MANNATECH, INCORPORATED
9,200,000 Shares (1)
Common Stock
(par value $.0001 per share)
------------
Underwriting Agreement
, 1998
Xxxxx, Xxxxxxxx & Xxxx, Inc.
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxx Xxxxxxx Inc.
As representatives of the several
Underwriters named in Schedule I hereto,
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
Mannatech, Incorporated, a Texas corporation (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 6,000,000 shares (the "Company Firm
Shares") and, at the election of the Underwriters, up to 900,000 additional
shares (the "Company Optional Shares") of common stock of the Company, $.0001
par value per share ("Common Stock"), and the Selling Shareholders named in
Schedule II hereto (the "Selling Shareholders"), propose, subject to the
terms and conditions stated herein, to sell to the Underwriters an aggregate
of 2,000,000 shares (the "Selling Shareholder Firm Shares", and together with
the Company Firm Shares, the "Firm Shares") and at the election of the
------------------
(1) Includes 1,200,000 shares subject to an option to purchase additional
shares to cover over-allotments.
Underwriters, up to an additional 300,000 shares (the "Selling Shareholder
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".
As part of the offering contemplated by this Agreement, the Underwriters
have agreed to reserve out of the Shares set forth on Schedule I to this
Agreement, up to 600,000 shares, for sale to the Company's employees,
officers, directors and certain other parties associated with the Company
(collectively, "Participants"), as set forth in the Prospectus under the
heading "Underwriting" (the "Directed Share Program"). The Shares to be sold
by the Underwriters pursuant to the Directed Share Program (the "Directed
Shares") will be sold by the Underwriters pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for purchase
by any Participants will be offered to the public by the Underwriters as set
forth in the Prospectus.
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. 333-49851) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); 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, excluding exhibits thereto, to you for each of the other
Underwriters, have 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 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, has been issued and no proceeding for that
purpose has been initiated or, to the Company's knowledge, 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
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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) 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
made in reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through you expressly for use therein. The
Company acknowledges that the statements set forth in the last paragraph of
the cover page, in the paragraph beneath the graphics on page 2 and under the
heading "Underwriting" in the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by 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 filing date as
to 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 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
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the Company is a party have been duly authorized, executed and delivered by
the Company, constitute valid and binding agreements of the Company and are
enforceable against and by the Company in accordance with their respective
terms, and, to the extent any party has any remaining or future obligation
thereunder or otherwise remains bound thereby, are in full force and effect
on the date hereof; and neither the Company nor, to the best of the Company's
knowledge, any other party is in breach of or default under any of such
contracts, except to the extent that such breach or default would not have a
material adverse effect on the business, assets, management, financial
position, shareholders' equity or results of operations of the Company;
(e) The Company has not sustained since the date of the latest
audited financial statements included in the Prospectus 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 material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, assets, management,
financial position, shareholders' equity or results of operations of the
Company, otherwise than as set forth or contemplated in the Prospectus;
(f) The Company has good and indefeasible title in fee simple to
all real property and good and indefeasible title to all other properties and
assets described in the Prospectus as owned by it, in each case free and
clear of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or which are not material to the business of the
Company; any real property and buildings held under lease by the Company are
held by it 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; the
Company owns or leases all such properties as are necessary to its 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 in or affecting
the business, assets, management, financial position, shareholders' equity or
results of operations of the Company;
(g) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
organization, with full corporate power and authority to own its properties
and conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of
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each other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so qualified
in any such jurisdiction;
(h) The Company has an authorized capitalization as set forth in
the Prospectus, and all the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Common Stock contained
in the Prospectus; the Company does not have any subsidiaries; 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,
the Company does not have 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 and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will conform 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 shareholder of the Company has any right which has not
been waived or satisfied to require the Company to register the sale of any
shares of capital stock owned by such shareholder under the Act in the public
offering contemplated by this Agreement (except with respect to the Shares to
be sold by the Selling Shareholders pursuant to this Agreement); and no
further approval or authority of the shareholders 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;
(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
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in a breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject, nor will such action result in any violation of the provisions of
the Articles 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 properties, except for any such
breach, violation or default that would not result in a material adverse
effect in the business, assets, management, financial position, shareholders'
equity or results of operations of the Company; 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 or foreign 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) Except as described in the Prospectus, 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 is or may be a party or
of which property owned or leased by the Company is or may be the subject, or
related to environmental or discrimination matters, which actions, suits or
proceedings, might, individually or in the aggregate, prevent or adversely
affect the transactions contemplated by this Agreement or result in a
material adverse change in or affecting the business, assets, management,
financial position, shareholders' equity or results of operations of the
Company; no labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent which could be reasonably likely to
have a material adverse effect on such business, assets, management,
financial position, shareholders' equity or results of operations; and the
Company is not 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 possesses all licenses, certificates,
authorizations or permits issued by the appropriate governmental or
regulatory agencies or authorities that are necessary to enable it to own,
lease and operate its properties and to carry on its business as presently
conducted and which are material to the Company, and the Company has not
received any notice of proceedings relating to the revocation or modification
of any such license, certificate, authority or permit which, singly or in the
aggregate, would reasonably be expected to materially and adversely affect
the
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business, assets, management, financial position, shareholders' equity or
results of operations of the Company;
(n) Each of Price Waterhouse LLP and Xxxxx Xxxxxxx LLP, who have
certified certain financial statements of the Company, are independent public
accountants as required by 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 on the basis stated 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 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 "Capitalization" and "Selected Financial Data"
fairly present 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 has sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals and governmental authorizations to
conduct its business as now conducted; 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, to the knowledge of the Company, there is no claim being made against
the Company regarding trademark, trade name, patent, copyright, license,
trade secret or other infringement which is reasonably likely to have a
material adverse effect on the business, assets, management, financial
position, shareholders' equity or results of operations of the Company;
(q) The Company has 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 might be asserted or threatened against the Company which is
reasonably likely to materially and adversely affect the business, assets,
management, financial position, shareholders' equity or results of operation
of the Company;
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(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) The Company 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 against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force
and effect;
(t) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for 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; and
(w) The Company 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 Federal Trade Commission, except where the failure to so comply would
not materially and adversely affect the business, assets, management,
financial position, shareholders' equity or results of operations of the
Company.
Furthermore, the Company represents and warrants to the
Underwriters that the Registration Statement, the Prospectus and any
Preliminary Prospectus comply, and any further amendments or supplements
thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus or any
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Preliminary Prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program.
The Company has not offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products.
2. REPRESENTATIONS OF THE SELLING SHAREHOLDERS. Each of the Selling
Shareholders, 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 Shareholder of this Agreement,
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 Shareholder hereunder, have been obtained; and such
Selling Shareholder has the requisite power and authority to enter into this
Agreement and the Custody Agreement and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Shareholder hereunder;
(b) This Agreement and the Custody Agreement have each been duly
authorized, executed and delivered by such Selling Shareholder and each such
document constitutes a valid and binding obligation of such Selling
Shareholder, enforceable in accordance with its terms;
(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 Shareholder or the
consummation by such Selling Shareholder of the transactions on his 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 or foreign 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 Shareholder
hereunder and the performance by such Selling Shareholder 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
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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
the Selling Shareholder is a party or by which such Selling Shareholder or
any of his or its properties is bound or affected, or violate or conflict
with the Certificate of Incorporation or By-laws of such Selling Shareholder
if such Selling Shareholder is a corporation, the Articles of Partnership of
such Selling Shareholder if such Selling Shareholder is a partnership or any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to such Selling Shareholder;
(e) Such Selling Shareholder has, and at the Closing Date will
have, good and valid title to the Shares to be sold by such Selling
Shareholder hereunder, free and clear of any claim, lien, encumbrance,
security interest, equity right, community property right, restriction on
transfer or other defect in title, other than pursuant to this Agreement;
and, upon delivery of such Shares and payment therefor pursuant hereto, good
and valid title to such Shares, free and clear of any claim, lien,
encumbrance, security interest, equity right, community property right,
restriction on transfer or other defect in title will pass to each of the
several Underwriters who have purchased such Shares in good faith and without
notice of any such claim, lien, encumbrance, security interest, equity right,
community property right, restriction on transfer or other defect in title or
any other adverse claim within the meaning of the Uniform Commercial Code;
(f) Such Selling Shareholder will not, directly or indirectly,
offer, sell or otherwise dispose of any shares of Common Stock within 180
days after the date of the Prospectus otherwise than hereunder or with your
written consent;
(g) Such Selling Shareholder 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 Shareholder
expressly for use therein, such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or supplements
to the Registration Statement and the Prospectus will, when they become
effective or are filed with the Commission, as the case may be, conform in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and not
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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; and
(i) Such Selling Shareholder has reviewed the Registration
Statement and Prospectus and, although such Selling Shareholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of such Selling
Shareholder that would lead such Selling Shareholder 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.
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 Shareholders 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).
Each of the Selling Shareholders represents and warrants that a
certificate in negotiable form representing all of the Shares to be sold by
such Selling Shareholder has been placed in custody under the Custody
Agreement, in the form heretofore furnished to you, duly executed and
delivered by such Selling Shareholder to the Custodian (as defined in the
Custody Agreement), and that such Selling Shareholder has duly executed and
delivered a power of attorney, in the form contained in the Custody Agreement
(the "Power of Attorney"), appointing Xxxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxx,
and each of them, as such Selling Shareholder's attorney-in-fact (the
"Attorney-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Shareholder, to determine (subject to the provisions
of the Custody Agreement) the purchase price to be paid by the Underwriters
to such Selling Shareholder as provided in Section 3 hereof, to authorize the
delivery of the Shares to be sold by such Selling Shareholder hereunder and
otherwise to act on behalf of the Selling Shareholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
Each of the Selling Shareholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Shareholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the
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arrangements made by such Selling Shareholder for such custody, and the
appointment by such Selling Shareholder of the Attorneys-in-Fact by the Power
of Attorney, are to that extent irrevocable. Each of the Selling
Shareholders specifically agrees that the obligations of such Selling
Shareholder hereunder shall not be terminated by operation of law, whether by
the death or incapacity of such Selling Shareholder 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 Shareholder 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 Shareholder shall be delivered by or on behalf of such Selling
Shareholder 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 Shareholders
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 Shareholders agrees to sell
its Selling Shareholder 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 Shareholders, 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 Shareholders agree to sell its Selling
Shareholder 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 Shareholders, 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
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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.
The Company and the Selling Shareholders, 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 900,000 Company
Optional Shares and 300,000 Selling Shareholder 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 Shareholders. Any such election to purchase Optional
Shares may be exercised by written notice from you to the Company and the
Selling Shareholders, 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 Shareholders 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 Xxxxx, Xxxxxxxx & Xxxx, 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 Shareholders 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 Xxxxx,
Xxxxxxxx & Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. 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 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
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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 which
shall be disapproved by you 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 reasonable 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;
(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
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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 (including at the option of the
Company Rule 158);
(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 and (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;
(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 shareholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and cash flow of the Company and
its consolidated subsidiaries certified by independent public accountants)
and, as soon as practicable
-15-
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 shareholders
(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 shareholders 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
shareholders generally or to the Commission);
(i) To use the net proceeds acquired by it from the sale of the
Shares in 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 180 days after the
effective date of the Registration Statement;
(k) Except as described in the Prospectus, 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;
(l) That in connection with the Directed Share Program, the
Company will comply with reasonable instructions from the Underwriters to
ensure that the Directed Shares will be restricted to the extent required by
the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. The Underwriters will notify
the Company as to which Participants will need to be so restricted. At the
request of the Underwriters, the Company will direct the transfer agent to
place stop transfer restrictions upon such securities for such period of
time; and
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(m) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters
in connection with the Directed Share Program.
Furthermore, the Company covenants with the Underwriters that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
7. COVENANTS OF THE SELLING SHAREHOLDERS. Each of the Selling
Shareholders agree 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 Shareholder
hereunder and the fees and expenses, if any, of counsel and accountants
retained by such Selling Shareholder. The Company agrees with such Selling
Shareholders to pay all costs and expenses incident to the performance of the
obligations of the Selling Shareholders 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
Shareholders, the costs and expenses incident to the preparation, printing
and filing of the Registration Statement (including all exhibits thereto) and
the Prospectus and any amendments or supplements thereto, the expenses of
qualifying the Shares to be sold by the Selling Shareholders 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 Shareholder 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 Shareholder 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 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 reasonable fees and
-17-
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey; (iv) the filing
fees and the reasonable fees and expenses of counsel to the Underwriters
incident to securing any required review by the NASD of the terms of the sale
of the Shares; (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 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 discretion, to the condition that all
representations and warranties and other statements of the Company and each
Selling Shareholder herein are, at and as of such Time of Delivery, true and
correct in all material respects, the condition that the Company and each
Selling Shareholder 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 and no
proceeding for that purpose shall have been initiated or 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) Xxxx and Xxxx 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) Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., counsel to the
Company and the Selling Shareholders, shall have furnished to you their
written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
-18-
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Texas, 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
in the Prospectus, and all of the issued and outstanding shares of
capital stock of the Company have been duly and validly authorized and
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 other 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
the Shares conform 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 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 so qualify in any such
jurisdiction would not have a material adverse effect on the Company
(such counsel being entitled to rely in respect of the opinion in this
clause upon certificates of public officials and in respect of matters
of fact upon certificates of officers of the Company, provided that
such counsel shall state that they believe that both you and they are
justified in relying upon such certificates);
(iv) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings, actions or suits pending or threatened to which the
Company is or may be a party or of which property owned or leased by
the Company is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings, might
reasonably be expected to, individually or in the aggregate, prevent
or adversely affect the transactions contemplated by this Agreement or
result in a material adverse change in or affecting the business,
assets, management, financial position, shareholders' equity or
results of operations of the Company; no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is
imminent which
-19-
could be reasonably likely to have a material adverse on such
business, assets, management, financial position, shareholders' equity
or results of operations; and the Company is not a party or subject
to the provisions of any material injunction, judgment, decree or
order of any court, regulatory body, administrative agency or
governmental body;
(v) The Company has full corporate power and authority to
enter into this Agreement and this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) The issuance and sale of the Shares being delivered at
such Time of Delivery 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 known to such
counsel to which the Company is a party or to which the Company is
bound or to which any of the property or assets of the Company is
subject, nor will such action result in any violation of the
provisions of the Articles of Incorporation or By-laws of the Company
or any statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or any of its properties, except for such breach,
violation or default that would not result in a material adverse
effect on the business, assets, management, financial position,
shareholders' equity or results of operations of the Company
("Material Adverse Effect");
(vii) 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, approval, authorizations,
registrations or qualifications as may be required under state or
foreign securities or Blue Sky laws or the by-laws and rules of the
NASD in connection with the purchase and distribution of the Shares by
the Underwriters;
(viii) To the best of such counsel's knowledge, 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
-20-
have not been described or filed as required; and the Company is not
in breach of or default under any such contract, which breach or
default would have a Material Adverse Effect;
(ix) The statements under the captions "Risk Factors -
Anti-Takeover Matters"; "Risk Factors - Shares Eligible for Future
Sale"; "Management - Stock Option Plans"; "Management - 401(k) Plan";
"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, 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);
(x) 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;
(xi) The Shares have been duly authorized for inclusion on the
Nasdaq National Market System, subject to notice of issuance;
(xii) 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 the financial statements,
financial data and related schedules therein and other statistical
data, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder;
(xiii) To such counsel's knowledge, this Agreement and the
Custody Agreement have been duly authorized, executed and delivered by
or on behalf of each of the Selling Shareholders; the Custody
Agreement is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms; the Custodian
has been duly and validly authorized to act as the custodian of the
Shares to be sold by each of the Selling Shareholders; to such
counsel's knowledge, the performance of this Agreement and the Custody
Agreement and the consummation of the transactions therein
-21-
contemplated by each of the Selling Shareholders does not conflict
with, result in a breach of, or constitute a default under, any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument to
which any Selling Shareholder is a party or by which any Selling
Shareholder or any of his or its properties are bound or affected, or
violate or conflict with the Certificate of Incorporation or By-laws
of any Selling Shareholder which is a corporation, the Articles of
Partnership of any Selling Shareholder which is a partnership, any
judgment, ruling, decree or order known to such counsel or any
statute, rule or regulation of any court or other governmental agency
or body applicable to the Selling Shareholder (except that such
counsel need express no opinion as to state or foreign securities or
Blue Sky laws or as to compliance with the antifraud provisions of
federal and state securities laws); and, to such counsel's knowledge,
no consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required
for consummation by any of the Selling Shareholders of the
transactions on his or its part contemplated by this Agreement and the
Custody Agreement, except such as may be required under state or
foreign 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 (as to which such counsel need express no
opinion) and such as have been obtained or made under the Act or the
rules and regulations thereunder;
(ii) To such counsel's knowledge, each of the Selling
Shareholders has full 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 Shareholder; immediately prior to the date
hereof, such Selling Shareholder was the sole registered owner of the
Shares to be sold by such Selling Shareholder on the date hereof;
each Underwriter that is a "bona fide purchaser" within the meaning of
Article 8 of the Massachusetts Uniform Commercial Code (the "Code")
will acquire, upon payment for the Shares as provided in the
Underwriting Agreement's, its interest in the Shares, free of any
adverse claim, as defined in the Code.
Such counsel shall also state that they have participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company and the Underwriters and
representatives of legal counsel for the Underwriters, at which conferences
the
-22-
contents of the Registration Statement and the Prospectus relating to the
Company were discussed and, although such counsel is not passing upon and
does not assume any responsibility for and shall not be deemed to have
independently verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, on the
basis of the foregoing (relying as to matters of fact upon representations of
officers and other representatives of the Company), no facts have come to
their attention that would lead them to believe that, as of its effective
date, the Registration Statement or any further amendment thereto made by the
Company prior to such Time of Delivery (other than the financial statements,
financial data and related schedules therein or other statistical data, as to
which such counsel need express no opinion) 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 (other than the financial
statements, financial data and related schedules therein or other statistical
data, as to which such counsel need express no opinion) 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 (other
than the financial statements, financial data and related schedules therein
or other statistical data, as to which such counsel need express no opinion)
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 opinion as to the
matters set forth in this paragraph. The Registration Statement has been
declared 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.
(e) King & Spalding, 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 of Products and Marketing; Import Restrictions"; "Risk
-23-
Factors - Government Regulation of Direct Selling Activities"; "Risk Factors -
Product Liability"; 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) They have 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) 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, Price Waterhouse LLP and Xxxxx Xxxxxxx LLP 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 1 hereto;
(g) (i) The Company has not 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
-24-
business, assets, management, financial position, shareholders' equity or
results of operations of the Company, 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;
(h) 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 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 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;
(i) 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
(j) Each director, executive officer and shareholder holding more
than 5% of the Company's capital stock shall have executed and delivered to
you agreements in which such holder undertakes, for 180 days after the date
of the Prospectus, not to offer, sell, contract to sell or otherwise dispose
of any shares of Common Stock, without the prior written consent of the
Representatives of the Underwriters; and
(k) The Company and each Selling Shareholder 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 Shareholder, respectively,
satisfactory to you, as to the accuracy of the representations and warranties
of the Company and each of the Selling Shareholders, respectively, herein at
and as of such Time of Delivery, as to the
-25-
performance by the Company and each of the Selling Shareholders 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 (g) of this Section, and as to such
other matters as you may reasonably request.
10. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the Selling
Shareholders, jointly and severally, will indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon 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 each Underwriter for
any reasonable and documented legal or other expenses incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and
the Selling Shareholders 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 any
Underwriter through you expressly for use therein; and, provided further,
that the liability of each of the Selling Shareholders under the indemnity
agreement in this Section 8 shall not exceed the total initial public
offering price of the Shares sold by such Selling Shareholder under this
Agreement, less underwriters' discounts.
The foregoing indemnity with respect to any untrue statement contained
in or omission from a Preliminary Prospectus shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage, liability or expense purchased
any of the Shares which are the subject thereof if the Company or the Selling
Shareholders shall sustain the burden of proving that such person was not
sent or given a copy of the Prospectus (or the Prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Shares to such person and the untrue statement
-26-
contained in or omission from such Preliminary Prospectus was corrected in
the Prospectus (or the Prospectus as amended or supplemented).
The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls such Underwriter against any losses,
claims, damages and liabilities (or actions in respect thereof) that arise
out of or are based on (i) any untrue statement or alleged untrue statement
of a material fact contained in the prospectus wrapper material prepared by
or with the consent of the Company for distribution in foreign jurisdictions
in connection with the Directed Share Program attached to the Prospectus or
any Preliminary Prospectus, or arise out of or are based on any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein, when considered in
conjunction with the Prospectus or any applicable Preliminary Prospectus, not
misleading; and (ii) caused by the failure of any Participant to pay for and
accept delivery of the shares which, immediately following the effectiveness
of the Registration Statement, were subject to a properly confirmed agreement
to purchase.
(b) Each Underwriter will indemnify and hold harmless the Company
and each Selling Shareholder against any losses, claims, damages or
liabilities to which the Company, its directors and officers or each Selling
Shareholder 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, 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 such
Underwriter through you expressly for use therein; and will reimburse the
Company, its directors and officers and each Selling Shareholder for any
reasonable and documented legal or other expenses incurred by the Company,
its directors and officers or such Selling Shareholder 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
-27-
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 satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying 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.
Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to subsection (a) above hereof in respect of such
action or proceeding, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in addition
to any local counsel) for the Underwriters for the defense of any losses,
claims, damages and liabilities arising out of the Directed Share Program,
and all persons, if any, who control such Underwriters.
(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 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
Shareholders 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
-28-
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 Shareholders 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 Shareholders 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 Shareholders, 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 Shareholders 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 Shareholders 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. 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 contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and the Selling Shareholders
under this Section 10 shall be in addition to any liability which the Company
and the Selling Shareholders may otherwise have and shall extend, upon the
same terms and
-29-
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
Shareholders 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 Shareholders that
you have so arranged for the purchase of such Shares, or the Company and the
Selling Shareholders notify you that they have so arranged for the purchase
of such Shares, you or the Company and the Selling Shareholders 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-eleventh 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 such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
-30-
(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-eleventh 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 Shareholders to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter,
the Company or any Selling Shareholder, 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 Shareholder 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
Shareholder, or any officer or director or controlling person of the Company
or any Selling Shareholder, 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 Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf of
you as the Representatives; and in dealing with any Selling Shareholder
hereunder, you and the Company shall be entitled to act and rely upon any
statement, request, notice or
-31-
agreement on behalf of such Selling Shareholder made or given by any or all
of the Attorneys-in-Fact for such Selling Shareholder.
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 Xxxxx,
Xxxxxxxx & Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx
X. Xxxxxx 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; and if to any Selling
Shareholder shall be delivered or sent by mail, telex or facsimile
transmission to the Selling Shareholder at the address of such Selling
Shareholder 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
Shareholders 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 Shareholder 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 Shareholders. 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 Shareholders for examination, upon
request, but without warranty on your part as to the authority of the signors
thereof.
-33-
Any person executing and delivering this Agreement as Attorney-in-Fact
for the Selling Shareholders represents by so doing that he has been duly
appointed as Attorney-in-Fact by each Selling Shareholder pursuant to a
validly existing and binding Power of Attorney which authorizes such
Attorney-in-Fact to take such action.
Very truly yours,
MANNATECH, INCORPORATED
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SELLING SHAREHOLDERS
(Names in Schedule II to the Agreement)
By:
----------------------------------
Name:
--------------------------------
Title: Attorney-in-Fact
Accepted as of the date
hereof at Boston, Massachusetts
XXXXX, XXXXXXXX & XXXX, INC.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXX XXXXXXX INC.
By:
--------------------------------
(Xxxxx, Xxxxxxxx & Xxxx, 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
--------- ---------
Xxxxx, Xxxxxxxx & Xxxx, Inc....
NationsBanc Xxxxxxxxxx
Securities LLC...............
Xxxxx Xxxxxxx Inc..............
------------ ---------------
TOTAL.......................... 8,000,000 1,200,000
--------- ---------
--------- ---------
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SCHEDULE II
Total Total Number
Number of of Optional
Firm Shares Shares to
to be Sold be Sold
---------- -------
The Company 6,000,000 900,000
The Selling Shareholders:
Xxxxxx X. Xxxxxx 200,000
Xxxxxxx X. Xxxxxxxx 800,000
Xxxxxxx X. Xxxxxxxx 200,000
Xxxxx X. Xxxxxxxx 80,000
Xxxxxxx X. Xxxx 70,000
H. Xxxxxxxx XxXxxxxx 35,000
Xxxxxxxxxxx X. Xxxxxxx 50,000
Xxxx Xxxxxxx, Xx. 200,000
Xxx Xxxxxxx 64,000
Xxxx Xxxxxx 156,000
Xxxx X. XxXxxxxxx 60,000
Xxxxx X. Xxxxxx 40,000
Xxx Xxxxxx 25,000
Xxxxx Xxxxxxxx 20,000
--------- ---------
8,000,000 1,200,000
--------- ---------
--------- ---------
TOTAL............................
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ANNEX I
Pursuant to Section 9(f) of the Underwriting Agreement, Price Waterhouse
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its 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
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules
-37-
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
-38-
(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.
Pursuant to Section 9(f) of the Underwriting Agreement, Xxxxx Xxxxxxx
LLP shall furnish letters to the Underwriters with respect to the matters set
forth in paragraphs (i), (ii) and (iii).
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