall have caused Deloitte & Touche, LLP to have
furnished to the Representatives, at the Execution Time and at the
Closing Date, letters,
19
dated respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and the
Exchange Act and the respective applicable published rules and regulations
thereunder and stating in effect that:
(1) in their opinion the audited financial statements and
financial statement schedules and pro forma financial statements
included or incorporated by reference in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(2) on the basis of carrying out certain specified procedures
(but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter;
a reading of the minutes of the meetings of the stockholders,
boards of directors and committees of the board of directors of the
Company and the Subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company and its Subsidiaries as to transactions and
events subsequent to January 3, 1998, nothing came to their
attention which caused them to believe that:
(i) with respect to the period subsequent to January 3,
1998, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
long-term debt of the Company and its subsidiaries or the
stockholders' equity of the Company as compared with the
amounts shown on the January 3, 1998 consolidated balance
sheet included or incorporated by reference in the
Registration Statement and the Prospectus, or for the period
from January 4, 1998 to such specified date there were any
decreases, as compared with January 1, 1997 in net sales or
income before income taxes or in total or per share amounts of
net income of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such letter,
in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives; or
(ii) the information included or incorporated by
reference in the Registration Statement and Prospectus in
response to Regulation S-K, Item 301 (Selected Financial
Data), Item 302 (Supplementary Financial Information), Item
402 (Executive Compensation) and Item 503(d) (Ratio of
Earnings to Fixed Charges) is not in conformity with the
applicable disclosure requirements of Regulation S-K;
20
(3) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus, in the
information included or incorporated by reference in Items 1, 2, 6,
7 and 11 of the Company's Annual Report on Form 10-K incorporated by
reference in the Registration Statement and the Prospectus and in the
Current Reports on Form 8-K incorporated by reference in the
Registration Statement and the Prospectus agrees with the accounting
records of the Company and its subsidiaries, excluding any questions
of legal interpretation.
References to the Prospectus in this paragraph (g) include any
supplement thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (1) any change or
decrease specified in the letter or letters referred to in paragraph (g)
of this Section 6 or (2) any change, or any development involving a
prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto) the
effect of which, in any case referred to in clause (1) or (2) above, is,
in the sole judgment of the Representatives, so material and adverse as
to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto).
(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto
from each of the executive officers and directors of the Company (other
than the Selling Stockholders) addressed to the Representatives.
(j) Prior to the Closing Date, the Company and the Selling
Stockholders shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may
reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by
the Representatives. Notice of such cancellation
21
shall be given to the Company and each Selling Stockholder in writing or by
telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., counsel
for the Underwriters, at 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000
on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company or
any Selling Stockholders to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally through
Xxxxx Xxxxxx Inc. on demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred
by them in connection with the proposed purchase and sale of the Securities.
If the Company is required to make any payments to the Underwriters under
this Section 7 because of any Selling Stockholder's refusal, inability or
failure to satisfy any condition to the obligations of the Underwriters set
forth in Section 6, the Selling Stockholders PRO RATA in proportion to the
percentage of Securities to be sold by each shall reimburse the Company on
demand for all amounts so paid.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Selling Stockholders jointly and severally
agree to indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person who
controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under
the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment
thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof 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, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company
and the Selling Stockholders will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for
22
inclusion therein; further provided, however, that such indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the
person is asserting such loss, claim, damage or liability (or action in
respect thereof) purchased Securities that are the subject thereof to the
extent that any such loss, claim, damage or liability results from the fact
that the Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of
the sale of such securities to such person in any case where such delivery
is required by the Act. This indemnity agreement will be in addition to
any liability which the Company or the Selling Stockholders may otherwise
have.
(b) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act and each
Selling Stockholder, to the same extent as the foregoing indemnity to each
Underwriter, but only with reference to written information relating to
such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any Underwriter may otherwise
have. The Company and each Selling Stockholder acknowledge that the
statements set forth in the last paragraph of the cover page regarding
delivery of the Securities, the legend in block capital letters on page 2
related to stabilization, syndicate covering transactions and penalty
bids and, under the heading "Underwriting," the sentence related to
concessions and reallowances in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in any Preliminary
Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (1) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of
such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (2) will not, in any
event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ
23
separate counsel (including local counsel), and the indemnifying party
shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Selling Stockholders,
jointly and severally, and the Underwriters severally agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal
or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company, the Selling
Stockholders and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Stockholders on the one hand and by the
Underwriters on the other from the offering of the Securities; PROVIDED,
HOWEVER, that in no case shall any Underwriter (except as may be provided
in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by such
Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Selling Stockholders, jointly and severally, and the Underwriters severally
shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Selling Stockholders on the one hand and of the Underwriters on the other
in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits
received by the Company and the Selling Stockholders shall be deemed to
be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall
be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Prospectus. Relative
fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information provided by
24
the Company or the Selling Stockholders on the one hand or the Underwriters
on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d),
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer, employee
and agent of an Underwriter shall have the same rights to contribution as
such Underwriter, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The liability of each Selling Stockholder under such Selling
Stockholder's representations and warranties contained in Section 1 hereof
and under the indemnity and contribution agreements contained in this
Section 8 shall be limited to an amount equal to the initial public
offering price of the Securities sold by such Selling Stockholder to the
Underwriters. The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they
each shall be responsible.
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under
this Agreement, the remaining Underwriters shall be obligated severally to
take up and pay for (in the respective proportions which the amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; PROVIDED, HOWEVER, that in the
event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting
25
Underwriter of its liability, if any, to the Company, the Selling
Stockholders and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended
by the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market shall
have been suspended or limited or minimum prices shall have been established
on either of such Exchange or National Market, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or other
calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers, of each Selling Stockholder and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, any Selling Stockholder or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions
of Sections 7 and 8 hereof shall survive the termination or cancellation of
this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Xxxxx Xxxxxx Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxx Xxxxxx Inc.
at 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to Fossil, Inc. Chief Legal Officer (fax no.: (000) 000-0000) and
confirmed to it at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx 00000,
Attention: Chief Legal Officer; or if sent to any Selling Stockholder, will
be mailed, delivered or telefaxed and confirmed to it at the address set
forth in Schedule II hereto.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
26
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. HEADINGS. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. DEFINITIONS. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any
Rule 462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(i)(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date,
shall also mean such registration statement as so amended or such
Rule 462(b) Registration
27
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
"Xxxxx Xxxxxx Inc." shall mean Xxxxx Xxxxxx Inc. or Salomon Brothers
Inc., to the extent that either such party is a signatory to this
Agreement.
[Signature Page Follows]
28
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
COMPANY: FOSSIL, INC.
By:
----------------------------------
Name:
Title:
SELLING STOCKHOLDERS:
----------------------------------------------
Xxx Xxxxxxxxx, in his individual capacity
----------------------------------------------
Xxxxx X. Xxxxxxxxx, in his individual capacity
----------------------------------------------
Xxxxxxx X. Xxxxx, in his individual capacity
----------------------------------------------
Xxxxx Scheurl, in his individual capacity
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
Xxxxx Xxxxxx Inc.
Xxxxxxxxx & Xxxxx LLC
X.X. Xxxxxxxx & Co.
Southwest Securities, Inc.
For themselves and the other several Underwriters
named in Schedule I to the foregoing Agreement.
By: Xxxxx Xxxxxx Inc.
By:
----------------------------------------------
Name:
Title:
29
SCHEDULE I
UNDERWRITERS
NUMBER OF UNDERWRITTEN
UNDERWRITERS SECURITIES TO BE PURCHASED
------------ --------------------------
Xxxxx Xxxxxx Inc. _____
Xxxxxxxxx & Xxxxx LLC _____
X.X. Xxxxxxxx & Co. _____
Southwest Securities, Inc. _____
1
SCHEDULE II
SELLING SHAREHOLDERS
NUMBER OF UNDERWRITTEN MAXIMUM NUMBER OF
SELLING STOCKHOLDERS: SECURITIES TO BE SOLD OPTION SECURITIES TO BE SOLD
--------------------- ---------------------- ----------------------------
Xxx Xxxxxxxxx 1,126,612 322,500
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxx X. Xxxxxxxxx 650,000 None
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx X. Xxxxx 135,888 None
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxx Scheurl 22,500 None
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
--------- -------
Total 1,935,000 322,500
--------- -------
--------- -------
2
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
Fossil, Inc.
Public Offering of Common Stock
New York, New York
May ___, 1998
Xxxxx Xxxxxx Inc.
Xxxxxxxxx & Xxxxx LLC
X.X. Xxxxxxxx & Co.
Southwest Securities, Inc.
As Representatives of the several Underwriters,
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement") between Fossil, Inc., a
Delaware corporation (the "Company"), and each of you as representatives of a
group of Underwriters named therein, relating to an underwritten public
offering of common stock, $.01 par value per share (the "Common Stock"), of
the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, or file (or participate in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder with respect
to, any shares of capital stock of the Company or any securities convertible
into or exercisable or exchangeable for such capital stock, or publicly
announce an intention to effect any such transaction, for a period of 120
days after the date of this Agreement, other than shares of Common Stock
disposed of as bona fide gifts approved by Xxxxx Xxxxxx Inc.
1
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
--------------------------------------
[Name of Officer]
2
