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EXHIBIT 1.1
10,715,000 Shares
SKECHERS U.S.A., INC.
Class A Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
_______________, 1999
BT Alex. ▇▇▇▇▇ Incorporated
Prudential Securities Incorporated
As Representatives of the Several Underwriters
c/o BT Alex. ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Skechers U.S.A., Inc., a Delaware corporation (the "COMPANY"), and the
selling stockholders named in Schedule II hereto (the "SELLING STOCKHOLDERS")
propose to sell to the several underwriters (the "UNDERWRITERS") named in
Schedule I hereto for whom you are acting as representatives (the
"REPRESENTATIVES") an aggregate of 10,715,000 shares (the "FIRM SHARES") of the
Company's Class A Common Stock, $0.001 par value (the "CLASS A COMMON Stock"),
of which 8,925,000 shares will be sold by the Company and an aggregate of
1,790,000 shares will be sold by the Selling Stockholders. The respective
amounts of the Firm Shares to be so purchased by the several Underwriters are
set forth opposite their names in Schedule I hereto. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and M.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as trustees of the ▇▇▇▇▇▇▇▇▇ Family Trust (the "PRINCIPAL
SELLING STOCKHOLDER") also proposes to sell at the Underwriters' option an
aggregate of up to 1,607,250 additional shares of the Company's Class A Common
Stock (the "OPTION SHARES") as set forth below. The Company and the Selling
Stockholders are sometimes referred to herein collectively as the "SELLERS."
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Principal Selling Stockholder are sometimes referred
to herein collectively as the "MANAGEMENT SELLING STOCKHOLDERS."
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As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and the
Option Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "SHARES." The shares of Class A Common Stock and Class B
Common Stock, $0.001 par value (the "CLASS B COMMON STOCK"), of the Company to
be outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the "COMMON STOCK."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
(a) The Company and each of the Management Selling Stockholders,
jointly and severally, represent and warrant to each of the Underwriters as
follows:
(i) A registration statement on Form S-1 (File No.
333-60065) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"ACT"), and the Rules and Regulations (the "RULES AND REGULATIONS") of the
Securities and Exchange Commission (the "COMMISSION") thereunder and has been
filed with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together with any
registration statement filed by the Company pursuant to Rule 462(b) of the Act,
herein referred to as the "REGISTRATION Statement," which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "PROSPECTUS" means the form of prospectus
first filed with the Commission pursuant to Rule 424(b). Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "PRELIMINARY PROSPECTUS." Any reference
herein to the Registration Statement, any Preliminary Prospectus or to the
Prospectus shall be deemed to refer to and include any supplements or amendments
thereto, filed with the Commission after the date of filing of the Prospectus
under Rules 424(b) or 430A, and prior to the termination of the offering of the
Shares by the Underwriters.
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. The subsidiary
of the Company listed in Exhibit 21 to Item 16(a) of the Registration Statement
(the "SUBSIDIARY") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. The Company
and the Subsidiary are duly qualified to transact business in all jurisdictions
in which the conduct of their business requires such qualification, except where
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the failure to be so qualified would not have a material adverse effect on the
earnings, business, management, properties, assets, rights, operations or
condition (financial or otherwise) of the Company and the Subsidiary taken as a
whole. The outstanding shares of capital stock of the Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable and are owned
by the Company free and clear of all liens, encumbrances and equities and
claims; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiary are
outstanding.
(iii) Except for the Subsidiary, the Company does not
own or control, directly or indirectly, any corporation, association or other
entity.
(iv) The outstanding shares of Common Stock of the
Company, including all shares to be sold by the Selling Stockholders, have been
duly authorized and validly issued and are fully paid and non-assessable; the
Shares to be issued and sold by the Company have been duly authorized and when
issued and paid for as contemplated herein will be validly issued, fully paid
and non-assessable; and no preemptive rights of stockholders exist with respect
to any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
(v) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Shares
conform to the description thereof contained in the Registration Statement. The
form of certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(vi) The Commission has not issued an order preventing
or suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein by, and will
conform, to the requirements of the Act and the Rules and Regulations. The
Registration Statement and any amendment thereto do not contain, and will not
contain, any untrue statement of a material fact and do not omit, and will not
omit, to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendments
and supplements thereto do not contain, and will not contain, any untrue
statement of material fact; and do not omit, and will not omit, to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of any Underwriter through the Representatives, specifically for use
in the preparation thereof.
(vii) The financial statements of the Company and the
Subsidiary, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company and the Subsidiary, at the indicated
dates and for the indicated periods. Such financial statements and related
schedules have been prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved,
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except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The financial data set
forth in the Prospectus under the captions "Prospectus Summary - Summary
Financial Data, "Selected Financial Data" and "Capitalization" presents fairly
the information shown therein and such data has been compiled on a basis
consistent with the financial statements presented therein and the books and
records of the Company.
(viii) KPMG LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(ix) There is no action, suit, claim or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
the Subsidiary before any court or administrative agency or otherwise which if
determined adversely to the Company or the Subsidiary might result in any
material adverse change in the earnings, business, management, properties,
assets, rights, operations or condition (financial or otherwise) of the Company
and of the Subsidiary, taken as a whole, or to prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement.
(x) The Company and the Subsidiary have good and
marketable title to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in the
Registration Statement) or which do not materially and adversely affect the
value of such property and do not materially interfere with the use made or
proposed to be made of such property by the Company and the Subsidiary. The
Company and the Subsidiary occupy their leased properties under valid and
binding leases with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real property,
conforming in all material respects to the description thereof set forth in the
Registration Statement.
(xi) The Company and the Subsidiary have filed all
Federal, State, local and foreign tax returns which have been required to be
filed and have paid all taxes indicated by said returns and all assessments
received by them or either of them to the extent that such taxes have become due
and are not being contested in good faith and for which an adequate reserve for
accrual has been established in accordance with generally accepted accounting
principles. All tax liabilities have been adequately provided for in the
financial statements of the Company, and the Company has not received any
notification of taxes due and owing from the Internal Revenue Service or
California taxation authorities.
(xii) Since the respective dates as of which information
is given in the Registration Statement, as it may be amended or supplemented,
there has not been any material adverse change or any development known to the
Company that is likely to result in the future in a material adverse change in
or affecting the earnings, business, management, properties, assets, rights,
operations or condition (financial or otherwise), of the Company and the
Subsidiary taken as a whole, whether or not occurring in the ordinary course of
business, there has not been any material transaction entered into by the
Company or the Subsidiary, other than transactions in the ordinary course of
business and changes and transactions described in the Registration Statement,
as it may be amended or supplemented, and the Company and the Subsidiary have
not incurred any material contingent obligations.
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(xiii) Neither the Company nor the Subsidiary is or,
with the giving of notice or lapse of time or both, will be in violation of or
in default under its Certificate of Incorporation or Bylaws, as applicable, or
under any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it, or any of its properties, is
bound and which default would have a material adverse effect on the earnings,
business, management, properties, assets, rights, operations or condition
(financial or otherwise) of the Company and the Subsidiary taken as a whole. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument that is material to the Company and the Subsidiary taken
as a whole, or of the Certificate of Incorporation or Bylaws of the Company or
any order, rule or regulation applicable to the Company or the Subsidiary of any
court or of any regulatory body or administrative agency or other governmental
body having jurisdiction.
(xiv) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(xv) The Company and the Subsidiary own or possess
adequate licenses or other rights to use all patents, patent rights inventions,
trade secrets, copyrights, trademarks, service marks, trade names, technology
and know-how currently employed or proposed to be employed by it in connection
with their business as described in the Prospectus. Neither the Company nor the
Subsidiary is obligated to pay a royalty, grant a license, or provide other
consideration to any third party in connection with its patents, copyrights,
trademarks, service marks, trade names, or technology other than royalties,
licenses or other consideration that would not be material to the business of
the Company and the Subsidiary taken as a whole or as disclosed in the
Prospectus, and except as disclosed in the Prospectus, neither the Company nor
the Subsidiary has received any notice of infringement or conflict with (and
neither the Company nor the Subsidiary knows of any infringement or conflict
with) asserted rights of others with respect to any patents, patent rights,
inventions, trade secrets, copyrights, trademarks, service marks, trade names,
technology or know-how which infringement or conflict, if the subject of an
unfavorable decision, would be material to the business of the Company and the
Subsidiary taken as a whole. Except as disclosed in the Prospectus, the
discoveries, inventions, products or processes of the Company and the Subsidiary
referred to in the Prospectus do not, to the knowledge of the Company or the
Subsidiary, infringe or conflict with any right or patent of any third party, or
any discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company or the Subsidiary,
which infringement or conflict is material to the business of the Company and
the Subsidiary taken as a whole.
(xvi) Neither the Company nor, to the Company's
knowledge, any of its affiliates has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted 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
Shares.
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(xvii) Neither the Company nor the Subsidiary is, and
after giving effect to the offering and sale of the Shares and the application
of the proceeds thereof as described in the Prospectus neither the Company nor
the Subsidiary will be, an "investment company" or an "affiliated person" of or
"promoter" or "principal underwriter" for an "investment company," within the
meaning of such terms under the Investment Company Act of 1940, (as amended, the
"1940 ACT") and the rules and regulations of the Commission thereunder.
(xviii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xix) The Company and the Subsidiary carry, or is
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(xx) The Company 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"), the violation of which would have a
material adverse effect on the earnings, business, management, properties,
assets, rights, operations or condition (financial or otherwise) of the Company;
no "reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would have any
material liability; the Company has not incurred and does not expect 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 would have any material 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.
(xxi) To the Company's knowledge, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater securityholders, except as set
forth in the Registration Statement.
(xxii) The Company has full corporate power and
authority to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation the Company enforceable
in accordance with its terms except as rights to indemnity and contribution
hereunder may be limited as a matter of applicable public policy or by
applicable laws and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally, or by general equitable principles.
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(xxiii) The execution and delivery of the Agreement and
Plan of Merger dated as of May 7, 1999 (the "MERGER AGREEMENT") between Skechers
U.S.A., Inc., a California corporation (the "CALIFORNIA CORPORATION"), and the
Company, effecting the reincorporation of the California Corporation under the
laws of the State of Delaware, was duly authorized by all necessary corporate
action on the part of each of the California Corporation and the Company. Each
of the California Corporation and the Company had all corporate power and
authority to execute and deliver the Merger Agreement, to file the Merger
Agreement with the Secretary of State of California and the Secretary of State
of Delaware and to consummate the reincorporation contemplated by the Merger
Agreement, and the Merger Agreement at the time of execution and filing
constituted a valid and binding obligation of each of the California Corporation
and the Company, enforceable in accordance with its terms and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by general equitable principles.
(xxiv) No material labor dispute with the employees of
the Company or the Subsidiary exists, except as described in the Prospectus, or,
to the knowledge of the Company and the Subsidiary, is imminent.
(xxv) No business relationship, or related party
transactions, exists between or among the Company or the Subsidiary, on the one
hand, and the directors officers, stockholders, customers or suppliers of the
Company or the Subsidiary, on the one hand, which is required to be described in
the Prospectus that is not so described.
(xxvi) Neither the Company nor the Subsidiary, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or the Subsidiary, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provisions of the Foreign Corrupt Practices Act of 1972; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(xxvii) Neither the Company nor the Subsidiary is a
"passive foreign investment company" within the meaning of Section 1296 of the
Code for its taxable year which includes the date hereof and to the knowledge of
the Company and the Subsidiary, neither the Company nor the Subsidiary will be a
"passive foreign investment company" for the subsequent taxable year.
(xxviii) Except as disclosed in the Prospectus, there is
no (i) administrative or judicial proceeding pending or, to the Company's
knowledge, threatened to which the Company or the Subsidiary is a party or to
which any of the properties of the Company or the Subsidiary is subject arising
under any Federal, state or local provisions that have been enacted or adopted
regulating the discharge of materials into the environment or primarily for the
purpose of protecting the environment; or (ii) material adverse effect upon the
Company or the Subsidiary arising from compliance with Federal, state and local
provisions which have been enacted or adopted regulating the discharge of
materials into the environment or otherwise relating to the protection of the
environment.
(xxix) For all periods from its election under
Subchapter S of the Code until [__________, 1999] (the "TERMINATION DATE"), the
California Corporation was qualified as an S
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Corporation pursuant to an election validly made under Subchapter S of the Code
and any applicable state statute (which election has not been and will not be
revoked or terminated for any such period) and the California Corporation has
not been and will not be subject to Federal corporate taxes for such periods.
The Subchapter S election of the California Corporation will be terminated on
the Termination Date, and the Company will be subject to federal corporate
income taxes from and after the date of such termination but not for any prior
period. In connection with the termination, income and loss of the California
Corporation for the S termination year will not be allocated pro rata under
Section 1362(e) of the Code.
(xxx) The Final 1998 Distribution and the Final Tax
Distribution (as such terms are defined in the Prospectus) are legal and valid
under Section 170 of the Delaware General Corporation Law and, to the extent
applicable, Section 500 of the California General Corporation Law.
(b) Each of the Selling Stockholders severally represents and
warrants as follows:
(i) Such Selling Stockholder now has and at the Option
Closing Date (as such date is hereinafter defined) will have good and marketable
title to the Firm Shares and the Option Shares to be sold by such Selling
Stockholder, free and clear of any liens, encumbrances, equities and claims, and
full right, power and authority to effect the sale and delivery of such Firm
Shares and Option Shares; and upon the delivery of, against payment for, such
Firm Shares and Option Shares pursuant to this Agreement, the Underwriters will
acquire good and marketable title thereto, free and clear of any liens,
encumbrances, equities and claims.
(ii) This Agreement has been duly authorized, executed
and delivered by such Selling Stockholder and constitutes a valid and binding
obligation of such Selling Stockholder enforceable in accordance with its terms
except as rights to indemnity and contribution hereunder may be limited as a
matter of applicable public policy or by applicable laws and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by general equitable principles. Such Selling Stockholder has full right, power
and authority to execute and deliver this Agreement, the Power of Attorney and
the Custody Agreement referred to below and to perform its obligations under
such Agreements. The execution and delivery of this Agreement and the
consummation by such Selling Stockholder of the transactions herein contemplated
and the fulfillment by such Selling Stockholder of the terms hereof will not
require any consent, approval, authorization, or other order of any court,
regulatory body, administrative agency or other governmental body (except as may
be required under the Act, state securities laws or Blue Sky laws) and will not
result in a breach of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Stockholder is a party, or of any order, rule
or regulation applicable to such Selling Stockholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction the effect of which would prevent consummation of the transactions
contemplated hereby.
(iii) Such Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock of the Company
and, other than as permitted by the Act, such Selling Stockholder will not
distribute any prospectus or other offering material in connection with the
offering of the Shares.
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(iv) Such Management Selling Stockholder is familiar
with the Registration Statement and has no knowledge of any material fact,
condition or information not disclosed in the Registration Statement which has
materially adversely affected or may materially adversely affect the business of
the Company or the Subsidiary; and the sale of the Firm Shares and the Option
Shares by such Management Selling Stockholder pursuant hereto is not prompted by
any information concerning the Company or the Subsidiary which is not set forth
in the Registration Statement. The information pertaining to such Selling
Stockholder under the caption "Principal Stockholders" in the Prospectus is
complete and accurate in all material respects.
(v) The information pertaining to such Selling
Stockholder under the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Sellers agree to sell to the Underwriters and each Underwriter agrees, severally
and not jointly, to purchase, at a price of $_____ [net price] per share, the
number of Firm Shares set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.
The number of Firm Shares to be purchased by each Underwriter from each Seller
shall be as nearly as practicable in the same proportion to the total number of
Firm Shares being sold by each Seller as the number of Firm Shares being
purchased by each Underwriter bears to the total number of Firm Shares to be
sold hereunder. The obligations of the Company and of each of the Selling
Stockholders shall be several and not joint.
(b) Payment for the Firm Shares to be sold hereunder is to be
made in Federal (same day) funds to an account designated by the Company for the
shares to be sold by it and to accounts designated by the Selling Stockholders
for the shares to be sold by the Selling Stockholders, in each case against
delivery of certificates therefor to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be made through
the facilities of the Depository Trust Company at 10:00 a.m., New York time, on
the third business day after the date of this Agreement or at such other time
and date not later than five business days thereafter as you and the Company
shall agree upon, such time and date being herein referred to as the "CLOSING
DATE." (As used herein, "BUSINESS DAY" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York are open for
business and not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives request in writing not later than the
second full business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day prior to the
Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Principal Selling Stockholder hereby grants an option to the several
Underwriters to purchase the Option Shares at the price per share as set forth
in the first paragraph of this Section 2. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time before
the Closing Date and (ii) only once thereafter within 30 days after the date of
this Agreement, by you, as Representatives of the several Underwriters, to the
Attorney-in-Fact and the Custodian setting forth the number of Option Shares as
to which the several Underwriters are exercising
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the option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to be delivered.
The time and date at which certificates for Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than three
nor later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred to
as the "OPTION CLOSING DATE"). If the date of exercise of the option is three or
more days before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be purchased by
each Underwriter shall be in the same proportion to the total number of Option
Shares being purchased as the number of Firm Shares being purchased by such
Underwriter bears to the total number of Firm Shares, adjusted by you in such
manner as to avoid fractional shares. The option with respect to the Option
Shares granted hereunder may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters. You, as Representatives of the
several Underwriters, may cancel such option at any time prior to its expiration
by giving written notice of such cancellation to either of the
Attorneys-in-Fact. To the extent, if any, that the option is exercised, payment
for the Option Shares shall be made on the Option Closing Date in Federal (same
day) funds drawn to the order of "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and M. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as
Trustees of the ▇▇▇▇▇▇▇▇▇ Family Trust" against delivery of certificates
therefor through the facilities of the Depository Trust Company, New York, New
York.
(d) Certificates in negotiable form for the total number of the
Shares to be sold hereunder by the Selling Stockholders have been placed in
custody with American Stock Transfer and Trust Company as custodian (the
"CUSTODIAN") pursuant to the Custody Agreement executed by each Selling
Stockholder for delivery of all Firm Shares and Option Shares to be sold
hereunder by the Selling Stockholders. Each of the Selling Stockholders
specifically agrees that the Firm Shares and Option Shares represented by the
certificates held in custody for the Selling Stockholders under the Custody
Agreement are subject to the interests of the Underwriters hereunder, that the
arrangements made by the Selling Stockholders for such custody are to that
extent irrevocable, and that the obligations of the Selling Stockholders
hereunder shall not be terminable by any act or deed of the Selling Stockholders
(or by any other person, firm or corporation including the Company, the
Custodian or the Underwriters) or by operation of law (including the death of an
individual Selling Shareholder or the dissolution or other termination of a
Selling Stockholder that is a trust) or by the occurrence of any other event or
events, except as set forth in the Custody Agreement. If any such event should
occur prior to the delivery to the Underwriters of the Firm Shares or the Option
Shares hereunder, certificates for the Firm Shares or the Option Shares shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such event has not occurred. The Custodian is authorized to
receive and acknowledge receipt of the proceeds of sale of the Shares held by it
against delivery of such Shares.
(e) If on the Closing Date or Option Closing Date, as the case
may be, any Selling Stockholder fails to sell the Firm Shares or Option Shares
which such Selling Stockholder has agreed to sell on such date as set forth in
Schedule II hereto, the Company agrees that it will sell or arrange for the sale
of that number of shares of Class A Common Stock to the Underwriters which
represents the Firm Shares or Option Shares which such Selling Stockholder has
failed to so sell, as set forth in Schedule II hereto, or such lesser number as
may be requested by the Representatives.
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3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the
Representatives for the Underwriters in the offering and sale of the Shares in
accordance with a Master Agreement Among Underwriters entered into by you and
the several other Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will (A) use its best efforts to cause
the Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company will advise the Representatives
promptly (A) when the Registration Statement or any post-effective amendment
thereto shall have become effective, (B) of receipt of any comments from the
Commission, (C) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(iii) The Company will cooperate with the
Representatives in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions as the Representatives may reasonably have
designated in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose,
provided 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 where it
is not now so qualified or required to file such a consent. The Company will,
from time to time, prepare and file such statements, reports, and other
documents, as are or may be required to
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continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of,
the Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representatives such number of copies of the
Registration Statement (including such number of copies of the exhibits filed
therewith that may reasonably be requested), and of all amendments thereto, as
the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules
and Regulations, and the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the rules and regulations of the Commission thereunder, so
as to permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so made
available.
(vii) Prior to the Closing Date, the Company will
furnish to the Underwriters, as soon as they have been prepared by or are
available to the Company, a copy of any unaudited interim financial statements
of the Company for any period subsequent to the period covered by the most
recent financial statements appearing in the Registration Statement and the
Prospectus.
(viii) No offering, sale, short sale or other
disposition of any shares of Common Stock of the Company or other securities
convertible into or exchangeable or exercisable for shares of Common Stock or
derivative of Common Stock (or agreement for such) will be made for a period of
180 days after the date of this Agreement, directly or indirectly, by the
Company otherwise than hereunder or with the prior written consent of BT Alex.
▇▇▇▇▇ Incorporated, except for the grant of options to purchase shares of Common
Stock pursuant to the 1998 Stock Option, Deferred Stock and Restricted Stock
Plan and shares of Common Stock issued pursuant to the exercise of options
granted under such plan and the grant of
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purchase rights and issuance of shares under the 1998 Employee Stock Purchase
Plan, provided that such options and grants shall not vest, or the Company shall
obtain the written consent of the holder thereof not to transfer such shares,
until the end of such 180-day period.
(ix) The Company will list, subject to notice of
issuance, the Shares on the New York Stock Exchange.
(x) The Company has caused each officer, director,
stockholder and optionholder of the Company to furnish to you, on or prior to
the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person agrees,
subject to certain limited exceptions set forth therein, not to offer, pledge,
sell, contract to sell, sell any option or contract to purchase, sell short,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or enter into any swap or similar agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Common Stock, for a period commencing on the date of the Prospectus and
continuing to a date 180 days after such date, except with the prior written
consent of BT Alex. ▇▇▇▇▇ Incorporated ("LOCKUP AGREEMENTS").
(xi) The Company has caused each stockholder of the
Company to enter into, on or prior to the date of this agreement, an S
Corporation Termination, Tax Allocation and Indemnification Agreement
substantially in the form filed as an exhibit to the Registration Statement (the
"S CORPORATION AGREEMENT").
(xii) The Company shall apply the net proceeds of its
sale of the Shares as set forth in the Prospectus and shall include such
disclosure in reports with the Commission with respect to the sale of the Shares
and the application of the proceeds therefrom as may be required in accordance
with Rule 463 under the Act.
(xiii) The Company shall not invest, or otherwise use
the proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company or the Subsidiary to register as an
investment company under the 1940 Act.
(xiv) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Class A Common Stock.
(xv) The Company will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
(b) Each of the Selling Stockholders covenants and agrees with
the several Underwriters that:
(i) The Selling Stockholder will not offer, pledge,
sell, contract to sell, sell any option or contract to purchase, sell short,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or
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any securities convertible into or exercisable or exchangeable for Common Stock,
or enter into any swap or similar agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock, for a period
commencing on the date of the Prospectus and continuing to a date 180 days after
such date, otherwise than hereunder or with the prior written consent of Alex.
▇▇▇▇▇ & Sons Incorporated; provided, however, that such restrictions shall not
apply to the Shares; and, provided, further, that such restrictions shall not
apply to shares of Class A Common Stock purchased by the Selling Stockholder in
the open market following the offering of the Shares.
(ii) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, the Selling
Stockholder agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-8 or W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(iii) The Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Sellers under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company and the Selling Stockholders; the cost of printing and delivering to, or
as requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, this Agreement, the Underwriters'
Selling Memorandum, the Underwriters' Invitation Letter, the Listing
Application, the Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements) incident to securing any required review by the NASD of
the terms of the sale of the Shares; the Listing Fee of the New York Stock
Exchange; and the expenses, including the fees and disbursements of counsel for
the Underwriters, incurred in connection with the qualification of the Shares
under state securities or Blue Sky laws. To the extent, if at all, that any of
the Selling Stockholders engage special legal counsel to represent it in
connection with this offering, the fees and expenses of such counsel shall be
borne by such Selling Stockholder. Any transfer taxes imposed on the sale of the
Shares to the several Underwriters will be paid by the Sellers pro rata. The
Company agrees to pay all costs and expenses of the Underwriters, including the
fees and disbursements of counsel for the Underwriters, incident to the offer
and sale of directed shares of the Class A Common Stock by the Underwriters to
employees and persons having business relationships with the Company and the
Subsidiary. The Sellers shall not, however, be required to pay for any of the
Underwriters expenses (other than those related to qualification under NASD
regulation and state securities or Blue Sky laws) except that, if this Agreement
shall not be consummated because the conditions in Section 6 hereof are not
satisfied, or because this Agreement is terminated by the Representatives
pursuant to Section 11 hereof, or by reason of any failure, refusal or inability
on the part of the Company or the Selling Stockholders to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on their part to be performed, unless such failure to satisfy
said condition or to comply with said terms is due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters for
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reasonable out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations hereunder;
but the Company and the Selling Stockholders shall not in any event be liable to
any of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and warranties of the Company
and the Selling Stockholders contained herein, and to the performance by the
Company and the Selling Stockholders of their covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or the Selling Stockholders, shall be
contemplated by the Commission and no injunction, restraining order, or order of
any nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Freshman,
Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇ ("FMOCK"), counsel for the Company and the
Selling Stockholders, dated the Closing Date or the Option Closing Date, as the
case may be, addressed to the Underwriters (and stating that it may be relied
upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; the Subsidiary
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement; the Company and the Subsidiary are duly
qualified to transact business in all jurisdictions in which the conduct of
their business requires such qualification, except where the failure to be so
qualified would not have a materially adverse effect upon the business of the
Company and the Subsidiary taken as a whole; and the outstanding shares of
capital stock of the Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable and are owned by the Company; and, to the best
of such counsel's knowledge, the outstanding shares of capital stock of the
Subsidiary are owned free and clear of all liens, encumbrances and equities and
claims, and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to
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convert any obligations into any shares of capital stock or of ownership
interests in the Subsidiary are outstanding.
(ii) To such counsel's knowledge, except for the
Subsidiary, the Company does not own or control, directly or indirectly, any
corporation, association or other entity;
(iii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly authorized; the
outstanding shares of the Company's Common Stock, including the Shares to be
sold by the Selling Stockholders, have been duly authorized and validly issued
and are fully paid and non-assessable; all of the Shares conform to the
description thereof contained in the Prospectus; the certificates for the
Shares, assuming they are in the form filed with the Commission, are in due and
proper form; the shares of Common Stock, including the Option Shares, if any, to
be sold by the Company pursuant to this Agreement have been duly authorized and
will be validly issued, fully paid and non-assessable when issued and paid for
as contemplated by this Agreement; and no preemptive rights of stockholders
arising under the Company's Certificate of Incorporation or, to such counsel's
knowledge, otherwise exist with respect to any of the Shares or the issue or
sale thereof.
(iv) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(v) The Registration Statement has become effective
under the Act and, to such counsel's knowledge, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the Act.
(vi) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules therein).
(vii) The statements (A) in the Prospectus under the
captions "Risk Factors--Anti-Takeover Provisions, "Risk Factors--Shares Eligible
for Future Sale," "Management," "Certain Transactions," "Description of Capital
Stock" and "Shares Eligible for Future Sale; Registration Rights" and (B) in the
Registration Statement in Items 14 and 15, in each case insofar as such
statements constitute a summary of documents referred to therein or matters of
law, fairly summarize in all material respects the information called for with
respect to such documents and matters.
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(viii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(ix) Such counsel knows of no legal or governmental
proceedings pending or threatened against the Company or the Subsidiary, except
as set forth in the Prospectus, which, if determined adversely to the Company
would have a material adverse effect on the business of the Company.
(x) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under any agreement or instrument known to such counsel to
which the Company or the Subsidiary is a party or by which the Company or the
Subsidiary may be bound, which default would have a material adverse effect on
the business of the Company and the Subsidiary, taken as a whole, or affect the
ability of the Company to consummate the transactions contemplated hereby or
under the Certificate of Incorporation or Bylaws of the Company.
(xi) This Agreement has been duly authorized, executed
and delivered by the Company.
(xii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by state
securities and Blue Sky laws as to which such counsel need express no opinion)
except such as have been obtained or made, specifying the same.
(xiii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiv) Each of this Agreement, the Power of Attorney and
the Custody Agreement has been duly authorized, executed and delivered on behalf
of the Selling Stockholders.
(xv) Each Selling Stockholder has full legal right,
power and authority, and any approval required by law (other than as required by
state securities and Blue Sky laws as to which such counsel need express no
opinion), to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder.
(xvi) The Custody Agreement and the Power of Attorney
executed and delivered by the Selling Stockholders is valid and binding.
(xvii) To our knowledge, the Underwriters (assuming that
they are bona fide purchasers within the meaning of the Uniform Commercial Code)
have acquired good and marketable title
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to the Shares being sold by the Selling Stockholders on the Closing Date, and
the Option Closing Date, as the case may be, free and clear of all liens,
encumbrances, equities and claims.
In rendering such opinion FMOCK may rely as to matters governed
by the laws of states other than Delaware or Federal laws on local counsel in
such jurisdictions, provided that in each case FMOCK shall state that they
believe that they and the Underwriters are justified in relying on such other
counsel. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement, at the
time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to such
statement, FMOCK may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(c) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, special intellectual property counsel for the Company, dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) the Company is listed in the records of the United
States Patent and Trademark Office ("PTO") as the holder of record of the
registered trademarks consisting of "SKECHERS" and the "S in Shield design"
(collectively, the "TRADEMARKS"). To such counsel's knowledge, there is no claim
of any party other than the Company to any ownership interest or lien with
respect to any of the Trademarks. As of March 31, 1999, to the best of such
counsel's knowledge based on information provided by local counsel, the Company
has a valid registered trademark or trademark application relating to the
Trademarks in each of the foreign jurisdictions listed on Exhibit A;
(ii) the statements in the Prospectus under the captions
"Risk Factors--Ability to Protect Intellectual Property," and
"Business--Intellectual Property Rights" (the "INTELLECTUAL PROPERTY PORTIONS"),
to our knowledge, insofar as such statements relate to trademarks, patents,
intellectual property or any legal matters, documents and proceedings relating
thereto fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein.
(iii) to such counsel's knowledge, except as set forth
in the Prospectus or otherwise disclosed to the Underwriters in writing, there
is not pending or threatened in writing any action, suit, proceeding or claim by
others (A) challenging the validity or scope of the Trademarks or any other
material trademarks, trademark applications or domain names held by or licensed
to the Company, or (B) , asserting that any trademark is infringed by the
activities of the Company described in the Prospectus or by
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the manufacture, use, sale, promotion or advertising of any of the Company's
products or use of its domain names.
(iv) to such counsel's knowledge, except as set forth in
the Prospectus or otherwise disclosed to the Underwriters in writing, there is
not pending or threatened in writing any action, suit, proceeding or claim by
the Company asserting infringement on the part of any third party of the
Trademarks or any other trademarks, domain names, trade names or advertising
slogans held by or licensed to the Company that are material to the business of
the Company.
(d) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation ("WSGR"), counsel for the
Underwriters, an opinion dated the Closing Date or the Option Closing Date, as
the case may be, substantially to the effect specified in subparagraphs (ii) (as
to matters relating to the shares only), (iv) and (ix) of Paragraph (b) of this
Section 6, and that the Company is a duly organized and validly existing
corporation under the laws of the State of Delaware. In rendering such opinion
WSGR may rely as to all matters governed other than by the laws of the State of
Delaware or Federal laws on the opinion of counsel referred to in Paragraph (b)
of this Section 6. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the Registration
Statement, or any amendment thereto, as of the time it became effective under
the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, WSGR may state
that their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(e) You shall have received, on each of the dates hereof, the
Closing Date and the Option Closing Date, as the case may be, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to you, of KPMG LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company,
signing on behalf of the Company, to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be, each of them severally represents
as follows:
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20
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been taken
or are, to the Company's knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Act have been made;
(iv) As of the effective date of the Registration
Statement, the statements contained in the Registration Statement were true and
correct, and such Registration Statement and Prospectus did not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set forth
in a supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment; and
(v) Since the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and the Subsidiary taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiary taken as a whole,
whether or not arising in the ordinary course of business.
(g) The Firm Shares and Option Shares, if any, shall have been
listed subject to notice of issuance on the New York Stock Exchange.
(h) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by the Selling Stockholders (or
by their attorney-in-fact on their behalf), to the effect that the
representations and warranties of the Selling Stockholders contained in Section
1 of this Agreement are true and correct as of the Closing Date and that each
Selling Shareholder has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on or prior to
before the Closing Date
(i) The Lockup Agreements described in Section 4(x) shall have
been delivered to the Company and shall not have been amended.
(j) The S Corporation Agreement described in Section 4(xi) shall
have been delivered to the Company and shall not have been amended.
The opinions and certificates mentioned in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to WSGR, counsel for
the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters
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hereunder may be terminated by the Representatives by notifying the Company and
the Selling Stockholders of such termination in writing or by telegram at or
prior to the Closing Date or the Option Closing Date, as the case may be.
In such event, the Selling Stockholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7 CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion
of the Shares required to be delivered as and when specified in this Agreement
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8 INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading any act or failure to act, or (iii) any
alleged act or failure to act by any Underwriter in connection with, or relating
in any manner to, the Shares 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 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);
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof.
(2) to reimburse each Underwriter and each such
controlling person upon demand for any legal or other out-of-pocket expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Shares, whether or not such Underwriter or
controlling person is a party to any action or proceeding. In the event that it
is finally judicially determined that the Underwriters were not entitled to
receive payments for
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legal and other expenses pursuant to this subparagraph, the Underwriters will
promptly return all sums that had been advanced pursuant hereto.
(b) The Selling Stockholders agree to indemnify the Underwriters
and each person, if any, who controls any Underwriter within the meaning of the
Act, against any losses, claims, damages or liabilities to which such
Underwriter or controlling person may become subject under the Act or otherwise
to the same extent as indemnity is provided by the Company pursuant to Section
8(a) above. In no event, however, shall the liability of any Selling Stockholder
for indemnification under this Section 8(a) exceed sum of (i) the proceeds
received by such Selling Stockholder from the Underwriters in the offering and
(ii), in the case of the Principal Selling Stockholder, the lesser of (A) the
amount received by such Principal Selling Stockholder in repayment of promissory
notes issued by the Company, which had an aggregate of $12.2 million principal
amount at December 31, 1998, and (B) $10.0 million. This indemnity obligation
will be in addition to any liability which the Company may otherwise have.
(c) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement, the Selling Stockholders, and each
person, if any, who controls the Company or the Selling Stockholders within the
meaning of the Act, against any losses, claims, damages or liabilities to which
the Company or any such director, officer, Selling Stockholders or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse upon demand any legal or other expenses reasonably incurred by
the Company or any such director, officer, Selling Stockholders or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing. No
indemnification provided for in Section 8(a), (b) or (c) shall be available to
any party who shall fail to give notice as provided in this Section 8(d) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a), (b) or (c). In case any such proceeding shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
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thereof, with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) or (b) and by the Company and the Selling Stockholders
in the case of parties indemnified pursuant to Section 8(c). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding of which indemnification may be sought hereunder (whether or not
any indemnified party is an actual or potential party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Stockholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
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Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 8(e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Section 8(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (e), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation, and (iii)
the Selling Stockholders shall not be required to contribute any amount in
excess of the sum of (x) the proceeds received by such Selling Stockholder from
the Underwriters in the offering and (y) in the case of the Principal Selling
Stockholder, the lesser of (A) the amount received by such Principal Selling
Stockholder in repayment of promissory notes issued by the Company, which had an
aggregate of $12.2 million principal amount at December 31, 1998, and (B) $10.0
million. The Underwriters' obligations in this Section 8(e) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(f) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Selling Stockholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
8.
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9 DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or the
Selling Stockholders), you, as Representatives of the Underwriters, shall use
your reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Selling
Stockholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Stockholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Stockholders
except to the extent provided in Section 8 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 9, the Closing
Date or Option Closing Date, as the case may be, may be postponed for such
period, not exceeding seven days, as you, as Representatives, may determine in
order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10 NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to BT Alex. ▇▇▇▇▇
Incorporated, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇; with a copy to BT Alex. ▇▇▇▇▇ Incorporated, One Bankers Trust Plaza, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; if to the
Company or the Selling Stockholders, to ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
-▇▇-
▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
(▇) This Agreement may be terminated by you by notice to the
Sellers at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and the Subsidiary taken as a
whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
the Subsidiary taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) suspension of trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange, (iv) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or New York
State authorities, (vi) any downgrading, or placement on any watch list for
possible downgrading, in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Exchange Act); (vii) the suspension of trading of the
Company's Class A Common Stock by the New York Stock Exchange, the Commission,
or any other governmental authority or, (viii) the taking of any action by any
governmental or regulatory body or agency in respect of its monetary or fiscal
affairs which in your reasonable opinion has a material adverse effect on the
securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12 SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Underwriters, the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13 INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished by
any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
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14 MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Stockholders, the
Company and the several Underwriters in accordance with its terms.
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
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Very truly yours,
SKECHERS U.S.A., INC.
By:_________________________________
Chief Executive Officer
MANAGEMENT SELLING STOCKHOLDERS
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and M. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ as Trustees of The
▇▇▇▇▇▇▇▇▇ Family Trust
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
____________________________________
M. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE II HERETO, ACTING SEVERALLY
By:_________________________________
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of the
date first above written.
BT ALEX. ▇▇▇▇▇ INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several Underwriters
listed on Schedule I
By: BT Alex. ▇▇▇▇▇ Incorporated
By:_______________________________
Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------------
BT Alex. ▇▇▇▇▇ Incorporated..........................................
Prudential Securities Incorporated...................................
Total
-------------------
30
SCHEDULE II
SCHEDULE OF SELLING STOCKHOLDERS
NUMBER OF FIRM SHARES
SELLING STOCKHOLDER TO BE PURCHASED
------------------- ---------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and M. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as trustees of the
▇▇▇▇▇▇▇▇▇ Family Trust............................................. 1,361,427
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 142,857
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 71,429
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 71,429
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 71,429
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 71,429
Total 1,790,000