NATROL, INC.
4,531,000 Shares(1)
Common Stock
(par value $.01 per share)
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Underwriting Agreement
, 1998
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As representatives of the several
Underwriters named in Schedule I hereto,
▇/▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Natrol, Inc., a Delaware corporation (together with its predecessor,
the "Company"), proposes, subject to the terms and conditions stated herein,
to issue and sell to you and the several Underwriters named in Schedule I
hereto (collectively, the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), an aggregate of 3,200,000 shares
(the "Company Firm Shares") and, at the election of the Underwriters, up to
295,500 additional shares (the "Company Optional Shares") of common stock of
the Company, $.01 par value per share ("Common Stock"), and the Selling
Stockholders named in Schedule II hereto (the "Selling Stockholders"),
propose, subject to the terms and conditions stated herein, to sell to the
Underwriters an aggregate of 740,000 shares (the "Selling Stockholder Firm
Shares", and together with the Company Firm Shares, the "Firm Shares") and at
the election of the Underwriters, up to an additional 295,500 shares (the
"Selling Stockholder Optional Shares", and together with the Company Optional
Shares, the "Optional Shares") of Common Stock. The Firm Shares, and the
Optional Shares which the Underwriters elect to purchase pursuant to Section
3 hereof, are herein collectively called the "Shares".
--------
(1) Includes 591,000 shares subject to an option to purchase additional shares
to cover over-allotments.
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1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-52109)
(the "Initial Registration Statement") in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission"); to the
Company's knowledge, based solely on oral advice provided by the Commission
on the date hereof, the Initial Registration Statement, including any
pre-effective amendments thereto and any post-effective amendment thereto,
each in the form heretofore delivered to you, and to you for each of the
other Underwriters, has been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and the
Company has received no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, the Company has received no
notice of the initiation or planned initiation of any proceeding for that
purpose and, to the Company's knowledge, no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement and incorporated by reference
in the Rule 462(b) Registration Statement, if any, or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and including
the information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with Section
6(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective or the
Rule 462(b) Registration Statement, if any, at the time it became effective,
each as amended at the time such part of such registration statement became
effective, are hereinafter collectively called the "Registration Statement";
and such final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus");
(b) The Company has received no order preventing or suspending
the use of any Preliminary Prospectus has been issued by the Commission, and
each Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions (i) which have been corrected in a subsequent
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Preliminary Prospectus or the final Prospectus or (ii) made in reliance upon
and in conformity with information furnished in writing to the Company by or
on behalf of an Underwriter through you expressly for use therein. The
Company acknowledges that the statements set forth in the last paragraph on
the front cover page (insofar as such information relates to the
Underwriters), the legends required by Item 502(d) of Regulation S-K under
the Act and the information under the heading "Underwriting" in the
Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by or on behalf of the Representatives
specifically for inclusion in the Registration Statement;
(c) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and do not and
will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable date of the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of an
Underwriter through you expressly for use therein;
(d) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the rules and regulations thereunder
which have not been described or filed as required; the contracts so
described in the Prospectus to which the Company or any of its subsidiaries
is a party have been duly authorized, executed and delivered by the Company
or its subsidiaries, constitute valid and binding agreements of the Company
or its subsidiaries and are enforceable against and by the Company or its
subsidiaries in accordance with their respective terms except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors rights generally, (ii) general
principles of equity, whether considered in a proceeding at law or in equity
and (iii) state or federal securities laws or policies relating to the
non-enforceability of the indemnification or contribution provisions
contained herein, and are in full force and effect on the date hereof; and
neither the Company nor any of its subsidiaries, nor, to the best of the
Company's knowledge, any other party is in material breach of or material
default under any of such contracts;
(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Prospectus
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any material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, assets, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, taken as a whole (hereinafter a "Material Adverse Change"),
otherwise than as set forth or contemplated in the Prospectus;
(f) The Company and its subsidiaries have valid title to all
properties and assets described in the Prospectus as owned by them, in each
case free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or are not material to the
business of the Company; any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries; the Company and its
subsidiaries own or lease all such properties as are necessary to their
operations as now conducted or as proposed to be conducted, except where the
failure to so own or lease would not result in a Material Adverse Change;
(g) Each of the Company and its subsidiaries has been duly
incorporated and is an existing corporation in good standing under the laws
of its respective jurisdiction of organization, each with full corporate
power and corporate authority to own its properties and conduct its business
as described in the Prospectus, and each has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification (except where the
failure to be so qualified in any such jurisdiction would not result in a
Material Adverse Change);
(h) The Company had as of March 31, 1998 an authorized
capitalization as set forth under the heading "Capitalization" in the
Prospectus, and all the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable
and conform in all material respects to the description of the Common Stock
contained in the Prospectus; all of the issued shares of capital stock of
each subsidiary of the Company have been duly authorized and validly issued,
are fully paid and non-assessable and are owned of record by the Company,
free and clear of all liens, encumbrances or claims, except for pledges
pursuant to the Amended and Restated Credit Agreement between the Company and
▇▇▇▇▇ Fargo Bank, N.A. (the "Credit Agreement") as described in the
Prospectus;
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except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company, and the related notes thereto, included in the
Prospectus, neither the Company nor any subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe
for or to purchase any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or any
such options, rights, convertible securities or obligations; and the
description of the Company's stock option and stock purchase plans and the
options or other rights granted and exercised thereunder set forth in the
Prospectus accurately and fairly presents in all material respects the
information required to be shown with respect to such plans, options and
rights;
(i) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be validly issued
and fully paid and non-assessable and will conform in all material respects
to the description of the Common Stock contained in the Prospectus; no
preemptive rights or other rights to subscribe for or purchase exist with
respect to the issuance and sale of the Shares by the Company pursuant to
this Agreement; no stockholder of the Company has any right which has not
been satisfied or waived to require the Company to register the sale of any
shares of capital stock owned by such stockholder under the Act in the public
offering contemplated by this Agreement; and no further approval or authority
of the stockholders or the Board of Directors of the Company will be required
for the issuance and sale of the Shares to be sold by the Company as
contemplated herein;
(j) The Company has full corporate power and authority to enter
into this Agreement; this Agreement has been duly authorized, executed and
delivered by the Company, constitutes a valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or similar laws
in effect which affect the enforcement of creditors rights generally, (ii)
general principles of equity, whether considered in a proceeding at law or in
equity and (iii) state or federal securities laws or policies relating to the
non-enforceability of the indemnification or contribution provisions
contained herein;
(k) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such
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action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties; and
no consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration under
the Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws or the by-laws and rules of the National Association of
Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution of the Shares by the Underwriters;
(l) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of its subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its subsidiaries is or may
be the subject, or related to environmental or discrimination matters, which
actions, suits or proceedings, if adversely decided, would result in a
Material Adverse Change; no labor disturbance by the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company, is
imminent which would result in a Material Adverse Change; and neither the
Company nor any of its subsidiaries is a party or subject to the provisions
of any material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body;
(m) The Company and its subsidiaries possess all governmental or
regulatory licenses, certificates, authorizations or permits that are
necessary to enable them to own, lease and operate their respective
properties and to carry on their respective businesses as presently conducted
and which the failure to possess would result in a Material Adverse Change,
and neither the Company nor any of its subsidiaries has received any written
notice of proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which, singly or in the aggregate,
would be expected to result in a Material Adverse Change;
(n) Each of Ernst & Young LLP and ▇▇▇▇▇▇ & ▇▇▇▇ LLP, who have
certified certain financial statements of the Company and Pure-Gar, L.P.,
respectively, are independent public accountants within the meaning of the
Act and the rules and regulations of the Commission thereunder;
(o) The financial statements and schedules of the Company, and
the related notes thereto, included in the Registration Statement and the
Prospectus present fairly in all material respects the financial position of
the Company as of the respective dates of such financial statements and
schedules, and the results of operations and cash flows of the Company for
the respective periods covered
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thereby; such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent public accountants named in
paragraph (n) above; no other financial statements or schedules are required
to be included in the Registration Statement; and the selected financial data
set forth in the Prospectus under the captions "Summary Consolidated
Financial Data," "Capitalization," "Selected Consolidated Financial Data" and
"Unaudited Pro Forma Consolidated Statements of Income" present fairly in all
material respects the information set forth therein on the basis stated in
the Registration Statement;
(p) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals and
governmental authorizations to conduct their business as now conducted except
where the failure to so own or possess would not result in a Material Adverse
Change; except as disclosed in the Registration Statement and Prospectus, the
Company has no knowledge of any material infringement by the Company of
trademark, trade name rights, patent rights, copyrights, licenses, trade
secret or other similar rights of others; and there is no claim being made
against the Company regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement which, if adversely decided,
would result in a Material Adverse Change;
(q) The Company and each of its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown as due thereon; and the Company has no knowledge of
any tax deficiency which has been or is reasonably likely to be asserted or
threatened against the Company or any of its subsidiaries which would result
in a Material Adverse Change;
(r) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(s) Each of the Company and its subsidiaries maintains insurance
of the types and in the amounts which it deems adequate for its business,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against by companies engaged in businesses substantially similar to that of
the Company, all of which insurance is in full force and effect;
(t) Neither the Company nor any of its subsidiaries has at any
time during the last five years (i) made any unlawful contribution to any
candidate for
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foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any foreign, federal or state governmental
officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof;
(u) The Company has not taken and will not take, directly or
indirectly through any of its directors, officers or controlling persons, any
action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Shares;
(v) The Company has filed a registration statement pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to register the Common Stock, has filed an application to
list the Common Stock on the Nasdaq National Market and has received
notification that the listing has been approved, subject to notice of
issuance of the Shares;
(w) The Company and each of its subsidiaries is conducting its
business in compliance with all the laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, those of the United States, and all governmental bodies having
jurisdiction over the Company, including but not limited to the United States
Food and Drug Administration, Federal Trade Commission, Consumer Product
Safety Commission, Department of Agriculture and Environmental Protection
Agency and those relating to employment and employment practices, except
where the failure to so comply would not result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notification
of any asserted present or past failure of the Company or its subsidiaries to
comply with any such laws, rules or regulations to the extent such notice
would reasonably be expected to result in a Material Adverse Change; and
(x) Neither the Company nor any of its subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or toxic substance or
wastes, pollutants or contaminants, except where the failure to so comply
would not result in a Material Adverse Change.
2. Representations and Agreements of the Selling
Stockholders. Each of the Selling Stockholders, severally and not jointly,
represents and warrants to, and agrees with, each of the Underwriters that:
(a) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this Agreement
and the Power of Attorney and Custody Agreement (the "Custody Agreement")
hereinafter referred to, and for the sale and delivery of the Shares to be
sold by such Selling
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Stockholder hereunder, have been obtained; and such Selling Stockholder has
full right, power and authority to enter into and perform this Agreement and
the Custody Agreement and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Stockholder hereunder;
(b) This Agreement and the Custody Agreement have each been duly
authorized, executed and delivered by such Selling Stockholder and each such
document constitutes a valid and binding obligation of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance with
its terms except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditors rights
generally, (ii) general principles of equity, whether considered in a
proceeding at law or in equity and (iii) state or federal securities laws or
policies relating to the non-enforceability of the indemnification or
contribution provisions contained herein and therein;
(c) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required in connection with the sale of the Shares by such Selling
Stockholder or the consummation by such Selling Stockholder of the
transactions on his or its part contemplated by this Agreement and the
Custody Agreement, except such as have been obtained under the Act or the
rules and regulations thereunder and such as may be required under state
securities or Blue Sky laws or the by-laws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the
Shares;
(d) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the performance by such Selling Stockholder of this Agreement
and the Custody Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, any material indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other
agreement or instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder or any of his or its material properties is
bound or affected, or violate or conflict with the Certificate of
Incorporation or By-laws of such Selling Stockholder if such Selling
Stockholder is a corporation, the Agreement of Limited Partnership of such
Selling Stockholder if such Selling Stockholder is a limited partnership or
any judgment, ruling, decree, order, statute, rule or regulation of any court
or other governmental agency or body applicable to such Selling Stockholder;
(e) Such Selling Stockholder has, and at the applicable Time of
Delivery (as defined below) will have, good and valid title to the Shares to
be sold by
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such Selling Stockholder hereunder, free and clear of all liens, encumbrances
or claims (except those in favor of the Underwriters created by this
Agreement or the Custody Agreement); and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances or claims, will pass to each of the
several Underwriters who have purchased such Shares in good faith and without
notice of any such lien, encumbrance or claim or any other adverse claim
within the meaning of the Uniform Commercial Code;
(f) Such Selling Stockholder will not, directly or indirectly,
offer, sell, assign, transfer, encumber, contract to sell, grant an option to
purchase, make a distribution of, or otherwise dispose of, any shares of
Common Stock or any securities convertible into or exchangeable for, or any
rights to purchase or acquire, shares of Common Stock held by such Selling
Stockholder, acquired by such Selling Stockholder after the date hereof or
which may be deemed to be beneficially owned (as defined in the rules and
regulations of the Commission) by such Selling Stockholder, for a period of
180 days following the date of the Prospectus, other than (i) the sale of the
Shares pursuant to this Agreement, (ii) with the prior written consent of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc. or (iii) pursuant to a bona fide gift to a person
or entity who agrees in writing to be bound by the provisions of the
agreements set forth in this paragraph (f);
(g) Such Selling Stockholder has not taken and will not at any
time take, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of shares of Common Stock to facilitate the sale
or resale of any of the Shares;
(h) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling Stockholder
expressly for use therein, such statements contained in the Preliminary
Prospectus and the Registration Statement in reliance thereon did, and such
statements contained in the Prospectus and any further amendments or
supplements to the Registration Statement and the Prospectus in reliance
thereon, when they become effective or are filed with the Commission, as the
case may be, will not contain 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, in the light of the circumstances under which they
were made, not misleading;
(i) Such Selling Stockholder has reviewed the Registration
Statement and Prospectus and, although such Selling Stockholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of such Selling
Stockholder that would lead such
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Selling Stockholder to believe that on the Effective Date, the Registration
Statement contained any untrue statement of a material fact or omitted 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 contained and, at each Time of Delivery, contains any untrue
statement of a material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(j) Such Selling Stockholder has carefully reviewed the
representations and warranties of the Company contained in this Agreement and
the information contained in the Registration Statement. Based on the
foregoing (i) such Selling Stockholder has no reason to believe and does not
believe that the representations of the Company contained in this Agreement
are not true and correct in all material respects; (ii) such Selling
Stockholder has no knowledge of any fact, condition or information not
disclosed in the Registration Statement which has materially adversely
affected or which may materially adversely affect the business of the
Company; and (iii) the sale of the Shares by such Selling Stockholder
pursuant to this Agreement is not prompted by any adverse information
concerning the Company which is not set forth in the Registration Statement.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or at the Closing Date
a properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
Certificates in negotiable form representing the shares of Convertible
Participating Preferred Stock, par value $.01 per share, of the Company (the
"Convertible Preferred Stock") which, immediately prior to the consummation
of the transactions contemplated hereby, will convert into all of the Shares
to be sold by such Selling Stockholder, have been placed in custody under the
Custody Agreement, in the form heretofore furnished to you, duly executed and
delivered by such Selling Stockholder to the Custodian (as defined in the
Custody Agreement), and that such Selling Stockholder has duly executed and
delivered a Power-of-Attorney, in the form heretofore furnished to you,
appointing ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and each of them, as such
Selling Stockholder's attorney-in-fact (the "Attorney-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Stockholder, to determine (subject to the provisions of the Custody
Agreement) the purchase price to be paid by the Underwriters to such Selling
Stockholder as provided in Section 3 hereof, to authorize the delivery of the
Shares to be sold by such Selling Stockholder hereunder and otherwise to act
on behalf of the Selling
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Stockholder in connection with the transactions contemplated by this
Agreement and the Custody Agreement.
Each of the Selling Stockholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Stockholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Stockholder for
such custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power-of-Attorney, are to that extent irrevocable.
Each of the Selling Stockholders specifically agrees that the obligations of
such Selling Stockholder hereunder shall not be terminated by operation of
law, whether by the death or incapacity of such Selling Stockholder or, in
the case of an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event. If such Selling
Stockholder or any such executor or trustee should die or become
incapacitated, or if any such estate or trust should be dissolved, of if such
corporation or partnership should be dissolved, or if any other such event
should occur, before the delivery of the Shares hereunder, certificates
representing the Shares to be sold by such Selling Stockholder shall be
delivered by or on behalf of such Selling Stockholder in accordance with the
terms and conditions of this Agreement and of the Custody Agreement, and
actions taken by the Attorneys-in-Fact pursuant to the Powers-of-Attorney
shall be as valid as if such death, incapacity, termination, dissolution or
other event had not occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such death,
incapacity, termination, dissolution or other event.
3. Shares Subject to Sale. (a) On the basis of the representations,
warranties and agreements of the Company and the Selling Stockholders
contained herein, and subject to the terms and conditions of this Agreement,
(i) the Company agrees to issue and sell the Company Firm Shares to the
several Underwriters, (ii) each of the Selling Stockholders agrees, severally
and not jointly, to sell its respective Selling Stockholder Firm Shares to
the several Underwriters, and (iii) each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholders, at a purchase price per share of $___, the respective number of
Firm Shares (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number of Firm Shares by a fraction,
the numerator of which is the aggregate number of Firm Shares to be purchased
by such Underwriter as set forth opposite the name of such Underwriter in
Schedule I hereto and the denominator of which is the aggregate number of
Firm Shares to be purchased by all the Underwriters and (b) in the event and
to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, (i) the Company agrees to issue and sell
the Company Optional Shares to the several Underwriters, (ii) each of the
Selling Stockholders agree to sell its respective Selling Stockholder
-12-
Optional Shares to the several Underwriters, and (iii) each of the
Underwriters agrees, severally and not jointly, to purchase from the Company
and the Selling Stockholders, at the purchase price per share set forth in
clause (a) of this Section 3, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of the Optional Shares which all
of the Underwriters are entitled to purchase hereunder.
In addition, subject to the terms and conditions of this Agreement, the
Company and the Selling Stockholders, as and to the extent indicated in
Schedule II hereto, each hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to 295,500 Company
Optional Shares and 295,500 Selling Stockholder Optional Shares,
respectively, at the purchase price per share set forth in the paragraph
above, for the sole purpose of covering over-allotments in the sale of the
Firm Shares. Any such election to purchase Optional Shares shall be made in
proportion to the maximum number of Optional Shares to be sold by the Company
and each of the Selling Stockholders. Any such election to purchase Optional
Shares may be exercised by written notice from you to the Company and the
Selling Stockholders, given within a period of 30 calendar days after the
date of this Agreement and setting forth the aggregate number of Optional
Shares to be purchased and the date on which such Optional Shares are to be
delivered, as determined by you but in no event earlier than the First Time
of Delivery (as defined in Section 5 hereof) or, unless you, the Company and
the Selling Stockholders otherwise agree in writing, earlier than two or
later than three business days after the date of such notice.
4. Offering. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus.
5. Closing. Certificates in definitive form for the Shares to be
purchased by each Underwriter hereunder, and in such denominations and
registered in such names as ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc. may request upon at
least forty-eight hours' prior notice to the Company and the
Attorneys-in-Fact, shall be delivered by or on behalf of the Company and each
of the Selling Stockholders to you for the account of such Underwriter,
against payment by such Underwriter or on its behalf of the purchase price
therefor by wire transfer of same day funds all at the office of ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The time
and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., Boston time, on ________, 1998 or such other time and date
as you and the Company may agree upon in writing, and, with respect to the
Optional
-13-
Shares, 9:30 a.m., Boston time, on the date specified by you in the written
notice given by you of the Underwriters' election to purchase such Optional
Shares, or at such other time and date as you and the Company may agree upon
in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery," and each such time and date for delivery is herein
called a "Time of Delivery." Such certificates will be made available for
checking and packaging at least twenty four hours prior to each Time of
Delivery at such location as you may specify.
6. Covenants of the Company. The Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus of
which you shall not have been previously advised and furnished with a copy or
to which you shall have reasonably objected in writing promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when the Registration Statement, or any amendment
thereto, has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you copies
thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
-14-
(c) To furnish the Underwriters with copies of the Prospectus in
such quantities as you may from time to time reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of
nine months after the time of issuance of the Prospectus in connection with
the offering or sale of the Shares and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus in order to
comply with the Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter
is required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many copies as you may request of
an amended or supplemented Prospectus complying with Section 10(a)(3) of the
Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than fifteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)), an
earning statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder;
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose of any
securities of the Company which are substantially similar to the Shares,
without your prior written consent other than (i) the sale of the Shares to
be sold by the Company hereunder, (ii) the Company's issuance of shares and
the award of options under its stock plans in amounts not in excess of the
amount shown as available for grant in the Prospectus, (iii) the Company's
issuance of shares of Common Stock and the Company's Redeemable Preferred
Stock, par value $.01 per share, upon the conversion of the outstanding
shares of the Convertible Preferred Stock in connection with the consummation
of the transactions contemplated hereby and by the Prospectus and (iv) the
Company's issuance of shares of Common Stock, with five business days prior
written notification to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., in connection with the
acquisition by the Company of another company or entity, provided that the
terms of such issuance contractually prohibit the resale or other disposition
of such shares of Common Stock through the date 180 days after the date of
the Prospectus;
-15-
(f) During a period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
grant options to purchase shares of Common Stock at a price less than the
initial public offering price;
(g) To furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flow of the Company and
its consolidated subsidiaries certified by independent public accountants)
and, as soon as practicable after the end of each of the first three quarters
of each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), to furnish or make available
to its stockholders (within the meaning of Rule 158(b) under the Act)
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(h) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the Company
generally, and deliver to you (i) as soon as they are available, copies of
any reports and financial statements furnished to or filed with the
Commission, the Nasdaq National Market or any national securities exchange on
which any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a combined or consolidated basis to the extent the
accounts of the Company and its subsidiaries are combined or consolidated in
reports furnished to its stockholders generally or to the Commission);
(i) To use the net proceeds acquired by it from the sale of the
Shares in substantially the manner specified in the Prospectus under the
caption "Use of Proceeds" and in a manner such that the Company will not
become an "investment company" as that term is defined in the Investment
Company Act;
(j) Not to file with the Commission any registration statement on
Form S-8 relating to shares of its Common Stock prior to 90 days after the
effective date of the Registration Statement; and
(k) Not to accelerate the vesting of any option issued under any
stock option plan such that any such option may be exercised within 180 days
from the date of the Prospectus other than in accordance with its terms.
7. Covenants of the Selling Stockholders. Each of the Selling
Stockholders agrees to pay or cause to be paid all taxes, if any, on the
transfer and sale of the Shares to be sold by such Selling Stockholder
hereunder and the fees and expenses, if any, of counsel and accountants
retained by such Selling Stockholder.
-16-
The Company agrees with such Selling Stockholders to pay all costs and
expenses incident to the performance of the obligations of the Selling
Stockholders under this Agreement (except as set forth above), including, but
not limited to, all expenses incident to the delivery of the certificates for
the Shares to be sold by the Selling Stockholders, the costs and expenses
incident to the preparation, printing and filing of the Registration
Statement (including all exhibits thereto), all Preliminary Prospectuses and
the Prospectus and any amendments or supplements thereto, the expenses of
qualifying the Shares to be sold by the Selling Stockholders under the state
securities or Blue Sky laws, all filing fees and the reasonable fees and
expenses of counsel for the Underwriters payable in connection with the
review of the offering of the Shares by the NASD, and the cost of furnishing
to the Underwriters the required copies of the Registration Statement and
Prospectus and any amendments or supplements thereto; provided that each
Selling Stockholder agrees to pay or cause to be paid his or its pro rata
share (based on the percentage which the number of Shares sold by such
Selling Stockholder bears to the total number of Shares sold) of all
underwriting discounts and commissions.
8. Expenses. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants
in connection with the registration of the Shares under the Act and all other
expenses incurred by it in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost
of printing or producing any Agreement among Underwriters, this Agreement,
the Blue Sky Memoranda and any other documents in connection with the
offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 6(b) hereof, including the fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey; (iv) the filing fee
of the NASD; (v) the cost of preparing stock certificates; (vi) the cost and
charges of any transfer agent or registrar; and (vii) all other costs and
expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, Section 10 and Section 13
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees and disbursements of their counsel, stock transfer taxes
on resale of any of the Shares by them, and any advertising expenses
connected with any offers they may make.
9. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their sole reasonable discretion, to the
condition that all representations and warranties and other statements of the
Company and each
-17-
Selling Stockholder herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and each Selling Stockholder shall
each have performed all of their respective obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 6(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued to the
Company and no proceeding for that purpose shall have been initiated or, to
the knowledge of the Company, threatened by the Commission; and all requests
for additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) ▇▇▇▇ and ▇▇▇▇ LLP, counsel to the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery, with
respect to this Agreement, the Registration Statement, the Prospectus, and
other related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, counsel to the Company and the
Selling Stockholders, shall have furnished to you their written opinion,
dated such Time of Delivery, in form and substance reasonably satisfactory to
you, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Registration Statement
and Prospectus;
(ii) The Company has an authorized capitalization as set forth
under the caption "Capitalization" in the Prospectus, and all of the
issued shares of capital stock of the Company (other than the
Shares) have been duly authorized and validly issued, are fully paid
and non-assessable, and, to the best of such counsel's knowledge,
were not issued in violation of or subject to any preemptive rights
or similar rights to subscribe for or purchase any securities which
have not been waived; the Shares have been duly authorized and when
issued and paid for as contemplated by this Agreement will be
validly issued, fully paid and non-assessable and, to the best of
such counsel's knowledge, will not have been issued in violation of
or subject to any preemptive or
-18-
similar rights; and the Shares conform as to legal matters to the
description of the Common Stock contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of the jurisdictions listed on Annex A to the opinion
(such counsel being entitled to rely in respect of the opinion in
this clause upon certificates of public officials);
(iv) Each subsidiary of the Company listed on Annex B to the
opinion has been duly incorporated and is an existing corporation in
good standing under the laws of its jurisdiction of organization;
and all of the issued shares of capital stock of each such
subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable, and are owned of record by the Company,
free and clear, to the best of such counsel's knowledge, of all
liens, encumbrances or claims except pledges pursuant to the Credit
Agreement (such counsel being entitled to rely in respect of the
opinion in this clause in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries);
(v) Such counsel does not know of any litigation or any
governmental proceeding instituted or threatened against the Company
or its subsidiaries that would be required to be disclosed in the
Prospectus that is not so disclosed;
(vi) The Company has corporate power and authority to enter
into this Agreement and this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) The issuance and sale of the Shares being delivered at
such Time of Delivery by the Company hereunder will not (A) result
in any violation of the provisions of the Certificate of
Incorporation or bylaws of the Company, (B) conflict with or result
in a breach or violation on the part of the Company or any
subsidiary of any of the terms or provisions of, or constitute a
default under, any agreement to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property to bound filed as an
exhibit to the Registration Statement, or (C) to the best of such
counsel's knowledge, result in a violation on the part of the
Company of any applicable Massachusetts or Federal statute or
regulation or the Delaware General Corporation Law;
(viii) To the best of such counsel's knowledge, no consent,
approval, authorization, order, registration or qualification of or
with
-19-
any such court or governmental agency or body is required to be
obtained by the Company for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act and
the rules and regulations thereunder and as may be required under
state securities or Blue Sky laws (as to which such counsel need
express no opinion) or the NASD (as to which such counsel need
express no opinion);
(ix) Such counsel does not know of any documents that are
required to be filed as exhibits to the Registration Statement and
are not so filed or of any documents that are required to be
summarized in the Registration Statement and the Prospectus and are
not so summarized;
(x) The statements under the captions ["Risk Factors -
AntiTakeover Provisions"; "Risk Factors - Shares Eligible for Future
Sale"; "Management - Employee Stock and other Benefit Plans";
"Certain Transactions"; "Description of Capital Stock"; and "Shares
Eligible for Future Sale"] in the Prospectus, insofar as such
statements constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and correctly
present, in all material respects, the information called for with
respect to such documents and matters (provided, however, that such
counsel may rely on representations of the Company with respect to
the factual matters contained in such statements);
(xi) Except as disclosed in the Prospectus, to the best of
such counsel's knowledge, the Company has not granted any rights,
warrants or options to acquire, instruments convertible into or
exchangeable or exercisable for, or entered into any commitments,
plans or arrangements to issue any shares of capital stock of the
Company or any security convertible units or exchangeable for
capital stock of the Company;
(xii) No holders of securities of the Company have rights
under the provisions of the Certificate of Incorporation or bylaws
of the Company or under any agreement filed as an exhibit to the
Registration Statement which have not been waived or satisfied to
the registration of shares of Common Stock or other securities
because of the filing of the Registration Statement by the Company
or the offering contemplated hereby;
(xiii) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company" as defined in the Investment Company
Act;
-20-
(xiv) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than financial, statistical or
accounting data and related schedules therein, as to which such
counsel need express no opinion) appeared on their face to be
appropriately responsive in all material respects to the
requirements of the Act and the applicable rules and regulations
thereunder;
(xv) To the best of such counsel's knowledge, this Agreement,
the Power-of-Attorney and the Custody Agreement have been duly
authorized, executed and delivered by or on behalf of each of the
Selling Stockholders; each of the Power-of-Attorney and the Custody
Agreement is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditors
rights generally, (ii) general principles of equity, whether
considered in a proceeding at law or in equity and (iii) state or
federal securities laws or policies relating to the
non-enforceability of the indemnification or contribution provisions
contained therein; to the best of such counsel's knowledge, the
performance of this Agreement, the Power-of-Attorney and the Custody
Agreement and the consummation of the transactions therein
contemplated by each of the Selling Stockholders will not result in
the violation of the provisions of the Agreement of Limited
Partnership of such Selling Stockholder if such Selling Stockholder
is a partnership or any order, rule or regulation known to such
counsel of any Massachusetts or Federal court or governmental agency
or body having jurisdiction over such Selling Stockholder;
(xvi) To the best of such counsel's knowledge, each of the
Selling Stockholders has full right, power and authority to enter
into this Agreement and the Custody Agreement and to sell, transfer
and deliver the Shares to be sold by such Selling Stockholder;
immediately prior to the date hereof, such Selling Stockholder was
the record owner of the Shares to be sold by such Selling
Stockholder on the date hereof; each Underwriter that is a
"protected purchaser" within the meaning of Article 8 of the
Massachusetts Uniform Commercial Code (the "Code") will acquire,
upon payment for such Shares as provided in the Underwriting
Agreement, its interest in the Shares free of any adverse claim, as
defined in the Code.
Such counsel shall have also furnished to you a letter, dated such Time of
Delivery, that they have participated in the preparation of the Registration
Statement
-21-
and Prospectus and have participated in discussions with your
representatives, those of counsel for the Underwriters, and those of the
Company and its accountants. On the basis of the information that such
counsel gained in the course of the performance of the services referred to
above, considered in the light of such counsel's understanding of the
applicable law and the experience such counsel has gained through its
practice under the Act, such counsel will confirm to you that, in such
counsel's opinion, nothing that came to such counsel's attention in the
course of such review has caused such counsel to believe that the
Registration Statement or any further amendment thereto made by the Company
prior to such Time of Delivery contained any 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, as of its
date, the Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery, contained any untrue statement of
a material fact or omitted to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading; and they do not know of any
amendment to the Registration Statement required to be filed.
Such counsel shall also include a statement in such letter as to the
matters set forth in this paragraph. The Registration Statement has become
effective under the Act. To the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has been
issued by the Commission nor has any proceeding been instituted or
contemplated for that purpose under the Act. The Prospectus has been filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations
under the Act within the time period required thereby.
Such letter may also state the limitations inherent in the independent
verification of factual matters and the character of determinations involved
in the registration process are such, however, that such counsel does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus except
for those made under the captions ["Risk Factors -- Anti-Takeover Provisions,"
"Management --Employee Stock and Other Benefit Plans," "Certain Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future Sale"] in the
Prospectus, insofar as they describe provisions, therein described, of documents
governed by the Delaware General Corporation Law or of United States Federal tax
law. Also, such counsel does not express any opinion or belief as to (i) the
statements in the Registration Statement or the Prospectus made under the
captions "Risk Factors -- Government Regulation," "Risk Factors -- Intellectual
Property Protection," "Business -- Regulatory
Matters" and
-22-
"Business -- Trademarks and Patents," (ii) any statement or claim in the
Registration Statement or the Prospectus with respect to the use or intended
use of the Company's products, and (iii) the financial statements, other
financial, statistical or accounting data and related schedules contained in
the Registration Statement or the Prospectus.
(e) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, regulatory counsel to the Company, shall
have furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The statements under the captions ["Risk Factors
Government Regulation"; and "Business - Government Regulation"] in
the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, are accurate
summaries and fairly and correctly present, in all material
respects, the information called for with respect to such documents
and matters (provided, however, that such counsel may rely on
representations of the Company with respect to the factual matters
contained in such statements and provided, further, that such
counsel shall state that nothing has come to the attention of such
counsel which leads them to believe that such representations are
not true and correct in all material respects); and
(ii) Such counsel has no reason to believe that, with respect
only to the portions of the Registration Statement and Prospectus
set forth in clause (i) of this subsection (e), as of its effective
date, the Registration Statement or any further amendment made
thereto by the Company prior to such Time of Delivery contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery contains an untrue
statement of a material fact, or omits to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(f) ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, intellectual property counsel to
the Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, to the effect
that:
-23-
(i) Such counsel is familiar with the technology used by the
Company and its subsidiaries in their businesses and the manner of
its use thereof and has read the Registration Statement and the
Prospectus, including particularly the portions of the Registration
Statement and the Prospectus referring to trademarks, trade names,
patents, mask works, copyrights, licenses, trade secrets or other
intellectual property rights;
(ii) Such counsel has no reason to believe that the
Registration Statement or the Prospectus (A) contains any untrue
statement of a material fact with respect to trademarks, trade
names, patents, mask works, copyrights, licenses, trade secrets or
other intellectual property rights owned or used by the Company or
any of its subsidiaries, or the manner of its use thereof, or any
allegation on the part of any person that the Company or any of its
subsidiaries is infringing any trademarks, trade names, patent
rights, mask works, copyrights, licenses, trade secrets or other
intellectual property rights of any such person or (B) omits to
state any material fact relating to trademarks, trade names,
patents, mask works, copyrights, license, trade secrets or other
intellectual property rights owned or used by the Company or any of
its subsidiaries, or the manner of its use thereof, or any
allegation of which such counsel have knowledge, that is required to
be stated in the Registration Statement or the Prospectus or is
necessary to make the statements therein not misleading;
(iii) To the best of such counsel's knowledge, there are no
adversarial legal or governmental proceedings pending relating to
trademarks, trade names, patent rights, mask works, copyrights,
licenses, trade secrets or other intellectual property rights of the
Company or any of its subsidiaries, and to the best of such
counsel's knowledge no such adversarial proceedings are threatened
or contemplated by governmental authorities or others;
(iv) Such counsel does not know of any contracts or other
documents relating to the Company's or any of its subsidiaries'
trademarks, trade names, patents, mask works, copyrights, licenses,
trade secrets or other intellectual property rights of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the
Prospectus that are not filed or described as required;
(v) To the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries is infringing or otherwise
violating any trademarks, trade names, patents, mask works,
copyrights, licenses, trade secrets or other intellectual property
rights of others, and to the
-24-
best of such counsel's knowledge there are no infringements by any
of the Company's or any of its subsidiaries' trademarks, trade
names, patents, mask works, copyrights, licenses, trade secrets or
other intellectual property rights which in the judgment of such
counsel could affect materially the use thereof by the Company or
any of its subsidiaries; and
(vi) To the best of such counsel's knowledge, the Company or
one of its subsidiaries owns or possesses sufficient licenses, or
other rights to use all trademarks, trade names, patents, mask
works, copyrights, licenses, trade secrets or other intellectual
property rights necessary conduct the business now being or proposed
to be conducted by the Company and its subsidiaries as described in
the Prospectus.
(g) At 10:00 a.m., Boston time, on the effective date of the
Registration Statement and the effective date of the most recently filed
post-effective amendment to the Registration Statement and also at each Time
of Delivery, Ernst & Young LLP and ▇▇▇▇▇▇ & ▇▇▇▇ shall each have furnished to
you a letter or letters, dated the respective date of delivery thereof, in
form and substance satisfactory to you, to the effect set forth in Annex I
hereto;
(h) (i) Neither the Company nor any of its subsidiaries have
sustained since the date of the latest audited financial statements included
in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, and (ii) since
the respective dates as of which information is given in the Prospectus there
shall not have been any change in the capital stock or long-term debt of the
Company or any change, or any development involving a prospective change, in
or affecting the business, assets, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i) or (ii), is in
your judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(i) On or after the date hereof there shall not have occurred any
of the following: (i) additional material governmental restrictions, not in
force and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange
or in the over the counter market by the NASD, or trading in securities
generally shall have been suspended on either such Exchange or in the over
the counter market by the NASD, or a general banking
-25-
moratorium shall have been established by federal or New York authorities,
(ii) an outbreak of major hostilities or other national or international
calamity or any substantial change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated to such
an extent, as, in the judgment of the Representatives, to affect adversely
the marketability of the Shares, or (iii) there shall be any action, suit or
proceeding pending or threatened, or there shall have been any development or
prospective development involving particularly the business or properties or
securities of the Company or any of its subsidiaries or the transactions
contemplated by this Agreement, which, in the judgment of the
Representatives, may materially and adversely affect the Company's business
or earnings and make it impracticable or inadvisable to offer or sell the
Shares;
(j) The Shares to be sold by the Company at such Time of Delivery
shall have been accepted for quotation, subject to notice of issuance, on the
Nasdaq National Market System; and
(k) Each director, executive officer and stockholder holding the
Company's capital stock and holder of options to purchase the Company's
capital stock shall have executed and delivered to you agreements in which
such holder undertakes not to, directly or indirectly, offer, sell, assign,
transfer, encumber, contract to sell, grant an option to purchase, make a
distribution of, or otherwise dispose of, any shares of Common Stock or any
securities convertible into or exchangeable for, or any rights to purchase or
acquire, shares of Common Stock held by such person, acquired by such person
after the date hereof or which may be deemed to be beneficially owned (as
defined in the rules and regulations of the Commission) by such person, for a
period of 180 days following the date of the Prospectus, other than (i) with
the prior written consent of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc. or (ii) pursuant to
a bona fide gift to a person or entity who agrees in writing to be bound by
the provisions of the agreements set forth in this paragraph (k); and
(l) The Company and each Selling Stockholder shall have furnished
or caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of each Selling Stockholder, respectively,
satisfactory to you, as to the accuracy of the representations and warranties
of the Company and each of the Selling Stockholders, respectively, herein at
and as of such Time of Delivery, as to the performance by the Company and
each of the Selling Stockholders of all of their obligations hereunder to be
performed at or prior to such Time of Delivery, and as to such other matters
as you may reasonably request and the Company shall have furnished or caused
to be furnished certificates as to the matters set forth in subsections (a)
and (h) of this Section, and as to such other matters as you may reasonably
request.
10. Indemnification and Contribution. (a) The Company agrees and each
of the Selling Stockholders, severally and not jointly, agrees to indemnify
and hold
-26-
harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act (each, a "Company Indemnified Party") against any losses,
claims, damages or liabilities, joint or several, to which such Company
Indemnified Party may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they
were made, not misleading, and will reimburse any Company Indemnified Party
for any legal or other expenses reasonably incurred by such Company
Indemnified Party in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and the Selling Stockholders shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
or on behalf of any Underwriter expressly for use therein; and, provided
further, that the liability of each of the Selling Stockholders under the
indemnity agreement in this Section 8 shall not exceed the total initial
public offering price of the Shares sold by such Selling Stockholder under
this Agreement, less underwriters' discounts. The indemnity contained in this
Section 10(a) with respect to any Preliminary Prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting such loss,
claim, damage or liability purchased the Shares which are subject thereof (or
to the benefit of any person controlling such Underwriter) if at or prior to
the written confirmation of the sale of such Shares a copy of the Prospectus
(or the Prospectus as amended or supplemented) was not sent or delivered to
such person and the untrue statement or omission of a material fact contained
in the Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
non-compliance by the Company.
(b) Each Underwriter will indemnify and hold harmless the
Company, each Selling Stockholder, each of the directors of the Company, each
of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company or any
Selling Stockholder within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act (each, an "Underwriter Indemnified Party") against
any losses, claims, damages or liabilities to which any Underwriter
Indemnified Party may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration
-27-
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of such Underwriter expressly for use therein; and will reimburse any
Underwriter Indemnified Party for any legal or other expenses reasonably
incurred by it or them in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party
in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party otherwise than under such subsection. In case any
such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of
-28-
such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders, respectively, bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Stockholders on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Stockholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and no Selling
Stockholder shall be required to contribute any amount in excess of the net
proceeds received by such Selling Stockholder with respect to the Shares sold
by such Selling Stockholder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
-29-
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Selling Stockholders
under this Section 10 shall be in addition to any liability which the Company
and the Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 10 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company
and to each person, if any, who controls the Company within the meaning of
the Act.
11. Termination. (a) If any Underwriter shall default in its obligation
to purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or
other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company and the Selling
Stockholders shall be entitled to a further period of thirty-six hours within
which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company and the Selling Stockholders that
you have so arranged for the purchase of such Shares, or the Company and the
Selling Stockholders notify you that they have so arranged for the purchase
of such Shares, you or the Company and the Selling Stockholders shall have
the right to postpone such Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-tenth of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
number of Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which
-30-
such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-tenth of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company
and the Selling Stockholders to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter,
the Company or any Selling Stockholder, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 8 hereof and the
indemnity and contribution agreements in Section 10 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
12. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company, each Selling Stockholder and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, or the Company or any Selling
Stockholder, or any officer or director or controlling person of the Company
or any Selling Stockholder, and shall survive delivery of and payment for the
Shares.
13. Expenses of Termination. If this Agreement shall be terminated
pursuant to Section 11 hereof, the Company shall not then be under any
liability to any Underwriter except as provided in Section 8 and Section 10
hereof; but, if for any other reason this Agreement is terminated, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of the Shares not so delivered, but the
Company shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Section 8 and
Section 10 hereof.
14. Notice. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc. on behalf of
you as the Representatives; and in dealing with any Selling Stockholder
hereunder, you and the
-31-
Company shall be entitled to act and rely upon any statement, request, notice
or agreement on behalf of such Selling Stockholder made or given by any or
all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the Representatives in care of ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: President, with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇; and if to any Selling Stockholder shall be delivered or sent by mail,
telex or facsimile transmission to the Selling Stockholder at the address of
such Selling Stockholder set forth in Schedule II hereto; provided, however,
that any notice to an Underwriter pursuant to Section 10(d) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriter's Questionnaire or
telex constituting such Questionnaire, which address will be supplied to the
Company by you on request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
14. Miscellaneous. (a) This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Stockholders and, to the extent provided in Sections 10 and 12 hereof, the
officers and directors of the Company and each person who controls the
Company, any Selling Stockholder or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Shares from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
(b) Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the Commission's
office in Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
(d) 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.
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall
-32-
constitute a binding agreement among each of the Underwriters, the Company
and the Selling Stockholders. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Stockholders for examination, upon
request, but without warranty on your part as to the authority of the signors
thereof.
[Remainder of page intentionally left blank]
-33-
Any person executing and delivering this Agreement as Attorney-in-Fact
for the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in-Fact by each Selling Stockholder pursuant to a
validly existing and binding Power-of-Attorney which authorizes such
Attorney-in-Fact to take such action.
Very truly yours,
NATROL, INC.
By:___________________________
Name:_________________________
Title:________________________
SELLING STOCKHOLDERS
(Names in Schedule II to the Agreement)
By:___________________________
Name:_________________________
Title: Attorney-in-Fact
Accepted as of the date
hereof at Boston, Massachusetts
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By:______________________________
(▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
On behalf of each of
the Underwriters)
-34-
SCHEDULE I
Number of
Optional
Total Shares to
Number of Purchased if
Firm Maximum
Shares to be Option
Purchased Exercised
--------- ---------
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.........
NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC....................
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc...................
----------- -------------
TOTAL............................... 3,940,000 591,000
----------- -------------
----------- -------------
-35-
SCHEDULE II
Total Total Number
Number of of Optional
Firm Shares Shares to
to be Sold be Sold
---------- -------
The Company 3,200,000 295,500
The Selling Stockholders:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ---- 295,500
c/o Natrol, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ 200,000 ----
c/o Natrol, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Advent VII, L.P. [_________]
Advent Atlantic and [_________]
Pacific III L.P.
Advent New York L.P. [_________]
TA Venture Investors [_________]
Limited Partnership
▇/▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ----
----------- ------------
TOTAL............................ 3,940,000 591,000
----------- ------------
----------- ------------
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ANNEX I
Pursuant to Section 9(g) of the Underwriting Agreement, Ernst & Young
LLP, and ▇▇▇▇▇▇ & ▇▇▇▇ shall furnish letters to the Underwriters to the
effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements and any
supplementary financial information and schedules (and, if applicable,
prospective financial statements and/or pro forma financial information)
examined by them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected consolidated financial data, pro forma financial information,
prospective financial statements and/or condensed financial statements
derived from audited consolidated financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon,
copies of which have been furnished to the representatives of the
Underwriters (the "Representatives");
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for
the five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited consolidated financial statements
and other information referred to below, a reading of the latest available
interim consolidated financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited consolidated financial
statements included in the Prospectus, inquiries of officials of the Company
and its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
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Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations thereunder, or are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with the basis for the audited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus;
(B) any other unaudited consolidated income statement data and
consolidated balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any such
unaudited data and items were not determined on a basis substantially
consistent with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited consolidated financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed consolidated financial statements referred to in Clause (A) and
any unaudited consolidated income statement data and consolidated balance
sheet items included in the Prospectus and referred to in Clause (B) were
not determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding
on the date of the latest financial statements included in the Prospectus)
or any increase in the combined long-term debt of the Company and its
subsidiaries, or any decreases in combined net current assets or net
assets or other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
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(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each case
for decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which appear
in the Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them to
be in agreement.
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