EXHIBIT 1
5,344,167 SHARES
▇▇▇▇▇▇▇ SHOE COMPANY INC.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
April __, 1998
▇▇▇▇▇▇ Brothers Inc.
Bear, ▇▇▇▇▇▇▇ & Co., Inc.
BT Alex. ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated,
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Certain stockholders and option holders of ▇▇▇▇▇▇▇ Shoe Company Inc.,
a Delaware corporation (the "Company") named in Schedule 2 hereto (the "Selling
Stockholders"), propose to sell an aggregate of 5,344,167 shares (the "Firm
Stock") of the Company's Class A Common Stock, par value $0.01 per share (the
"Common Stock"). In addition, the Company proposes to grant to the Underwriters
named in Schedule 1 hereto (the "Underwriters") an option to purchase up to an
additional 801,625 shares of the Common Stock on the terms and for the purposes
set forth in Section 3 (the "Option Stock"). The Firm Stock and the Option
Stock, if purchased, are hereinafter collectively called the "Stock." The
irrevocable trust established by agreement dated December 23, 1980 for the
benefit of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ is referred to herein as the "Trust Selling
Stockholder." This is to confirm the agreement concerning the purchase of the
Stock from the Selling Stockholders and the Company by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
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Company represents, warrants and agrees that:
(a) A registration statement on Form S-2 and two amendments thereto,
with respect to the Stock has (i) been prepared by the Company in conformity
with the requirements of the United States Securities Act of 1933 (the
"Securities Act") and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities Act and
(iii)
become effective under the Securities Act. Copies of such registration
statement and amendment[s] thereto have been delivered by the Company to you as
the representatives (the "Representatives") of the Underwriters. As used in
this Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including any documents
incorporated by reference therein at such time and all information contained in
the final prospectus filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations in accordance with Section 6(a) hereof and deemed to be a
part of the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations; and "Prospectus" means
such final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations. Reference made herein to
any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to Item 12 of
Form S-2 under the Securities Act, as of the date of such Preliminary Prospectus
or the Prospectus, as the case may be.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued and no proceedings for that purpose are pending or,
to the best knowledge of the Company or the Selling Stockholders, threatened or
contemplated by the Commission; no order suspending the offering of the Firm
Stock or the Option Stock, as the case may be, in any jurisdiction designated by
you has been issued and no proceedings for that purpose have been instituted or,
to the best knowledge of the Company or the Selling Stockholders, threatened or
contemplated, and any request of the Commission for additional information (to
be included in the Registration Statement or Prospectus or otherwise) has been
complied with.
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations 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 (i) in the case of the Registration Statement, not misleading
and (ii) in the case of the Prospectus, in light of the circumstances under
which they were made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company and the Selling Stockholders through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein.
(d) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission conformed in all material respects to the
requirements of the
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Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(e) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, there has been no material
adverse change, or any development involving a prospective material adverse
change, in or affecting the business, prospects, properties, management,
condition (financial or other), stockholders' equity or results of operations of
the Company and its subsidiaries, whether or not arising from transactions in
the ordinary course of business (the foregoing is collectively referred to
herein as a "Material Adverse Change"), and since the date of the latest balance
sheet presented in the Registration Statement and the Prospectus, neither the
Company nor any of its subsidiaries has incurred or undertaken any liabilities
or obligations, direct or contingent, which are material to the Company and its
subsidiaries, except for liabilities or obligations which are reflected in or
contemplated by the Registration Statement and the Prospectus.
(f) The Company has all requisite corporate power and authority to
enter into this Agreement and the Custody Agreement and to perform its
obligations hereunder and thereunder. This Agreement, the Custody Agreement and
the transactions contemplated herein and therein have been duly and validly
authorized by the Company and this Agreement and the Custody Agreement have been
duly and validly executed and delivered by the Company; the Custody Agreement
(assuming due authorization, execution and delivery by the Custodian and the
Selling Stockholders) will constitute the valid and binding agreement of the
Company enforceable against the Company in accordance with its terms.
(g) Neither the Company nor any of its subsidiaries is in default in
the performance or observance of, or in violation of, any obligation, agreement,
covenant or condition contained in any loan agreement, note, contract,
instrument, indenture, lease, franchise, license, mortgage, permit or other
agreement to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
properties or assets of the Company or any of its subsidiaries are subject,
except for such defaults that would not, singly or in the aggregate, have a
material adverse effect on the business, prospects, properties, management,
condition (financial or other), stockholders' equity or results of operations of
the Company and its subsidiaries (the foregoing is collectively referred to
herein as a "Material Adverse Effect"). Neither the Company nor any of its
subsidiaries is and on each Delivery Date (as hereinafter defined) will be, in
violation of any provisions of its Certificate of Incorporation or by-laws.
(h) The execution, delivery and performance of this Agreement and the
Custody Agreement and the consummation of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or result in a breach of any
of the terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, any
loan agreement,
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note, contract, instrument, indenture, lease, franchise, license, mortgage,
permit or other agreement to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the properties or assets of the Company or any of its subsidiaries are
subject, except for such conflicts, breaches, defaults or liens that would not,
singly or in the aggregate, have a Material Adverse Effect; (ii) violate or
conflict with any provisions of the Certificate of Incorporation or by-laws of
the Company or any of its subsidiaries; or (iii) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or the property or
assets of the Company or any of its subsidiaries, except for such violations or
conflicts that would not, singly or in the aggregate, have a Material Adverse
Effect.
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification, except for any such failure to so qualify which would not have a
Material Adverse Effect, and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is engaged.
(j) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of each of the Company
and its subsidiaries have been duly and validly authorized and issued, are fully
paid and non-assessable, conform, in the case of the Company's capital stock, to
the description thereof contained in the Prospectus and were not issued and are
not now in violation of or subject to any preemptive rights.
(k) The shares of the Stock 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, fully paid and non-assessable, and will not have been issued
in violation of or be subject to any preemptive rights; and the Stock will
conform to the description thereof contained in the Prospectus.
(l) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any third party or any court or any
public, governmental or regulatory agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of the
properties or assets of the Company or any of its subsidiaries is required for
the execution, delivery and performance of this Agreement or the Custody
Agreement or the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of the Option Stock to be
issued, sold and delivered by the Company hereunder, except the registration
under the Securities Act of the Stock, approval by the National Association of
Securities Dealers, Inc. ("NASD") of the underwriting terms and arrangements,
and such consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as have been obtained or as may be required
under state securities or blue sky laws in connection with the purchase and
distribution of the Stock by the Underwriters.
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(m) There are no contracts, agreements or understandings between the
Company or any of its subsidiaries and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act.
(n) Except as described in the Prospectus, the Company has not sold
or issued any shares of Common Stock during the six-month period preceding the
date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(o) Ernst & Young LLP, who have certified certain consolidated
financial statements of the Company, whose report appears in the Prospectus or
is incorporated by reference therein and who have delivered the initial letter
referred to in Section 9(g) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(p) The conditions for use of Form S-2, as set forth in the General
Instructions thereto, have been satisfied.
(q) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries
on the other hand, which is required to be described in the Prospectus which is
not so described.
(r) Each of the Company and its subsidiaries is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its subsidiaries would have any
liability; neither the Company nor any of its subsidiaries has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or any of its subsidiaries would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects and nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification.
(s) Each of the Company and its subsidiaries has filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its subsidiaries which has
had (nor does the Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of its subsidiaries might have) a
Material Adverse Effect.
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(t) Except as described in the Prospectus, there is no litigation or
governmental proceeding, domestic or foreign, to which the Company or any of its
subsidiaries is a party or to which any property, assets or business of the
Company or any of its subsidiaries is subject or which is pending or, to the
knowledge of the Company, contemplated against the Company or any of its
subsidiaries that might result in a Material Adverse Change, or which is
required to be disclosed in the Registration Statement and the Prospectus.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Stock.
(v) The consolidated financial statements, including the notes
thereto, and supporting schedules included (through incorporation by reference
or otherwise) in the Registration Statement and the Prospectus present fairly
the consolidated financial position of the Company and its subsidiaries as of
the dates indicated and the results of its operations for the periods specified;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and the supporting schedules included
in the Registration Statement present fairly the information required to be
stated therein.
(w) Neither the Company nor any of its subsidiaries is, and upon
consummation of the transactions contemplated hereby will be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission thereunder.
(x) There are no contracts or other documents which are required to
be described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described and filed as
required.
(y) Each of the Company and its subsidiaries has good and valid title
to all personal property and assets described in the Prospectus as owned by the
Company and its subsidiaries, free and clear of all liens, charges, encumbrances
or restrictions, except such as (A) are described in the Prospectus or (B) are
neither material in amount nor materially significant in relation to the
business of the Company and its subsidiaries; all of the leases and subleases
material to the business of the Company and its subsidiaries and under which the
Company and its subsidiaries hold properties described in the Prospectus, are in
full force and effect, and neither the Company nor any of its subsidiaries has
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the rights of
such corporation to the continued possession of the leased or subleased premises
under any such lease or sublease, except for such claims which if the subject of
an unfavorable decision or resolution would not have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries owns any real property.
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(z) Each of the Company and its subsidiaries has all requisite power
and authority, and other than as described in subparagraph (aa) below, each of
the Company and its subsidiaries owns, possesses or has obtained all material
governmental and business licenses, permits, certificates, consents, orders,
approvals and other authorizations necessary to own or lease, as the case may
be, and to operate its properties and assets and to carry on its business as
presently conducted, and as described in the Registration Statement and the
Prospectus; no such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome restriction
not adequately disclosed in the Registration Statement and the Prospectus, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to revocation or modification of any such licenses,
permits, certificates, consents, orders, approvals or authorizations.
(aa) Each of the Company and its subsidiaries owns or possesses
adequate and enforceable rights to use, under license or otherwise, all patents,
patent applications, trademarks, trade names, service marks, copyrights, rights,
trade secrets, confidential information, processes and formulations used or
proposed to be used in the conduct of its business as described in the
Prospectus including, but not limited to, Mootsies Tootsies(R), Mootsies
Kids(R), ▇▇▇ & ▇▇▇▇▇(R), ▇▇▇▇▇ New York(R), ▇▇▇▇▇ New York Sport(R), ▇.▇.
▇▇▇▇(R) and Hook Sport(R) (collectively, the "Intangibles"); to the best of the
-----------
Company's knowledge, neither the Company nor any of its subsidiaries has
infringed or is infringing upon the rights of others with respect to the
Intangibles, and neither the Company nor any of its subsidiaries has received
any notice of conflict with the asserted rights of others with respect to the
Intangibles, which could, singly or in the aggregate, have a Material Adverse
Effect, and the Company knows of no basis therefor; and, to the best of the
Company's knowledge, no others have infringed upon the Intangibles of the
Company or any of its subsidiaries.
(bb) To the best knowledge of the Company, no labor dispute exists
with the Company's employees or is imminent that would have a Material Adverse
Effect, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, contractors or
customers that would have a Material Adverse Effect.
(cc) Each of the Company and its subsidiaries is in material
compliance with applicable existing federal, state and local laws and
regulations relating to protection of human health or the environment and has no
liability or alleged liability under any such law which is required to be
disclosed in the Registration Statement or the Prospectus that is not so
disclosed.
(dd) As of the date of the latest financial statements included in or
incorporated by reference in the Registration Statement and the Prospectus, to
the best of the Company's knowledge, the Company's inventory was saleable and
the Company's accounts receivable were collectible in the ordinary course of the
Company's business, subject to posted reserves; and, as of the last day of the
calendar month prior to the date hereof, to the best of the Company's knowledge,
the Company's inventory was saleable and the Company's accounts receivable were
collectible in the ordinary course of the Company's business, subject to posted
reserves.
(ee) Except as described in the Prospectus, to the best of the
Company's knowledge, none of the officers and directors listed in the Prospectus
under the caption
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"Management" has any current plans to terminate his or her present employment
with the Company.
2. Representations, Warranties and Agreements of the Selling
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Stockholders. Each Selling Stockholder severally represents, warrants and
------------
agrees that:
(a) The Selling Stockholder has good and valid title to the shares,
if any, of Class B common stock, par value $0.01 per share, of the Company (the
"Class B Common Stock"), which will be converted into the Stock and the options,
if any, with respect to Common Stock held by the Selling Stockholder which will
be exercised immediately prior to the First Delivery Date (as defined in Section
5 hereof); and immediately prior to the First Delivery Date the Selling
Stockholder will have good and valid title to the shares of Stock to be sold by
the Selling Stockholder hereunder on such date, free and clear of all liens,
encumbrances, equities or claims; such shares have been duly authorized and are
validly issued, fully paid and non-assessable; and upon delivery of such shares
and payment therefor pursuant hereto, good and valid title to such shares, free
and clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters.
(b) The Selling Stockholder has placed in custody, or will place in
custody prior to the First Delivery Date after conversion of the related Class B
Common Stock or exercise of the related options with respect to the Common
Stock, under a custody agreement (the "Custody Agreement") with Boston Equiserve
Limited Partnership, as custodian (the "Custodian"), for delivery under this
Agreement, certificates in negotiable form (with signature guaranteed by a
commercial bank or trust company having an office or correspondent in the United
States or a member firm of the New York or American Stock Exchange) representing
the shares of Stock to be sold by the Selling Stockholder hereunder.
(c) The Selling Stockholder has duly and irrevocably executed and
delivered a power of attorney (the "Power of Attorney" and, together with all
other similar agreements executed by the other Selling Stockholders, the "Powers
of Attorney") appointing the Custodian and one or more other persons, as
attorneys-in-fact, with full power of substitution, and with full authority
(exercisable by any one or more of them) to execute and deliver this Agreement
and to take such other action as may be necessary or desirable to carry out the
provisions hereof on behalf of the Selling Stockholder.
(d) The Selling Stockholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody Agreement; this
Agreement, the Power of Attorney and the Custody Agreement have been duly
authorized, executed and delivered by the Selling Stockholder; the Power of
Attorney and the Custody Agreement (assuming due authorization, execution and
delivery by the Company and the Custodian) will constitute valid and binding
agreements of the Selling Stockholder, each enforceable against the Selling
Stockholder in accordance with its terms; the execution, delivery and
performance of this Agreement, the Power of Attorney and the Custody Agreement
by the Selling Stockholder and the consummation by the Selling Stockholder of
the transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, any loan agreement, note, contract,
instrument, indenture, lease,
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franchise, license, mortgage, permit or other agreement or instrument to which
the Selling Stockholder is a party or by which the Selling Stockholder is bound
or to which any of the property or assets of the Selling Stockholder is subject,
nor will such actions result in any violation of the provisions of the trust
agreement of the Selling Stockholder, if applicable, or any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body, domestic or foreign, having jurisdiction over the
Selling Stockholder or the property or assets of the Selling Stockholder; and,
except for the registration under the Securities Act of the Stock, approval by
the NASD of the underwriting terms and arrangements, and such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits as may be required under the state securities or blue sky
laws in connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court, agency or body is required for the execution,
delivery and performance of this Agreement, the Power of Attorney or the Custody
Agreement by the Selling Stockholder or the consummation by the Selling
Stockholder of the transactions contemplated hereby and thereby.
(e) To the best of the Selling Stockholder's knowledge, the
Registration Statement and the Prospectus and any further amendments or
supplements to the Registration Statement or the Prospectus will, when they
become effective or are filed with the Commission, as the case may be, 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 (i) in the case of
the Registration Statement, not misleading and (ii) in the case of the
Prospectus, in light of the circumstances under which they were made, not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the Company and the Selling Stockholders through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein.
(f) The Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 hereof are
not materially true and correct, is familiar with the Registration Statement and
the Prospectus (as amended or supplemented) and has no knowledge of any material
fact, condition or information not disclosed in the Registration Statement, as
of the effective date, or the Prospectus (or any amendment or supplement
thereto), as of the applicable filing date, which would have a Material Adverse
Effect, and is not prompted to sell shares of Stock by any information
concerning the Company which is not set forth in the Registration Statement and
the Prospectus.
(g) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which constitutes
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Stock.
3. Purchase of the Stock by the Underwriters. On the basis of the
-----------------------------------------
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, each Selling Stockholder hereby agrees to sell
the number of shares of the Firm Stock set opposite his
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or her name in Schedule 2 hereto, severally and not jointly, to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set opposite that Underwriter's
name in Schedule 1 hereto. Each Underwriter shall be obligated to purchase from
each Selling Stockholder, that number of shares of the Firm Stock which
represents the same proportion of the number of shares of the Firm Stock to be
sold by each Selling Stockholder, as the number of shares of the Firm Stock set
forth opposite the name of such Underwriter in Schedule 1 represents of the
total number of shares of the Firm Stock to be purchased by all of the
Underwriters pursuant to this Agreement. The respective purchase obligations of
the Underwriters with respect to the Firm Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 801,625 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 5 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Stock shall be adjusted by the Representatives so that no Underwriter
shall be obligated to purchase Option Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock to be purchased by the
Underwriters shall be $[_____] per share.
The Company and the Selling Stockholders shall not be obligated to
deliver any of the Stock to be delivered on any Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
4. Offering of Stock by the Underwriters. Upon authorization by the
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Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
5. Delivery of and Payment for the Stock. Delivery of and payment
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for the Firm Stock shall be made at the office of Milbank, Tweed, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 A.M., New York
City time, on the [fourth] full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Selling Stockholders shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Selling Stockholders of
the purchase price by wire transfer in immediately available funds, net of any
payments to the Company in immediately available funds to be effected by wire
transfer to the Company on the First Delivery Date pursuant to an instruction
delivered by the Company and the Selling Stockholders to the Representatives
with respect to (i) the exercise price due the Company in connection with the
exercise of options that give rise to the Firm Stock being sold on the First
Delivery Date and (ii) amounts required to be withheld by the Company in respect
of taxes due as a result of such exercise of options and sale of Firm Stock.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in
such names and in such denominations as the Representatives shall request in
10
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Stock, the Selling Stockholders shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date".
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Stock shall
be registered in such names and in such denominations as the Representatives
shall request in the aforesaid written notice. For the purpose of expediting
the checking and packaging of the certificates for the Option Stock, the Company
shall make the certificates representing the Option Stock available for
inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to such Second Delivery
Date.
6. Further Agreements of the Company. The Company agrees:
---------------------------------
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the 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
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, 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
11
Preliminary Prospectus or the Prospectus, of the suspension of the qualification
of the Stock 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
the 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 the Prospectus or suspending any such qualification,
to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits other
than this Agreement and the computation of per share earnings), (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in the Prospectus
(excluding exhibits thereto); and, if the delivery of a prospectus is required
at any time after the Effective Time in connection with the offering or sale of
the Stock or any other securities relating thereto 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
the 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
to amend or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, to notify the Representatives and, upon
their request, to file such document and to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus or any Prospectus pursuant to Rule
424 of the Rules and Regulations, to furnish a copy thereof to the
Representatives and counsel for the Underwriters and obtain the consent of the
Representatives to the filing;
(f) To make generally available (within the meaning of Section 11(a)
of the Act) to its security holders and to the Underwriters as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the Effective Date occurs,
12
an earning statement (in form complying with the provisions of Rule 158 of the
Regulations) covering a period of at least twelve consecutive months beginning
after the Effective Date;
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the Company
to its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange or national securities market upon which the Common Stock may be listed
pursuant to requirements of or agreements with such exchange or market or to the
Commission pursuant to the Exchange Act or any rule or regulation of the
Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives 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 Stock; 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;
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than (x) the Stock, (y) shares issued pursuant to
employee benefit plans, nonqualified or qualified stock option plans or other
employee compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights, and (z) 100,000 shares of Common Stock
(the "Foundation Shares") to be issued to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ upon the conversion of
a corresponding amount of Class B Common Stock, such Foundation Shares to be
donated to the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Family Foundation on or about the First Delivery
Date), or sell or grant options, rights or warrants with respect to any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
(other than the grant of options pursuant to option plans existing on the date
hereof), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of ▇▇▇▇▇▇ Brothers Inc.; and to cause each officer and director
of the Company to furnish to the Representatives, prior to the First Delivery
Date, a letter or letters, in the form of Exhibit A hereto, pursuant to which
each such person shall agree not to, directly or indirectly, (1) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock (other than, in
the case of ▇▇. ▇▇▇▇, the Foundation Shares) or securities convertible into or
exchangeable for Common Stock or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or
13
other securities, in cash or otherwise, in each case for a period of 90 days
from the date of the Prospectus, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc.;
(j) Prior to the Effective Date, to apply for the inclusion of the
Stock on the National Association of Securities Dealers Automated Quotations
National Market System ("NASDAQ NMS") and to use its best efforts to complete
that listing, subject only to official notice of issuance, prior to the First
Delivery Date;
(k) To apply the net proceeds, if any, from the sale of the Stock
being sold by the Company as set forth in the Prospectus;
(l) To take such steps as shall be necessary to ensure that the
Company shall not become an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder; and
(m) Not to issue additional shares of Class B Common Stock, except in
conjunction with stock splits, reverse stock splits, stock dividends,
reclassifications and similar transactions and events regarding the Common Stock
that would otherwise have the effect of changing the conversion rights of the
Class B Common Stock relative to the Common Stock; and as soon as practicable
after the First Delivery Date, but in no event later than the Company's next
regularly scheduled annual meeting of stockholders after the date hereof, to
seek stockholder approval to amend the Company's Certificate of Incorporation to
eliminate the authorization for the issuance of Class B Common Stock.
7. Further Agreements of the Selling Stockholders. Each Selling
----------------------------------------------
Stockholder agrees:
(a) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly,(1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than the Stock and, in the case of ▇▇. ▇▇▇▇, the
Foundation Shares) or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of ▇▇▇▇▇▇ Brothers Inc.;
(b) That the Stock to be sold by the Selling Stockholder hereunder,
which is represented by the certificates or options held in custody for the
Selling Stockholder, is subject to the interest of the Underwriters and the
other Selling Stockholders thereunder, that the arrangements made by the Selling
Stockholder for such custody are to that extent irrevocable, and that the
obligations of the Selling Stockholder hereunder shall not be terminated by any
act of the Selling Stockholder, by operation of law, by the death or incapacity
of any individual Selling Stockholder or, in the case of a trust, by the death
or incapacity of any executor or trustee or the termination of such trust, or
the occurrence of any other event;
14
(c) To deliver to the Representatives prior to the First Delivery
Date a properly completed and executed United States Treasury Department Form W-
9; and
(d) To convert, prior to the First Delivery Date, all shares of Class
B Common Stock that are owned by the Selling Stockholder into shares of Common
Stock, or to exercise, prior to the First Delivery Date, all options to purchase
shares of Common Stock, as the case may be, which shares will constitute not
less than the required number of shares of Stock to be sold by the Selling
Stockholder to the Underwriters under this Agreement.
8. Expenses. The Company agrees (except to the extent that
--------
applicable law requires payment of any such expenses on a pro rata basis between
the Company and the Selling Stockholders or except as otherwise agreed between
the Company and the Selling Stockholders) to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of producing and distributing this Agreement and any other related
documents in connection with the offering, purchase, sale and delivery of the
stock; (e) the costs of delivering and distributing the Custody Agreements and
the Powers of Attorney; (f) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
sale of the Stock (including related fees and expenses of counsel to the
Underwriters); (g) any applicable listing or other fees; (h) the fees and
expenses of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section 6(h) and of preparing, printing and
distributing a blue sky Memorandum (including related fees and expenses of
counsel to the Underwriters); and (i) all other costs and expenses incident to
the performance of the obligations of the Company and the Selling Stockholders
under this Agreement except commissions and discounts incurred by the Selling
Stockholders in respect of shares of Stock to be sold by the Selling
Stockholders to the Underwriters under this Agreement; provided that, except as
provided in this Section 8 and in Section 13 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
---------------------------------------
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Stockholders contained herein, to the performance by the Company
and the Selling Stockholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); 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 any request of the Commission for
15
inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for
the Underwriters, is material or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein (i) in the case of the Registration Statement,
not misleading and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Custody Agreement, the
Powers of Attorney, the Stock, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company and the Selling Stockholders shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed to the
Underwriters and dated the First Delivery Date and each such other Delivery
Date, in form and substance reasonably satisfactory to the Representatives, to
the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which its ownership
or lease of property or the conduct of its business requires such
qualification, except for any such failure to so qualify which would
not have a Material Adverse Effect, and has all power and authority
necessary to own or hold its properties and to conduct the business in
which it is engaged;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of
the Company (including the shares of Stock being delivered on such
Delivery Date) have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus;
(iii) Except as disclosed in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of the Stock
pursuant to the Company's Certificate of Incorporation or by-laws or
any agreement or other instrument known to such counsel;
16
(iv) To the best of such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding or
investigation before any court or before or by any public,
governmental or regulatory agency or body pending, threatened against,
or involving the properties or business of, the Company or any of its
subsidiaries that might have a Material Adverse Effect or which is
required to be disclosed in the Registration Statement and the
Prospectus which has not been properly disclosed therein.
(v) To the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries is in default in the performance
or observance of, or in violation of, any loan agreement, note,
contract, instrument, indenture, lease, franchise, license, mortgage,
permit or other agreement to which it is a party or by which it is
bound or to which any of its properties are subject and that is filed
as an exhibit to the Registration Statement, except for such defaults
that would not have a Material Adverse Effect. To the best of such
counsel's knowledge, neither the Company nor any of its subsidiaries
is in violation of its Certificate of Incorporation or by-laws.
(vi) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion,
the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in
such opinion on the date specified therein and no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(vii) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements, financial
data and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations;
the documents incorporated by reference in the Prospectus (other than
the financial statements, financial data and related schedules
therein, as to which such counsel need express no opinion), when they
were filed with the Commission complied as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder;
(viii) The statements contained in the Prospectus under the
caption "Certain United States Federal Tax Considerations for Non-U.S.
Holders of Class A Common Stock", insofar as they describe federal
statutes, rules and regulations, constitute a fair summary thereof;
(ix) The descriptions in the Prospectus of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents therein described fairly summarize the information required
to be shown in all material respects.
17
(x) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Registration Statement or the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
(xi) The Company has all requisite corporate power and
authority to enter into this Agreement and the Custody Agreement and
to perform its obligations hereunder and thereunder; this Agreement
has been duly authorized, executed and delivered by the Company; the
Custody Agreement has been duly authorized, executed and delivered by
the Company, and (assuming due execution and delivery by the Custodian
and the Selling Stockholder) will constitute a valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms; except (x) as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and (y) as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law);
(xii) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the Company
with all of the provisions of this Agreement and the Custody Agreement
and the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a
default) under, any loan agreement, note, contract, instrument,
indenture, lease, franchise, license, mortgage, permit or other
agreement known to such counsel 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 actions result in any
violation of the provisions of the Certificate of Incorporation or by-
laws of the Company or any judgment, decree, order, statute, rule or
regulation known to such counsel of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or the property or assets of the Company, except in any such
case for such conflicts, breaches, violations or defaults that would
not, singly or in the aggregate, have a Material Adverse Effect; and,
except for such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits as have
been obtained or as may be required under state securities or Blue sky
laws in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court, agency or body is
required for the execution, delivery and performance of this Agreement
and the Custody Agreement by the Company or the consummation of the
transactions contemplated hereby and thereby;
18
(xiii) To the best of such counsel's knowledge, and except as
disclosed in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement
under the Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant
to any other registration statement filed by the Company under the
Securities Act.
(xiv) Each of the Company and its subsidiaries owns or
possesses adequate and enforceable rights to use the Intangibles; to
the best of such counsel's knowledge, neither the Company nor any of
its subsidiaries has infringed or is infringing upon the rights of
others with respect to the Intangibles; and, to the best of such
counsel's knowledge, neither the Company nor any of its subsidiaries
has received any notice of conflict with the asserted rights of others
with respect to the Intangibles which might, singly or in the
aggregate, have a Material Adverse Effect and such counsel is not
aware of any licenses with respect to the Intangibles which are
required to be obtained by the Company or any of its subsidiaries
which have not been obtained by the Company or any of its
subsidiaries; and
(xv) The Common Stock currently outstanding is listed, and the
shares of Stock to be sold under this Agreement to the Underwriters
are duly authorized for quotation, on the NASDAQ NMS.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the States of New York and
California and the General Corporation Law of the State of Delaware
and (ii) rely upon the opinion of other counsel of good standing
familiar with applicable laws provided that (A) such other counsel is
satisfactory to counsel for the Underwriters, (B) such other counsel
furnishes a copy of such opinion addressed to the Representatives and
dated such Delivery Date and (C) the opinion of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP states that the opinion of such other counsel is in form
satisfactory to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and, in ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP's opinion, the Underwriters and ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP are justified in relying thereon. In rendering such opinion on a
Delivery Date other than the First Delivery Date, such counsel may
omit any references to the Custody Agreement. Such counsel shall also
have furnished to the Representatives a written statement, addressed
to the Underwriters and dated such Delivery Date, in form and
substance satisfactory to the Representatives, to the effect that (x)
such counsel has acted as counsel to the Company in connection with
the preparation of the Registration Statement, and (y) based on the
foregoing, no facts have come to the attention of such counsel which
lead it to believe that (I) the Registration Statement, as of the
Effective Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or
that the Prospectus contained as of its date or contains as of such
Delivery Date
19
any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading or (II) any document incorporated by
reference in the Prospectus and the Registration Statement when they
were filed with the Commission contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such
counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial data included
or incorporated by reference therein).
(e) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C., special counsel for the Company and special
counsel for the Selling Stockholders, shall have furnished to the
Representatives its written opinion, as counsel to the Selling Stockholders,
addressed to the Underwriters and dated the First Delivery Date and each such
other Delivery Date (but only as to matters pertaining to the Company), in form
and substance reasonably satisfactory to the Representatives, to the effect
that:
(i) Each Selling Stockholder has full right, power and
authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement;
(ii) This Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder;
(iii) A Power-of-Attorney and the Custody Agreement have been
duly authorized, executed and delivered by or on behalf of each
Selling Stockholder and (assuming due authorization, execution and
delivery by the Custodian) will constitute valid and binding
agreements of each Selling Stockholder, enforceable against each
Selling Stockholder in accordance with their respective terms, except
(x) as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (y) as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law);
(iv) The execution, delivery and performance of this Agreement,
the Power of Attorney and the Custody Agreement by each Selling
Stockholder and the consummation by each Selling Stockholder of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default (or an event which with notice or lapse of
time, or both, would constitute a default) under, any loan agreement,
note, contract, instrument, indenture, lease, franchise, license,
mortgage, permit or other agreement known to such counsel to which any
Selling Stockholder is a party or by which any Selling Stockholder is
bound or to which any of the property or assets of any Selling
Stockholder is subject, nor will such actions result in any violation
of the provisions of the trust agreement of any Selling
20
Stockholder or any judgment, decree, order, statute, rule or
regulation known to such counsel of any court or any public,
governmental or regulatory agency or body having jurisdiction over any
Selling Stockholder or the property or assets of any Selling
Stockholder; and, except for such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits
as have been obtained or as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court, agency or
body is required for the execution, delivery and performance of this
Agreement, the Power of Attorney or the Custody Agreement by any
Selling Stockholder or the consummation by any Selling Stockholder of
the transactions contemplated hereby and thereby;
(v) Immediately prior to the First Delivery Date, each Selling
Stockholder had good and valid title to the shares of Stock to be sold
by each Selling Stockholder under this Agreement free and clear of all
liens, encumbrances, equities or claims, and full right, power and
authority to sell, assign, transfer and deliver such shares to be sold
by such Selling Stockholder hereunder;
(vi) Good and valid title to the shares of Stock to be sold by
each Selling Stockholder under this Agreement, free and clear of all
liens, encumbrances, equities or claims, has been transferred to each
of the several Underwriters;
(vii) The Company is duly qualified to do business and is in
good standing as a foreign corporation in the state of Massachusetts;
and
(viii) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the Company
with all of the provisions 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 the provisions of
any judgment, decree, order, statute, rule or regulation known to such
counsel of any court or any public, governmental or regulatory agency
or body in the state of Massachusetts; and except for such consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as have been obtained or as may
be required under the securities or blue sky laws in connection with
the purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or
registration with, any such court, agency or body is required for the
execution, delivery and performance of this Agreement and the Custody
Agreement. by the Company or the consummation of the transactions
contemplated hereby and thereby.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United States of
America and the laws of the State of Massachusetts and (ii) in rendering the
opinion in Section 9(e)(v) above, rely upon a
21
certificate of each Selling Stockholder in respect of matters of fact as to
ownership of and liens, encumbrances, equities or claims on the shares of Stock
sold by such Selling Stockholder, provided that such counsel shall furnish
copies thereof to the Representatives and state that it believes that both the
Underwriters and it are justified in relying upon such certificate.
(f) The Representatives shall have received from Milbank, Tweed,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated
such Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and the Rules and Regulations and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, and (ii)
stating, as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with registered
public offerings.
(h) With respect to the letter of Ernst & Young referred to in the
preceding paragraph and delivered to the Representatives concurrently with the
execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and the Rules and Regulations and are in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date;
the Company has complied with all its agreements contained herein; and
the conditions set forth in Sections 9(a) and 9(k) have been
fulfilled; and
22
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement did not contain any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (B) as of the date thereof and as of such Delivery Date,
the Prospectus did not and does not contain any untrue statement of a
material fact and did not and does not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and (C) since the Effective Date no event
has occurred which should have been set forth in a supplement or
amendment to the Registration Statement or the Prospectus.
(j) Each Selling Stockholder (or the Custodian or one or more
attorneys-in-fact on behalf of the Selling Stockholders) shall have furnished to
the Representatives on the First Delivery Date a certificate, dated the First
Delivery Date, signed by, or on behalf of, the Selling Stockholder (or the
Custodian or one or more attorneys-in-fact) stating that the representations,
warranties and agreements of the Selling Stockholder contained herein are true
and correct as of the First Delivery Date and that the Selling Stockholder has
complied with all agreements contained herein to be performed by the Selling
Stockholder at or prior to the First Delivery Date. Any Selling Stockholder
which is a trust shall have furnished to the Representatives the documents or
agreements, including but not limited to the trust agreement, which authorize
the trustee of such trust to act on behalf of the trust as a Selling Stockholder
hereunder and to comply with and perform this Agreement.
(k) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference 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 or (ii)
since such date there shall not have been any change in the capital stock or
long-term debt of the Company or any Material Adverse Change, 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 the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Stock
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a
23
material adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or inadvisable to proceed
with the public offering or delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
(m) The NASDAQ NMS shall have approved the Stock for inclusion,
subject only to official notice of issuance.
(n) Each of the directors and officers of the Company shall have
furnished to the Representatives letters dated the First Delivery Date in the
form of Exhibit A hereto.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
10. Indemnification and Contribution.
--------------------------------
(a) The Company and the Selling Stockholders (other than the Trust
Selling Stockholder), jointly and severally, shall indemnify and hold harmless
each Underwriter, its officers and employees, each of its directors and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee, director or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any blue sky application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company and the Selling
Stockholders shall not be liable under this clause (iii) to the extent that it
is determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee, director or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee, director or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company and the Selling Stockholders shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the
24
Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company and the Selling
Stockholders through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein which information consists solely of the
information specified in Section 10(f). The foregoing indemnity agreement is in
addition to any liability which the Company or any Selling Stockholder may
otherwise have to any Underwriter or to any officer, employee, director or
controlling person of that Underwriter.
(b) The Trust Selling Stockholder shall indemnify and hold harmless
each Underwriter, its officers and employees, each of its directors and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee, director or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any blue sky application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Trust Selling Stockholder
shall not be liable under this clause (iii) to the extent that it is determined
in a final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter and each
such officer, employee, director or controlling person promptly upon demand for
any legal or other expenses reasonably incurred by that Underwriter, officer,
employee, director or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Trust
Selling Stockholder shall be liable only to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, in reliance upon and in conformity with
written information concerning the Trust Selling Stockholder furnished to the
Company and the Representatives specifically for inclusion therein. The
foregoing indemnity agreement is in addition to any liability which the Trust
Selling Stockholder may otherwise have to any Underwriter or to any officer,
employee, director or controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
each person, if any, who controls the Company within the meaning of the
Securities Act, and each of the Selling Stockholders from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company, any such director, officer, employee or controlling
25
person or any such Selling Stockholder may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any blue sky application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any blue sky
application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company and the Selling Stockholders through
the Representatives by or on behalf of that Underwriter specifically for
inclusion therein, and shall reimburse the Company, any such director, officer,
employee or controlling person and any such Selling Stockholder for any legal or
other expenses reasonably incurred by the Company, any such director, officer,
employee or controlling person or any such Selling Stockholder in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company, any such director, officer, employee or
controlling person or any such Selling Stockholder.
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
26
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company and the Selling Stockholders
on the one hand, and the total underwriting discounts and commissions received
by the Underwriters with respect to the shares of the Stock purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the shares of the Stock under this Agreement, 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 whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Selling Stockholders or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section were to be
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 into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
shall be
27
deemed to include, for purposes of this Section 10(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding anything to
the contrary in the provisions of this Section 10(e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(e) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 10(e) are several in proportion to their respective
underwriting obligations and not joint.
(f) The Underwriters severally confirm and the Company and the Selling
Stockholders acknowledge that the statements with respect to the public offering
of the Stock by the Underwriters set forth in the last paragraph on the cover
page of, the legend concerning over-allotments on the inside front cover page of
and the concession and reallowance figures appearing under the caption
"Underwriting" in, the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company and
the Selling Stockholders by or on behalf of the Underwriters specifically for
inclusion in the Registration Statement and the Prospectus.
(g) Each Selling Stockholder hereby designates C.T. Corporation, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ as its authorized agent, upon which process may be
served in any action which may be instituted in any state or federal court in
the State of New York by any Underwriter, any director, officer or employee of
any Underwriter or any person controlling any Underwriter asserting a claim for
indemnification or contribution under or pursuant to this Section 10, and each
Selling Stockholder will accept the jurisdiction of such court in such action,
and waives, to the fullest extent permitted by applicable law, any defense based
upon lack of personal jurisdiction or venue. A copy of any such process shall
be sent or given to such Selling Stockholder, at the address for notices
specified in Section 14.
(h) Notwithstanding anything to the contrary in the foregoing
provisions of this Section 10, no Selling Stockholder shall be required to pay
or contribute any amount pursuant to any provision of this Section 10 in excess
of the total net proceeds (before deducting expenses and in the case of the
Trust Selling Stockholders, after the payment of any taxes due as a result of
the sale of Stock) received by such Selling Stockholder from the offering of the
Stock purchased by the underwriters from such Selling Stockholder under this
Agreement.
11. Defaulting Underwriters. If, on any Delivery Date, any
-----------------------
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Stock which the defaulting Underwriter agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Stock set opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting Underwriters in Schedule
1 hereto; provided, however, that the remaining non-defaulting Underwriters
shall not be obligated to
28
purchase any of the Stock on such Delivery Date if the total number of shares of
the Stock which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such date exceeds 9.09% of the total number of shares of the Stock
to be purchased on such Delivery Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase more than 110% of the number of
shares of the Stock which it agreed to purchase on such Delivery Date pursuant
to the terms of Section 3. If the foregoing maximums are exceeded, the remaining
non-defaulting Underwriters, or those other underwriters satisfactory to the
Representatives who so agree, shall have the right, but shall not be obligated
to purchase, in such proportion as may be agreed upon among them, all the Stock
to be purchased on such Delivery Date. If the remaining Underwriters or other
underwriters satisfactory to the Representatives do not elect to purchase the
shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to a Second
Delivery Date, the obligation of the Underwriters to purchase, and of the
Company to sell, the Option Stock) shall terminate without liability on the part
of any non-defaulting Underwriter or the Company or the Selling Stockholders,
except that the Company and the Selling Stockholders will continue to be liable
for the payment of expenses to the extent set forth in Sections 8 and 13. As
used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 11, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Stockholders for damages
caused by its default. If other underwriters are obligated or agree to purchase
the Stock of a defaulting or withdrawing Underwriter, either the Representatives
or the Company and the Selling Stockholders may postpone the Delivery Date for
up to seven full business days in order to effect any changes that in the
opinion of counsel for the Company and the Selling Stockholders or counsel for
the Underwriters may be necessary in the Registration Statement, the Prospectus
or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may
-----------
be terminated by the Representatives by notice given to and received by the
Company and the Selling Stockholders prior to delivery of and payment for the
Firm Stock if, prior to that time, any of the events described in Sections 9(k)
or 9(l), shall have occurred or if the Underwriters shall decline to purchase
the Stock for any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If the Company or any
---------------------------------------
Selling Stockholder (the "Defaulting Person") shall fail to tender the Stock for
delivery to the Underwriters by reason of any failure, refusal or inability on
the part of the Defaulting Person to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Defaulting Person is not fulfilled,
the Defaulting Person will reimburse the Underwriters for all reasonable out-of-
pocket expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Stock to be sold by the Defaulting Person, and upon demand the Defaulting
Person, shall pay the full amount thereof to the Representatives. If this
Agreement is terminated pursuant to Section 11 by reason of the default of one
or more Underwriters, neither the Company nor any Selling Stockholder shall be
obligated to reimburse any defaulting Underwriter on account of those expenses.
29
14. Notices, etc. All statements, requests, notices and agreements
------------
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World Financial Center,
New York, New York 10285, Attention: Syndicate Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇),
with a copy, in the case of any notice pursuant to Section 10(c), to the
Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) if to the Selling Stockholders, shall be delivered or sent by
mail, telex or facsimile transmission to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at the address of the
Company set forth in the Registration Statement (Fax: (▇▇▇) ▇▇▇-▇▇▇▇); and
(c) 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: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Fax: (▇▇▇) ▇▇▇-▇▇▇▇);
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Selling Stockholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
▇▇▇▇▇▇ Brothers Inc. on behalf of the Representatives and the Company and the
Underwriters shall be entitled to act and rely upon any request, consent, notice
or agreement given or made on behalf of the Selling Stockholders by the
Custodian.
15. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Underwriters, the Company, the
Selling Stockholders and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company and the Selling Stockholders contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Underwriter within the meaning of Section 14 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 10(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 14 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 15, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations,
--------
warranties and agreements of the Company, the Selling Stockholders and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Stock and shall remain in full force and effect,
30
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
17. Definition of the Term "Business Day". For purposes of this
-------------------------------------
Agreement, "business day" means each Monday, Tuesday, Wednesday, Thursday or
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
18. Counterparts. This Agreement may be executed by fax in one or
------------
more counterparts and, if executed in more than one counterpart, the executed
counterparts (by facsimile or otherwise) shall each be deemed to be an original
but all such counterparts shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
31
If the foregoing correctly sets forth the agreement among the Company,
the Selling Stockholders and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
▇▇▇▇▇▇▇ SHOE COMPANY INC.
By:_____________________________________
Name:
Title:
The Selling Stockholders named
in Schedule 2 to this Agreement
By:_____________________________________
Attorney-in-Fact
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
BEAR, ▇▇▇▇▇▇▇ & CO., INC.
BT ALEX. ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: ▇▇▇▇▇▇ BROTHERS INC.
By:_____________________________________
Authorized Representative
32
SCHEDULE 1
Number of
Underwriters Shares of Firm Stock
------------ ---------------------
▇▇▇▇▇▇ Brothers Inc...........................
Bear, ▇▇▇▇▇▇▇ & Co., Inc......................
BT Alex. ▇▇▇▇▇ Incorporated...................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated...................
Total............................... 5,344,167
=========
SCHEDULE 2
Number of
Selling Stockholders Shares of Firm Stock
-------------------- --------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇............................. 788,790
▇▇▇▇ ▇. ▇▇▇▇▇▇▇............................. 300,000
▇▇▇▇▇ ▇▇▇ ▇▇▇▇.............................. 1,728,387
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇............................ 1,728,387
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as
Trustee of the ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ Irrevocable Trust UA 12/23/80
FBO ▇▇▇▇▇▇▇ ▇. ▇▇▇▇........................ 798,603
---------
Total..................... 5,344,167
=========
Exhibit A
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ BROTHERS INC.
BEAR, ▇▇▇▇▇▇▇ & CO., INC.
BT ALEX. ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
As Representatives of the
several underwriters
c/▇ ▇▇▇▇▇▇ BROTHERS INC.
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Class A Common Stock, par value $.01 per share (the "Common
Stock"), of ▇▇▇▇▇▇▇ Shoe Company Inc.(the "Company") and that the Underwriters
propose to reoffer the Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., the undersigned will not, directly or indirectly, (1) offer for
sale, sell, pledge, or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Stock (other than the Shares [and
the Foundation Shares (as defined in the Underwriting Agreement)])/1/ owned by
the undersigned on the date of execution of this Lock-Up Letter Agreement or on
the date of the completion of the Offering, or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
for a period of 90 days after the date of the final Prospectus relating to the
Offering.
In furtherance of the foregoing, the Company and its Transfer Agent
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
-----------------------
/1/ Insert in the Lock-up Letter Agreement to be delivered by ▇▇. ▇▇▇▇.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Shares, we will be released from our obligations under this
Lock-Up Letter Agreement.
The undersigned understands that the Company, the Underwriters and the
stockholders selling shares in the Offering will proceed with the Offering in
reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
Very truly yours,
__________________________________
Name:
Title:
Dated: April ___, 1998
2