EXHIBIT 1
DRAFT 10/31/97
2,275,000 Shares*
BRASS EAGLE INC.
Common Stock, $.01 par value
UNDERWRITING AGREEMENT
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______________, 1997
XxXXXXXX & COMPANY SECURITIES, INC.
XXXX XXXXXXXX INCORPORATED
As Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
1. Introduction. Brass Eagle Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 2,275,000 shares of its common stock,
$.01 par value (the "Common Stock"), which are authorized but unissued, to the
public through the underwriters named in Schedule A annexed hereto (the
"Underwriters") for whom you are acting as the Representatives. The 2,275,000
shares of Common Stock to be purchased from the Company are hereinafter referred
to as the "Firm Stock." The Company also proposes to sell to the Underwriters,
at their option, an aggregate of not more than 341,250 additional shares of
Common Stock solely to cover over-allotments which are hereinafter referred to
as the "Option Stock." The Firm Stock and the Option Stock are hereinafter
collectively referred to as the "Stock" and are more fully described in the
Registration Statement and the Prospectus (as hereinafter defined). The Company
hereby confirms its agreements, as set forth herein, with you acting as the
Representatives of the Underwriters.
2. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) The Company does not own or control, directly or indirectly, any
corporation, association or other entity. The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of
Delaware with power and authority to own and lease its properties and conduct
its business as described in the Prospectus (as hereinafter defined). The
Company is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions (i) in which the conduct of business, as presently
conducted, requires such qualification (except for those jurisdictions in which
the failure to so qualify will not in the aggregate have a material adverse
effect on the Company or its prospects)
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* Plus an option to purchase up to 341,250 additional shares to cover
over-allotments.
and (ii) in which the Company owns or leases real property. Except as disclosed
in the Registration Statement, the Company does not own, directly or indirectly,
any equity securities or securities convertible into or exchangeable for equity
securities of any other corporation, partnership, Massachusetts or other
business trust or any other business enterprise.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms.
(c) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the Rules and Regulations of
the Commission thereunder (as hereinafter defined), a registration statement on
Form S-1 (Registration No. 333-36179) including a preliminary prospectus
relating to the Company's Stock. The Company expects to file on or prior to the
effective date of such registration statement (the "Effective Date") one or more
additional amendments to such registration statement. The registration
statement, as amended at the time when it becomes effective, and including
information (if any) contained in a prospectus subsequently filed with the
Commission pursuant to Rule 424(b) under the Act, and deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act is hereinafter referred to as the "Registration Statement"; the
prospectus in the form first used to confirm sales of Stock, whether or not
filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter
referred to as the "Prospectus."
(d) As of the Effective Date, and at all times subsequent
thereto, up to and including the respective Closing Dates (as hereinafter
defined) of the offering, the Registration Statement and the Prospectus, and any
amendments or supplements thereto, will contain all statements of material facts
which are required to be stated therein in accordance with the Act and the
applicable rules, regulations and interpretive releases of the Commission
thereunder (the "Rules and Regulations"), and will in all material respects
conform to the requirements of the Act and the Rules and Regulations; and
neither the Registration Statement nor the Prospectus, nor any amendment thereof
or supplement thereto, will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the Company
makes no representations, warranties or agreements as to information contained
in the last paragraph of the cover page of the Prospectus and the statements
relating to the terms of the offering by the several Underwriters set forth
under the caption "Underwriting" in the Prospectus, provided to the Company by
you, expressly for such use.
(e) The Company has a duly authorized and outstanding
capitalization as set forth under "Capitalization" in the Prospectus except for
changes due to payments required by debt agreements, or as otherwise provided in
the Prospectus; the outstanding shares of Common Stock are duly authorized and
validly issued, fully paid and nonassessable, are free of any preemptive rights,
rights of first refusal or similar rights, were issued and sold in compliance
with the applicable Federal and state securities laws and conform in all
material respects to the description in the Prospectus; except as described in
the Prospectus, there are no outstanding
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options, warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue any shares of capital stock of the
Company or any security convertible or exchangeable or exercisable for capital
stock of the Company. There are no holders of securities of the Company who, by
reason of the filing of the Registration Statement have the right to request the
Company to include in the Registration Statement securities owned by them.
(f) The shares of Common Stock of the Company conform in
substance to all statements in relation thereto contained in the Registration
Statement and the Prospectus; the Stock to be sold by the Company hereunder has
been duly authorized and, when issued and delivered pursuant to this Agreement,
will be validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus. All corporate action required
to be taken for the issuance of the Stock by the Company has been validly and
sufficiently taken. No preemptive rights of security holders of the Company
exist with respect to the issuance and sale of the Stock by the Company pursuant
to this Agreement
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as set forth
or contemplated in the Prospectus, (i) the Company has not incurred any material
liabilities or obligations, direct or contingent, nor has it entered into any
material transaction, (ii) there has not been and will not have been any change
on a pro forma basis or otherwise in the capital stock or funded debt of the
Company which is material or any material adverse change in the business,
prospects, financial position or results of operations of the Company, and (iii)
no loss or damage (whether or not insured) to the property of the Company have
been sustained which materially and adversely affects the operations of the
Company or its prospects.
(h) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms and provisions of, or constitute a default under, the
Certificate of Incorporation or By-laws of the Company, or any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party or by which the Company is bound, or any order, rule or regulation
applicable to the Company of any court or of any federal or state regulatory
body or administrative agency or other governmental body having jurisdiction
over the Company or any of its property.
(i) The financial statements of the Company included in the
Registration Statement and the Prospectus fairly present the financial position
and results of operations of the Company at the respective dates and for the
respective periods to which they apply, and such financial statements have been
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The pro forma financial
statements of the Company included in the Prospectus fairly present the pro
forma financial position and results of operations of the Company at the dates
and for the periods to which they apply, and have been prepared to give effect
to certain assumptions and proposed transactions made on reasonable bases which
are fully and accurately described in the Prospectus, and the pro forma
adjustments have been properly applied on the bases described therein.
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(j) Xxxxx, Xxxxxx and Company, LLP, who have examined and
expressed their opinion on the financial statements of the Company referenced in
their opinion set forth in the Prospectus, are independent accountants within
the meaning of the Act and the Rules and Regulations.
(k) The Company holds all necessary material authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies (collectively the "licenses")
required for the conduct of its business as described in the Prospectus, and all
such licenses are valid and in full force and effect, and the Company is
operating in compliance in all material respects with the terms and provisions
of such licenses and with all material laws, regulations, orders and decrees
applicable to the Company and its business and assets.
(l) The Company is in not violation of any applicable Federal,
state or local laws, statutes, rules, regulations or ordinances relating to
public health, safety or the environment, including, without limitation,
relating to the release, discharge, emission or disposal to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use, handling or
disposal of polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to
the treatment, storage, disposal or management of hazardous substances
(including, without limitation, petroleum, crude oil or any fraction thereof, or
other hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous
or other controlled, prohibited or regulated substances, which violation could
have a material adverse effect on the business, prospects, condition (financial
or other) or results of operations of the Company, or which might materially and
adversely affect the consummation of the transactions contemplated by this
Agreement. In addition, and irrespective of such compliance, the Company is not
subject to any liabilities for environmental remediation or clean-up, including
any liability or class of liability of the lessee under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
the Resource Conservation and Recovery Act of 1976, as amended, which liability
could have a material adverse effect on the business, prospects, condition
(financial or other) or results of operations of the Company, or which might
materially and adversely affect the consummation of the transactions
contemplated by this Agreement.
(m) There are no legal or governmental actions, suits or
proceedings pending or, to the knowledge of the Company, threatened to which the
Company, or any of its executive officers or directors is a party or of which
the business or property (including, without limitation, any of the licenses
referred to in (k) above) of the Company or any of the Company's employees is
the subject which could have a material adverse effect on the business,
prospects, condition (financial or other) or results of operations of the
Company, except as set forth in the Prospectus.
(n) The Company is not in violation of its Certificate of
Incorporation or Bylaws or other organizational documents, and no default exists
by the Company in the due performance and observance of any material term,
covenant or condition of any agreement material to the Company to which the
Company is a party or by which the Company is bound.
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(o) The Company has good title to, or valid and enforceable
leasehold estates in, all properties and assets used for its business (including
the property described in the Prospectus as being owned or leased by the
Company), in each case free and clear of all liens, encumbrances and defects
other than those set forth or referred to in the Registration Statement or
Prospectus or those which do not materially affect the value of such property or
leasehold and do not materially interfere with the use made or proposed to be
made of such property or leasehold by the Company; and all of the leases and
subleases under which the Company hold such properties are in full force and
effect.
(p) Other than as set forth in the Prospectus, the Company
owns or possesses, or can acquire on reasonable terms, the patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets,
applications and other unpatented or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, and trade names
(collectively, "Proprietary Rights") used in or necessary for the conduct of its
business as now conducted and as proposed to be conducted as described in the
Prospectus; the Company has the right to use all Proprietary Rights used in or
necessary for the conduct of its business without infringing the rights of any
person or violating the terms of any licensing or other agreement to which the
Company is a party, and to the knowledge of the Company no person is infringing
upon any Proprietary Right which the Company has the sole and exclusive right to
use; no charges, claims or litigation have been asserted or to the knowledge of
the Company threatened against the Company contesting the right of the Company
to use, or the validity of, any Proprietary Right or challenging or questioning
the validity or effectiveness of any license or agreement pertaining thereto or
asserting the misuse thereof, and, to the Company's knowledge, no valid basis
exists for the assertion of any such charge, claim or litigation; all licenses
and other agreements to which the Company is a party relating to Proprietary
Rights are in full force and effect and constitute valid, binding and
enforceable obligations of the Company, and, to the Company's knowledge, the
other respective parties thereto, and there have not been and there currently
are not any defaults which could have a material adverse effect on the Company
or its prospects, and no event has occurred which (whether by notice or lapse of
time or both) could constitute a default under any license or other agreement
affecting Proprietary Rights used in or necessary for the conduct of the
businesses of the Company by any party; and except as set forth in the
Prospectus, the validity, continuation and effectiveness of all such licenses
and other agreements and the current terms thereof will not be affected by the
transactions contemplated by this Agreement.
(q) No approval, authorization, consent or other order of any
public board or body (other than in connection with or in compliance with the
provisions of the Act and the securities or Blue Sky laws of various
jurisdictions) is legally required for the sale of the Stock by the Company.
(r) The shares of Common Stock have been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and have been authorized for trading over-the-counter on the National
Association of Securities Dealers Automated Quotation National Market (the
"NASDAQ/NM") subject to notice of issuance or sale, as the case may be.
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(s) The outstanding debt, the properties and the business of
the Company conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus.
(t) The Company maintains insurance with reputable,
independent and financially stable third-party insurers of the types and in the
amounts generally deemed adequate for its business and, to the best of the
Company's knowledge, consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, insurance
covering (i) personal injury claims (whether arising under tort, products
liability, warranty or any other legal theory), including without limitation,
with respect to all paintball and non-paintball products sold by the Company
prior to the transfer by the Company of all of the Company's non- paintball
related assets and liabilities to Daisy Manufacturing Company, a Delaware
corporation ("New Daisy"), in connection with the initial public offering of the
Stock contemplated by this Agreement (the "Reorganization") and (ii) real and
personal property owned or leased by the Company against theft damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect. The Company does not have
any material exposure to any products liability or other claim, whether pending
or not, and whether derived from any paintball or non-paintball product sold by
it, for which it does not have adequate insurance coverage or which could
materially adverse effect on the business, prospects, assets, results of
operation or condition (financial or other) of the Company.
(u) The Company has filed on a timely basis all necessary
federal, state, local and foreign income and franchise tax returns required to
be filed through the date hereof and has paid all taxes due with respect to the
period covered thereby; and no tax deficiency has been asserted against the
Company, nor does the Company know of any tax deficiency which could be asserted
against the Company which if determined adversely to the Company could
materially adversely affect the business, prospects, properties, assets, results
of operations or condition (financial or otherwise) of the Company. All tax
liabilities are adequately provided for on the books of the Company.
(v) The Company will be required to recognize gain on the
transfer of certain assets and liabilities from the Company to New Daisy to the
extent that the value for tax purposes of the liabilities assumed by New Daisy
exceeds the Company's adjusted tax basis in the assets transferred. The Company
has available to it tax loss carryforwards from prior years and current year tax
losses through the effective date of the Reorganization sufficient to offset all
of this gain.
The Company would also be required to recognized gain on
the spin-off if and to the extent that the fair market value of the outstanding
capital stock of New Daisy exceeds the Company's adjusted tax basis in such
stock. The adjusted basis in the stock is $-0- and the fair market value of the
stock is also $-0-.
(w) To the best of the Company's knowledge, no labor problem
exists with its employees or is threatened or imminent that could materially
adversely affect the Company, and
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the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, contractors or
customers that could materially adversely affect the business, prospects,
properties, assets, results of operation or condition (financial or other) of
the Company.
(x) The Company has obtained the agreement of each of its
executive officers, directors and all stockholders owning in excess of 5% of the
Common Stock issued and outstanding immediately prior to the Offering, that, for
a period of 180 days from the date of the final Prospectus, such persons will
not, without the prior written consent of XxXxxxxx & Company Securities, Inc.,
directly or indirectly sell, offer to sell, grant any option for the sale of, or
otherwise dispose of any shares of the Common Stock (including, without
limitation, shares of Common Stock which may be deemed to be beneficially owned
by such persons in accordance with Rule 13d-3 of the Exchange Act) or any
securities convertible into Common Stock.
(y) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Act and the Rules and Regulations), has taken or
will take, directly or indirectly, any action designed to stabilize or
manipulate, or which has constituted, or might in the future reasonably be
expected to cause or result in, stabilization or manipulation of, the price of
the Stock of the Company in order to facilitate the sale or resale of the Stock
or otherwise.
(z) The Company's system of internal accounting controls is
sufficient so to meet the broad objectives of internal accounting control as far
as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that could be material in relation to the Company's
financial statements; and, to the best of the Company's knowledge, neither the
Company nor any employee or agent of the Company has made any payment of funds
of the Company or received or retained any funds and no funds of the Company
have been set aside to be used for any payment in violation of any law, rule or
regulation.
(aa) The Company is not and does not intend to become, an
"investment company" as defined in Section 3(a) of the Investment Company Act of
1940, as amended.
(bb) The Company shall not, in connection with the
Reorganization or otherwise, have incurred, or otherwise exposed itself to any
material obligation or liability (whether fixed, contingent, known or unknown)
attributable to the operations of New Daisy or the historical, non-paintball
related operations of the Company.
(cc) All contracts and documents which are required to be
filed as exhibits to the Registration Statement have been so filed.
3. Sale, Purchase and Delivery of Stock. (a) On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees to purchase
from the Company the respective number of shares of the Firm Stock set forth
opposite the Underwriter's name in Schedule A hereto, at a price of $________
per
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share, as adjusted by the Representatives to avoid fractions and to reflect any
adjustment required by Section 11 hereof.
(b) The Company will deliver the Firm Stock to you for the
respective accounts of the several Underwriters at the office of XxXxxxxx &
Company Securities, Inc., XxXxxxxx Investment Center, 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, at 10:00 A.M., Cleveland time, or to your designee at a
specified place at the same time, against payment of the purchase price at the
place of such Closing, by certified or official bank checks in next day funds
drawn to the order of the Company on the third full business day after the
effective date of the Registration Statement (or, if the Firm Stock is priced
after 4:30 p.m., Cleveland time on the effective date of the Registration
Statement, the fourth full business day after the effective date of the
Registration Statement), or at such other time not later than seven full
business days after such initial public offering as you shall determine, such
time and place being herein referred to as the "Closing Date." The certificates
for the Firm Stock so to be delivered will be in such denominations and
registered in such names as you may specify to the Company at or before 3:00
P.M., Cleveland time, on the second full business day prior to the Closing Date.
Such certificates will be made available for checking and packaging at least 24
hours prior to the Closing Date. Certificates for further delivery of the Firm
Stock will be in such denominations and registered in such names as you may
request.
(c) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to 341,250 additional shares in the aggregate, of the Option
Stock at the purchase price set forth in Section 4(a) hereof, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Stock. The option granted hereunder may be exercised at
any time (but not more than once) within 30 days after the date the Registration
Statement becomes effective, upon written or telegraphic notice by the
Representatives to the Company setting forth the aggregate number of shares of
the Option Stock as to which the Underwriters are exercising the option and the
time and place at which certificates will be delivered, such time (which, unless
otherwise determined by you and the Company, shall not be earlier than three nor
later than seven full business days after the exercise of said option) being
herein called the "Second Closing Date." The number of shares of the Option
Stock to be sold by the Company to each Underwriter and purchased by such
Underwriter from the Company shall be the same percentage of the total number of
shares of the Option Stock to be purchased by the several Underwriters on the
Second Closing Date as such Underwriter purchased of the total number of shares
of the Firm Stock, as adjusted by the Representatives to avoid fractions and to
reflect any adjustment required by Section 11 hereof. The Company will deliver
certificates for the shares of the Option Stock being purchased by the several
Underwriters to you on the Second Closing Date at the place and time of such
Closing, or to your designee at a specified place at the same time, against
payment of the purchase price at the place of such Closing, by certified or
official bank checks in next day funds drawn to the order of the Company. The
certificates for the Option Stock so to be delivered will be in such
denominations and registered in such names as you may specify to the Company at
or before 3:00 P.M., Cleveland time, on the second full business day prior to
the Second Closing Date. Such certificates will be made available for checking
and packaging at least 24 hours prior to the
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Second Closing Date. Certificates for further delivery of the Option Stock will
be in such denominations and registered in such names as you may request. The
option granted hereby may be canceled by you as the Representatives of the
several Underwriters, as to the shares of the Option Stock for which the option
is unexercised, at any time prior to the expiration of the 30 day period, upon
notice to the Company.
4. Offering by Underwriters. Subject to the terms and conditions
hereof, the several Underwriters agree that (i) they will offer the Stock to the
public as set forth in the Prospectus as soon after the Registration Statement
becomes effective as may be practicable, but in no event later than 5:00 p.m.,
Cleveland time, on the 15th business day subsequent to the date that the
Registration Statement becomes effective, and (ii) they will offer and sell the
Stock to the public only in those jurisdictions, and in such amounts, where due
qualification and/or registration has been effected or an exemption from such
qualification and/or registration is available under the applicable securities
or Blue Sky laws of such jurisdiction; it being understood, however, that such
agreement only covers the initial sale of the Stock by the Underwriters and not
any subsequent sale of such Stock in any trading market which may develop after
the public offering.
5. Covenants of the Company. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will make every reasonable effort to cause the
Registration Statement to become effective and will advise you when it is
effective under the Act. The Company will not file any amendment to the
Registration Statement, or supplement to the Prospectus, of which you have not
been previously advised and furnished with a copy, or to which you have
reasonably objected in writing.
(b) The Company will advise you promptly of any request of the
Commission for amendment of the Registration Statement or Prospectus or for
additional information and of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose of which it has knowledge, and the Company
will make every reasonable effort to prevent the issuance of any such stop order
and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will comply, to the best of its ability, with the
Act so as to permit the continuance of sales of and dealings in the Stock under
the Act for such period as may be required by the Act; whenever it is necessary
to amend or supplement the Prospectus to make the statements therein not
misleading, furnish, without charge to you as the Representatives, either
amendments to the Prospectus or supplemental information, so that the statements
in the Prospectus as so amended or supplemented will not be misleading; and file
a post-effective Amendment to the Registration Statement whenever such an
amendment may be required and furnish, without charge to you, a reasonable
number of copies of any such amendment and related Prospectus.
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(d) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders and
deliver to you an earnings statement (which need not be audited) covering a
period of at least 12 months beginning not earlier than the Effective Date which
shall satisfy the provisions of Section 11(a) of the Act and/or Rule 158
promulgated under the Act.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all exhibits thereto),
each preliminary prospectus, the Prospectus, all amendments of and supplements
to such documents, and all correspondence between the Commission and the Company
or its counsel or accountants relating thereto, in each case as soon as
available and in such quantities as you may reasonably request.
(f) For a period of three years from the date of the
Prospectus, the Company will deliver to you (i) within 90 days after the end of
each fiscal year, audited consolidated balance sheets, statements of income,
statements of cash flow and statements of changes in stockholders' equity of the
Company and its consolidated subsidiaries, if any, as at the end of and for such
year and the last preceding year, all in reasonable detail and certified by
independent accountants, (ii) within 45 days after the end of each of the first
three quarterly periods in each fiscal year, unaudited consolidated balance
sheets and statements of income, statements of cash flow and statements of
changes in stockholders' equity of the Company and its consolidated
subsidiaries, if any, as at the end of and for such period, all in reasonable
detail, (iii) as soon as available, copies of each report or other publicly
available information of the Company mailed to the holders of the Common Stock
or filed with the Commission or any stock exchange, and such other publicly
available information concerning the Company as you may reasonably request.
(g) The Company will apply the net proceeds from the sale of
the Stock sold by it in the manner set forth in the Prospectus and will timely
file with the Commission such reports on Form SR as may be required pursuant to
Rule 463 under the Act.
(h) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A promulgated under the Act, then immediately following the execution of
this Agreement, the Company will prepare and file with the Commission, in
accordance with Rule 430A and Rule 424(b) promulgated under the Act, copies of
an amended Prospectus or, if required by such Rule 430A, a post-effective
amendment (including an amended Prospectus), containing all information so
omitted.
(i) The Company will file with the NASD all documents and
notices required of companies that have issued securities that are traded in the
over-the-counter market and quotations for which are reported by the NASDAQ/NM.
(j) The Company will satisfy all requirements for continued
listing on the NASDAQ/NM for a period of three years after the effective date of
the Registration Statement and will consult with XxXxxxxx & Company Securities,
Inc. prior to making any decision to
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discontinue such listing at any time within five years after the effective date
of the Registration Statement.
(k) The Company will cooperate with you and your counsel to qualify
the Stock for sale under the securities or Blue Sky laws of such jurisdictions
within the United States as you designate, including furnishing such information
and executing such instruments as may be required, and will continue such
qualifications in effect for a period of at least three months from the date
hereof; provided, however, the Company shall not be required to register or
qualify as a foreign corporation or as a dealer in securities nor, except as to
matters and transactions relating to the offer and sale of the Stock, consent to
a service of process in any jurisdiction.
(l) For a period of 180 days from the time of the initial public
offering of the Stock by the Underwriters, the Company will not publicly sell,
except with your prior written consent, any Common Stock or securities
convertible into Common Stock for cash, except pursuant to the exercise of any
outstanding stock options of the Company that are described in the Prospectus.
(m) After the Closing Dates, the Company will comply with the
financial record-keeping requirements and internal accounting control
requirements of Section 13(b)(2) of the Exchange Act.
6. Payment of Expenses. The Company will pay or cause to be paid all
costs and expenses incident to the performance of the obligations of the Company
hereunder, including, but not limited to, the reasonable fees, costs and
expenses of preparing, printing and delivering the certificates for the Stock;
the reasonable fees, costs and expenses of the transfer agent and registrar for
the Common Stock; the reasonable fees and disbursements of its accountants; the
reasonable fees and expenses of its counsel; the filing fees and reasonable
expenses incurred in connection with the qualification, registration or
exemption of the Stock under state securities or Blue Sky laws and the fees and
disbursements of counsel for the Underwriters in connection with such
qualification, registration or exemption and the preparation and printing of the
preliminary and final Blue Sky Surveys; the filing fees, and reasonable expenses
paid and incurred by the Underwriters, including fees and disbursements of
counsel for Underwriters, in connection with the review of the terms of the
underwriting arrangements by the NASD; the costs and expenses in connection with
the preparation, printing and filing of the Registration Statement (including
exhibits thereto) and the Prospectus and the furnishing to the Underwriters of
such copies of each preliminary and final Prospectus as the Underwriters may
reasonably require; and the costs and expenses in connection with the printing
of this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement and other documents distributed to the Underwriters. In addition to
the foregoing, on the Closing Date the Company shall pay to you the amount of
$100,000 in non-accountable expenses to cover the Underwriters' other counsel
fees and expenses.
7. Conditions of the Obligation of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Stock on the Closing
Date and the Option Stock on the Second Closing Date shall be subject to the
condition that the representations and
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warranties made by the Company herein are true and correct as of the date hereof
and as of the respective Closing Dates, to the condition that the written
statements of Company officers made pursuant to the provisions hereof are true
and correct, and to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M., Cleveland time, on the date of this Agreement, or at such
later time as shall have been consented to by you, and prior to each Closing
Date 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 shall be pending, or to the knowledge of the Company or you, shall
be contemplated by the Commission.
(b) You shall not have advised the Company that the Registration
Statement or Prospectus or any amendment thereof or supplement thereto contains
an untrue statement of fact which, in the reasonable opinion of Xxxxx &
Xxxxxxxxx LLP, counsel for the Underwriters, is material, or omits to state a
fact which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading.
(c) You shall have received as of each Closing Date (or prior
thereto as indicated) the following:
(i) An opinion of Friday, Xxxxxxxx & Xxxxx, dated as of each
respective Closing Date, to the effect that:
(aa) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of Delaware with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus. The Company is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions (i) in which the conduct of business, as presently being
conducted, requires such qualification (except for those jurisdictions in
which the failure to so qualify will not in the aggregate have a material
adverse effect on the Company or its prospects) and (ii) in which the
Company owns or leases real property.
(bb) The authorized capital stock of the Company is as
set forth under "Capitalization" in the Prospectus; all issued and
outstanding shares of Common Stock of the Company have been duly authorized
and validly issued, are free of preemptive rights of stockholders, rights
of first refusal or similar rights and are fully paid and nonassessable.
Except as described in the Prospectus, there are no outstanding options,
warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue, any shares of capital stock of
the Company or any security convertible or exchangeable or exercisable for
capital stock of the Company. There are no holders of securities of the
Company who, by reason of the filing of the Registration Statement, have
the right to request the Company to include in the Registration Statement
securities owned by them.
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(cc) The shares of Common Stock of the Company to be
issued and sold by the Company hereunder have been duly authorized, and,
when issued, delivered and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable. No preemptive rights of
security holders of the Company exist with respect to the issuance and sale
of the Stock by the Company pursuant to this Agreement. The shares of
Common Stock of the Company conform to the description thereof contained in
the Prospectus and the certificates for the shares of Common Stock of the
Company (including the Stock) are in due and legal form under Delaware law.
(dd) The Company has the corporate power and authority
to enter into and perform this Agreement and to issue and deliver the Stock
as provided herein. The execution, delivery and performance of this
Agreement by the Company has been duly authorized by all necessary action
of the Company. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except
as rights to indemnity may be limited by public policy and applicable
federal or state securities laws and except as enforcement thereof may be
limited by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights or by limitations upon the
availability of certain remedies that may be precluded by general
principles of equity.
(ee) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act. The Registration Statement and the
Prospectus, and each amendment thereof or supplement thereto (except for
the financial statements and schedules included therein as to which such
counsel need express no opinion) comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations (except for
the financial statements and schedules included therein as to which such
counsel need express no opinion); the descriptions in the Registration
Statement and the Prospectus of the shares of Common Stock, statutes,
regulations, leases, employee benefit plans, contracts and other documents
are materially accurate and fairly present the information required to be
shown; and such counsel does not know of any legal or governmental
proceedings which are required by the Act and the Rules and Regulations to
be described in the Prospectus and which are not described as so required,
or of any leases, contracts or other documents of a character which are
required by the Act and the Rules and Regulations to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement and which are not described and/or filed as so
required.
(ff) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not result in a
breach of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party and of which such counsel has
knowledge after reasonable investigation, or the Certificate of
Incorporation or By-laws of the Company, or, to the knowledge of such
counsel, any order, rule or regulation
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applicable to the Company of any court or of any federal or state
regulatory body or administrative agency or other governmental body having
jurisdiction over the Company or its property, except for such breaches or
defaults as will not have a material adverse effect on the consummation of
the transactions herein contemplated and the fulfillment of the terms
hereof by the Company.
(gg) All approvals, consents and orders of all
governmental bodies required in connection with the valid authorization,
issuance and sale of the Stock as contemplated by this Agreement have been
obtained, except such as may be required under the securities or Blue Sky
laws of any jurisdiction as to which such counsel need express no opinion.
(hh) To such counsel's knowledge, the Company is not in
violation of its Certificate of Incorporation or By-laws or other
organizational documents, and no default exists by the Company in the due
performance and observance of any term, covenant or condition of any
agreement material to the Company to which the Company is a party or by
which the Company is bound.
(ii) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(jj) No facts have come to the attention of such counsel
which would lead such counsel to believe that either the Registration
Statement at the time it became effective and at the Closing Date or the
Second Closing Date, as the case may be, 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 the date thereof and as of the Closing Date or the
Second Closing Date, as the case may be, 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, 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 schedules and other financial data included
therein).
(kk) [Each of (A) the Assignment, Assumption and
Indemnification Agreement between the Company and Daisy Manufacturing
Company, a Delaware corporation ("New Daisy") to be dated as of the
Effective Date, (B) the Guaranty to be executed by each of the stockholders
of New Daisy in favor of the Company and dated as of the Effective Date,
and (C) the Tax Allocation Agreement between the Company and New Daisy to
be dated as of the Effective Date, constitute valid, binding and
enforceable obligations of each of the parties thereto enforceable against
them in accordance with their respective terms.]
(ll) Such other matters as you may reasonably request.
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In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent specified in such
opinion, if at all, upon an opinion or opinions of other counsel, familiar with
the applicable laws; (B) as to matters of fact on certificates of officers of
the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. The opinion of such counsel
for the Company shall state that the opinion of any such other counsel is in
form satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(ii) An opinion of Friday, Xxxxxxxx & Xxxxx, dated as of the
Closing Date, to the effect that:
(aa) [tax free nature of the "spin"]; and
(bb) [methodology set forth in the certificate
contemplated by Section 7(h)].
(iii) An opinion of Xxxx X. Xxxxx, Esq., Secretary and General
Counsel of the Company, dated as of each respective Closing Date, to the effect
that:
(aa) To the best of his knowledge, the Company holds,
and is in compliance with, all necessary material authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies (collectively, the "licenses")
required for the conduct of its business as described in the Prospectus,
except where the failure to so hold or comply with any license would not
have, individually or in the aggregate, a material adverse effect on the
business, prospects, condition (financial or other) or results of
operations of the Company.
(bb) To the best of his knowledge, the Company is not in
violation of any Federal or Delaware laws and regulations that are of
general application to corporations in the conduct of its business, except
where the failure so to comply or conform would not have a material adverse
effect on the business, prospects, condition (financial or other) or
results of operations of the Company.
(cc) Except as set forth in the Prospectus, such counsel
does not know of any past, pending or threatened action, suit, proceeding,
inquiry or investigation before any court or before or by any public,
regulatory or governmental body or board against or involving the business
or property of the Company, if successful, could have a material adverse
effect on the business, prospects, condition (financial or other) or
results of operations of the Company.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which he is admitted, to the extent specified in such opinion,
if at all, upon an opinion or
-15-
opinions of other counsel, familiar with the applicable laws; (B) as to matters
of fact on certificates of officers of the Company. The opinion of Xx. Xxxxx
shall state that the opinion of any such other counsel is in form satisfactory
to him and, in his opinion, you and they are justified in relying thereon.
(iv) Such opinion or opinions of Xxxxx & Xxxxxxxxx LLP,
counsel for the Underwriters, dated as of each respective Closing Date, with
respect to the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement, the validity of the Stock, the Registration
Statement, the Prospectus, and other related matters as you may reasonably
request, and the Company shall have furnished to such counsel such documents as
they may request for the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company; and in rendering an opinion such
counsel may rely on the opinion of Friday, Xxxxxxxx & Xxxxx.
(v) A certificate of the Company executed by the principal
executive officer and the principal financial and accounting officer of the
Company, dated as of each respective Closing Date, to the effect that:
(aa) The representations and warranties of the Company
in Section 2 of this Agreement are true and correct as of each respective
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 each respective Closing Date.
(bb) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of the respective
signers of the certificate, are contemplated under the Act.
(cc) The signers of the certificate have carefully
examined the Registration Statement and the Prospectus; no facts have come
to their attention which would lead them to believe that either the
Registration Statement at the time it became effective (or any amendment
thereof or supplement thereto made prior to the Closing Date or the Second
Closing Date, as the case may be, as of the date of such amendment or
supplement) 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 the date
thereof (or any amendment thereof or supplement thereto made prior to the
Closing Date or the Second Closing Date, as the case may be, as of the date
of such amendment or supplement) 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, in light of the
circumstances under which they were made, not misleading; since the latest
respective dates as of which information is given in the Registration
Statement, there has been no material adverse change in the financial
position, business, prospects or results of operations of the Company,
except as set forth in or contemplated by the Prospectus; and since the
-16-
Effective Date of the Registration Statement there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has
not been set forth.
(vi) Letters from Xxxxx, Xxxxxx and Company, LLP, dated
respectively the date of this Agreement and each respective Closing Date,
addressed to you and in form and substance previously approved by you, with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(vii) A certification from the Company that (i) it has received
a written representation from each of its directors and executive officers who
are also stockholders of the Company (with a copy of each such representations
attached thereto) that such stockholder does not have any plan or intention to
sell, exchange, transfer by gift or otherwise dispose of any shares of the
Company, and (ii) that the Company is not aware that any other stockholder has
any such plan or intention.
(viii) A certification from New Daisy that (i) it has received
a written representation from each of its directors and officers who are also
stockholders of New Daisy (with a copy of each such representation attached
thereto) that such stockholder does not have any plan or intention to sell,
exchange, transfer by gift or otherwise dispose of any shares of New Daisy, and
(ii) that New Daisy is not aware that any other stockholder has any such plan or
intention.
(e) The Company shall have furnished to you such further
certificates and documents as you may reasonably request.
(f) No stop order suspending the qualification of the Stock under
the securities or Blue Sky laws of the states in which the Stock is to be
offered and sold shall have been issued and no proceedings for that purpose
shall have been instituted or shall be pending, or to the knowledge of the
Company or you, shall be contemplated by the applicable state securities
administrators.
(g) You shall have received a copy of a duly executed and delivered
continuing guaranty between shareholders of New Daisy and the Company in form
and substance reasonably satisfactory to you and counsel for the Underwriters.
(h) You shall have received a written statement signed by the
Secretary of the Company and dated as of the Closing Date certifying (A) the
amount of the Company's adjusted tax basis in the assets transferred by the
Company to New Daisy in connection with the Reorganization, (B) the value, for
tax purposes, of the liabilities assumed by New Daisy in connection therewith,
(C) the amount of the Company's net operating losses from prior years and
current year operating losses through the date of the Reorganization that are
available to offset the gain associated with the asset transfer described in
clause (A) and the gain associated with the termination of the LIFO reserve
described in clause (D), (D) the amount and timing of the recognition by the
Company for tax purposes of the gain attributable to the contemplated election
by the Company to terminate its LIFO reserve effective as of January 1, 1997,
(E) that the Company's adjusted tax basis in the outstanding capital stock of
New Daisy distributed by the Company in connection with
-17-
the Reorganization exceeds the fair market value thereof, and (F) that such
Secretary has made all inquiries with the Company's chief accounting officer and
independent certified public accountants, as well as with such other persons,
including, without limitation, appraisers and other financial and legal
advisors, necessary to familiarize himself with such matters and to enable him
to render such certifications. Such statement shall otherwise be in form and
substance reasonably satisfactory to you and your counsel and, with respect to
the certifications contained in clauses (A) through (E), such statement shall
include a detailed numerical calculation supporting such certifications.
If any condition of the Underwriters' obligations hereunder to be
satisfied prior to any Closing Date is not so satisfied, this Agreement may be
terminated by you prior to such Closing Date, by notice in writing or by
telegram confirmed in writing to the Company.
All such opinions, certificates, letters and documents furnished to
you pursuant to this Section 7 will be in compliance with the provisions hereof
only if they are in all material respects satisfactory to you and to Xxxxx &
Xxxxxxxxx LLP, counsel for the Underwriters, as to which both you and such
counsel shall act reasonably. The Company will furnish you with such executed
and conformed copies of such opinions, certificates, letters and documents as
you may request.
You, on behalf of the Underwriters, may waive in writing the
compliance by the Company of any one or more of the foregoing conditions or
extend the time for their performance.
8. Representations of the Underwriters. Each of the Underwriters
severally represents and warrants to the Company that the information provided
to the Company in writing by such Underwriters or by you expressly for use in
the preparation of the Registration Statement or the Prospectus does not, and
any amendments thereof or supplements thereto thus provided will not, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
Through you each Underwriter has furnished to the Company expressly for such
use, only the statements made in the last paragraph of the cover page of the
Prospectus and the statements relating to the terms of the offering by the
several Underwriters set forth under the caption "Underwriting" in the
Prospectus.
9. Termination of Agreement. This Agreement shall become effective upon
the earlier to occur of (i) the time the Stock is released by you for sale or
(ii) 11:00 A.M., Cleveland time, on the first business day following the date on
which the Registration Statement becomes effective. At any time before the
happening of such occurrence, the Company may, by notice to you, terminate this
Agreement; and at any time prior to such time, you, as the Representatives of
the several Underwriters, may, by notice to the Company, terminate this
Agreement.
-18-
This Agreement may also be terminated by you, as Representatives of
the several Underwriters, by notice to the Company on or after the Effective
Date of the Registration Statement and prior to each respective Closing Date, if
at any time during such period any of the following has occurred: (i) except as
disclosed in or contemplated by the Registration Statement, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company or the earnings, business affairs, management or
business prospects of the Company, whether or not arising in the ordinary course
of business; (ii) any outbreak of hostilities or escalation in existing
hostilities anywhere in the world or other national or international calamity or
crisis or change in economic or political conditions, if the effect of such
outbreak, escalation, calamity, crisis or change in the financial markets in the
United States would, in your reasonable judgment, make it impracticable to offer
for sale or to enforce contracts made by the Underwriters for the resale of the
Stock agreed to be purchased hereunder; (iii) any general suspension of trading
in securities on the New York Stock Exchange or the American Stock Exchange or
the NASDAQ/NM or any general limitation on prices for such trading or any
general restrictions on the distribution of securities, all to such a degree as
would in your reasonable judgment materially adversely affect the market for the
Stock; or (iv) a banking moratorium shall have been declared by either Federal,
Arkansas, Delaware, Ohio or New York State authorities.
This Agreement may also be terminated as provided in Sections 7 and
11 hereof.
If this Agreement shall be terminated by you because of any failure
on the part of the Company to comply with any of the terms or to fulfill any of
the conditions of this Agreement, or if for any reason the Company shall be
unable to perform its obligations under this Agreement, the Company shall pay,
in addition to the costs and expenses referred to in Section 6, all reasonable
out-of-pocket expenses incurred by the Underwriters in contemplation of the
performance by them of their obligations hereunder, including but not limited to
the reasonable fees and disbursements of counsel for the Underwriters, the
Underwriters' reasonable printing and traveling expenses and postage, telegraph
and telephone charges relating directly to the offering contemplated by the
Prospectus, and also including reasonable advertising expenses of the
Representatives incurred after the Effective Date of the Registration Statement
and so relating, it being understood that such out-of-pocket expenses shall not
include any compensation, salaries or wages of the officers, partners or
employees of any of the Underwriters. Only such out-of-pocket expenses as shall
be accounted for by the Underwriters shall be paid to the Underwriters by the
Company.
The Company shall not in any event be liable to the several
Underwriters for damages on account of loss of anticipated profits arising out
of the actions contemplated by this Agreement.
10. Indemnification. (a) The Company will indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such
-19-
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained herein or any failure of the Company to
perform its obligations hereunder, or arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any related preliminary prospectus (if used prior to the
Effective Date), the Prospectus or 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, subject to the provisions of Section
10(c), will reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 10(a) with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter or to the benefit
of any person controlling such Underwriter in respect of any loss, claim,
damage, liability or action asserted by a person who purchases shares of the
Stock from such Underwriter, if such Underwriter failed to send or give a copy
of the Prospectus (as the same may then be amended or supplemented) to such
person with or prior to written conformation of the sale to such person; and
provided, further, that the Company 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 untrue statement or omission or alleged omission made in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment thereof or supplement thereto in reliance upon or in conformity with
written information furnished to the Company by an Underwriter specifically for
use in the preparation thereof, as referred to in the last sentence of Section 8
hereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Act each of its directors, each of its officers who have signed the Registration
Statement, against any losses, claims, damages or liabilities to which the
Company, or any such director or officer may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
any preliminary prospectus, the Prospectus, or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment thereof
or supplement thereto in reliance upon or in conformity with written information
furnished to the Company by such Underwriter through you, as the Representatives
of the Underwriters, specifically for use in the preparation thereof, as
referred to in the last sentence of Section 8 of this Agreement; and will
reimburse the Company and each such director or officer for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which the Underwriters may
otherwise have.
-20-
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify each party against whom indemnification is to be
sought in writing of the commencement thereof; but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the Company of the
commencement thereof, the Company will be entitled to participate in, and, to
the extent that it may wish, to assume the defense thereof, with counsel
approved by such indemnified party (which approval shall not be unreasonably
withheld), and after notice from the Company to such indemnified party of its'
election so to assume the defense thereof, the Company will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the named parties to any such action include both the indemnifying
party and the indemnified party, and the indemnified party shall have reasonably
concluded that there is an actual or potential conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party), or (iii)
the indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one or separate but similar or
related actions in the same jurisdiction arising out of the same allegations or
circumstances. Anything in this Section to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section is for any reason held to
be unavailable from the Company or the Underwriters or is insufficient to hold
harmless a party indemnified hereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of the Act, officers of the Company who signed the Registration Statement and
directors of the Company) to which the Company and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the
-21-
Underwriters from the offering of the Stock or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in this Section,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as (y) the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company and (z) the underwriting
discounts and commissions received by the Underwriters, respectively, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and of the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omissions or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 10(e) were determined by pro rata allocation even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this Section 10(e), (i) in no case
shall any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discounts and commissions applicable to the Stock purchased by such
Underwriter hereunder and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person, if any, who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10(e), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company within the meaning of Section 15 of the 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 clauses (i) and (ii) of this Section 10(e). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 10(e), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 10(e) or otherwise. No party
shall be liable for contribution for any settlement of any action or claim
effected without its written consent.
11. Default of the Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase the Stock hereunder and arrangements
satisfactory to you and the Company, evidenced by a writing or writings signed
by you and the Company, for the purchase of such Stock by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the Company (except
that the Company shall be liable for the expenses to be paid by it pursuant to
the provisions of Section 8), provided, however, that if the number of shares of
the Stock which all
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such defaulting Underwriters have agreed but failed to purchase shall not exceed
10% of the number of shares of the Firm Stock or the Option Stock, as the case
may be, agreed to be purchased pursuant to this Agreement (other than the shares
agreed to be taken up hereunder which the defaulting Underwriters failed to
purchase) by all non-defaulting Underwriters, the non-defaulting Underwriters
shall be obligated proportionately to take up and pay for the shares of the Firm
Stock or the Option Stock which such defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company shall have
the right to postpone the Closing Date for not more than seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangement, may be effected. As used
in this Agreement, the term "Underwriters" includes any person substituted for
an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from its liability to the other several Underwriters and the Company
for its default hereunder.
12. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations and warranties of the Company and the
several 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, the Company or any of its officers or directors or
any controlling person, and will survive delivery of and payment for the Stock
and, in the case of the agreements contained in Sections 6, 9 and 10 hereof,
will survive any termination of this Agreement.
13. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to you in care of XxXxxxxx & Company Securities, Inc., XxXxxxxx Investment
Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: X.X. Xxxx Xxxxxx,
with a copy to Xxxxx & Xxxxxxxxx LLP, 3200 National City Center, 0000 Xxxx 0xx
Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000, Attention: Xxxxxx X. Xxxxx, Esq., or if sent
to the Company, will be mailed, delivered or telegraphed and confirmed to the
Company at 0000X Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, Attention: E. Xxxx
Xxxxx, President and Chief Executive Officer; with a copy to Friday, Xxxxxxxx &
Xxxxx, 2000 First Commercial Building, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000-0000, Attention:
Xxxx X. Xxxxxx, III.
14. Successors, Governing Law. This Agreement will inure solely to the
benefit of and be binding upon the parties hereto and the officers and directors
and persons referred to in Section 10 hereof and their respective successors,
assigns, heirs, executors and administrators, and no other persons will have any
right or obligation hereunder. This Agreement will be governed by and construed
in accordance with the laws of the State of Ohio, without giving effect to the
principles of conflicts of law's thereof.
17. Execution in Counterparts. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
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18. Authority of the Representatives. You represent and warrant that
you have been authorized by the several Underwriters to enter into this
Agreement on their behalf and to act for them in the manner provided herein.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement by and among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
BRASS EAGLE INC.
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
The foregoing Agreement is hereby confirmed and accepted by us acting on our own
behalf and as the Representatives of the several Underwriters named on Schedule
A annexed hereto, as of the date first above written.
XxXXXXXX & COMPANY SECURITIES, INC.
As Representative of the Several Underwriters
By:
-----------------------------------------
Name:
----------------------------------
Title: Managing Director
XXXX XXXXXXXX INCORPORATED
As Representative of the Several Underwriters
By:
-----------------------------------------
Name:
-----------------------------------
Title: Managing Director
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SCHEDULE A
UNDERWRITERS
Number of Shares
Underwriter to be Purchased
----------- ----------------
XxXxxxxx & Company Securities, Inc.
Xxxx Xxxxxxxx Incorporated
Total
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