Exhibit 1.1
___________ Shares of Class B Common Stock
PLAYBOY ENTERPRISES, INC.
UNDERWRITING AGREEMENT
April __, 2004
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
As Representative of the
several Underwriters named in
Schedule I attached hereto (the "Representative")
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Playboy Enterprises, Inc., a corporation organized and existing under
the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of ___________ shares (the
"Company Shares") of its Class B common stock, par value $0.01 per share (the
"Common Stock"). The shareholders of the Company listed on Schedule II hereto
(the "Selling Shareholders") severally propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of
___________ shares of Common Stock (the "Selling Shareholders' Shares" and
together with the Company Shares, the "Firm Shares"). For the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, at the
option of the Underwriters, the Company also proposes, subject to the terms and
conditions stated herein, to issue and sell to the Underwriters up to an
additional ___________ shares of Common Stock (the "Additional Shares"). The
Firm Shares and any Additional Shares purchased by the Underwriters are referred
to herein as the "Shares". The Shares are more fully described in the
Registration Statement and Prospectus referred to below. Bear, ▇▇▇▇▇▇▇ & Co.
Inc. ("Bear ▇▇▇▇▇▇▇") and Banc of America Securities LLC are acting as lead
managers (the "Lead Managers") in connection with the offering and sale of the
Shares contemplated herein (the "Offering").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-112682), and amendments thereto, and related preliminary prospectuses for
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the Shares which registration
1
statement, as so amended (including post-effective amendments, if any), has been
declared effective by the Commission and copies of which have heretofore been
delivered to the Underwriters. The registration statement, as amended at the
time it became effective, including the prospectus, financial statements,
schedules, exhibits and other information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A or
434(d) under the Securities Act, is hereinafter referred to as the "Registration
Statement." If the Company has filed or is required pursuant to the terms hereof
to file a registration statement pursuant to Rule 462(b) under the Securities
Act registering additional shares of Common Stock (a "Rule 462(b) Registration
Statement"), then, unless otherwise specified, any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission. All of the
Shares have been registered under the Securities Act pursuant to the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. No stop order suspending the effectiveness of
either the Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or,
to the Company's knowledge, threatened by the Commission. The Company, if
required by the Securities Act and the rules and regulations of the Commission
(the "Rules and Regulations"), proposes to file the Prospectus with the
Commission pursuant to Rule 424(b) under the Securities Act ("Rule 424(b)"). The
prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b), or, if the prospectus is not to be filed with the Commission
pursuant to Rule 424(b), the prospectus in the form included as part of the
Registration Statement at the time the Registration Statement became effective,
is hereinafter referred to as the "Prospectus," except that if any revised
prospectus or prospectus supplement shall be provided to the Underwriters by the
Company for use in connection with the Offering which differs from the
Prospectus (whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b)), the term
"Prospectus" shall refer to such revised prospectus or prospectus supplement, as
the case may be, from and after the time it is first provided to the
Underwriters for such use. Any preliminary prospectus or prospectus subject to
completion included in the Registration Statement or filed with the Commission
pursuant to Rule 424 under the Securities Act is hereafter called a "Preliminary
Prospectus." Any reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the effective date of the Registration Statement,
the date of such Preliminary Prospectus or the date of the Prospectus, as the
case may be, and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include (i) the
filing of any document under the Exchange Act after the effective date of the
Registration Statement, the date of such Preliminary Prospectus or the date of
the Prospectus, as the case may be, which is incorporated therein by reference
and (ii) any such document so filed. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a Preliminary
Prospectus and the Prospectus, or any amendments or supplements to any of the
foregoing shall be deemed to include any copy thereof filed with the
- 2 -
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("▇▇▇▇▇").
(b) At the time of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 under the
Securities Act ("Rule 434"), when any supplement to or amendment of the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed and at the Closing Date and the Additional Closing
Date, if any (as hereinafter respectively defined), the Registration Statement
and the Prospectus and any amendments thereof and supplements thereto complied
or will comply in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the Rules and Regulations and did not and
will not contain an untrue statement of a material fact and did not and will not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein (i) in the case of the Registration
Statement, not misleading and (ii) in the case of the Prospectus or any related
Preliminary Prospectus in light of the circumstances under which they were made,
not misleading. When the Preliminary Prospectus, dated April [?], 2004 (the
"April Preliminary Prospectus") was first filed with the Commission and when any
amendment thereof or supplement thereto was first filed with the Commission,
such April Preliminary Prospectus and any amendments thereof and supplements
thereto complied in all material respects with the applicable provisions of the
Securities Act and the Rules and Regulations and did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Company will comply with the requirements
of Rule 434. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter for use therein. The parties acknowledge and agree that such
information provided by or on behalf of any Underwriter consists solely of the
material included in paragraphs 5, 8 (including in the bullet points set forth
below such paragraph) and 12 under the caption "Underwriting" in the Prospectus.
The documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, or any further
amendment or supplement thereto, when such documents become effective or are
filed with the Commission, as the case may be, complied or will comply in all
material respects to the requirements of the Securities Act, the Exchange Act
and the Rules and Regulations, as applicable, and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
(c) Ernst & Young LLP, who have certified the financial
statements and supporting schedules and information of the Company and its
subsidiaries that are included or incorporated by reference in the Registration
Statement or the Prospectus are independent public accountants as required by
the Securities Act and the Rules and Regulations.
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
disclosed in the Registration
- 3 -
Statement and the Prospectus, (i) the Company has not declared, paid or made any
dividends or other distributions of any kind on or in respect of its capital
stock, except for regular dividends on the outstanding shares of the Company's
Series A Preferred Stock (the "Preferred Stock") in accordance with its terms,
and (ii) there has been no material adverse change or any development involving
a prospective material adverse change, whether or not arising from transactions
in the ordinary course of business, in or affecting (A) the business, condition
(financial or otherwise), results of operations, shareholders' equity or
properties of the Company and the subsidiaries of the Company listed on Exhibit
21 to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 (the "Subsidiaries"), taken as a whole, or (B) the capital
stock of the Company or any of its Subsidiaries (each, a "Material Adverse
Change"). Since the date of the latest balance sheet presented, or incorporated
by reference, in the Registration Statement and the Prospectus, neither the
Company nor any Subsidiary has incurred or undertaken any liabilities or
obligations, whether direct or indirect, liquidated or contingent, matured or
unmatured, or entered into any transactions, including any acquisition or
disposition of any business or asset, in each case, which are material to the
Company and the Subsidiaries taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Registration Statement
and the Prospectus.
(e) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column headed "Actual"
under the caption "Capitalization" and, after giving effect to the Offering and
the other transactions contemplated by this Agreement, the Registration
Statement and the Prospectus, will be as set forth in the column headed "As
Adjusted" under the caption "Capitalization". All of the issued and outstanding
shares of capital stock of the Company are fully paid and non-assessable and
have been duly and validly authorized and issued, in compliance with all
applicable state, federal and foreign securities laws and not in violation of or
subject to any preemptive or similar right that does or will entitle any person,
upon the issuance or sale of any security, to acquire from the Company or any
Subsidiary any Common Stock or other security of the Company or any Subsidiary
or any security convertible into, or exercisable or exchangeable for, Common
Stock or any other such equity security (any "Relevant Security"), except for
such rights as may have been fully satisfied or waived prior to the
effectiveness of the Registration Statement. The Shares to be delivered on the
Closing Date and the Additional Closing Date, if any (as hereinafter
respectively defined), have been duly and validly authorized and, when delivered
in accordance with this Agreement, will be duly and validly issued, fully paid
and non-assessable, will have been issued in compliance with all applicable
state, federal and foreign securities laws and will not have been issued in
violation of or subject to any preemptive or similar right that does or will
entitle any person to acquire any Relevant Security from the Company or any
Subsidiary upon issuance or sale of Shares in the Offering. The Common Stock and
the Shares conform as to legal matters to the descriptions thereof contained in
the Registration Statement and the Prospectus. Except as disclosed in the
Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has outstanding warrants, options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, or any contracts or
commitments to issue or sell, any Relevant Security.
(f) The Subsidiaries and Playboy of Sussex, Inc., Playboy of
▇▇▇▇▇, Inc., Playboy Club of Hollywood, Inc., Playboy Club of New York, Inc. and
Steelton, Inc. are
- 4 -
the only subsidiaries of the Company within the meaning of Rule 405 under the
Securities Act. Except for the Subsidiaries and Playboy of Sussex, Inc., Playboy
of ▇▇▇▇▇, Inc., Playboy Club of Hollywood, Inc., Playboy Club of New York, Inc.
and Steelton, Inc. and as otherwise disclosed in the Registration Statement and
the Prospectus, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity. All of the issued shares of capital stock of or other
ownership interests in each Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable and, except as set forth in the
Prospectus, are owned directly or indirectly by the Company free and clear of
any lien, charge, mortgage, pledge, security interest, claim or encumbrance (any
"Lien").
(g) Each of the Company and the Subsidiaries has been duly
organized and validly exists as a corporation, partnership or limited liability
company in good standing under the laws of its jurisdiction of organization.
Each of the Company and the Subsidiaries is duly qualified to do business and is
in good standing as a foreign corporation, partnership or limited liability
company in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified
or in good standing which (individually and in the aggregate) would not
reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), results of operations, shareholders' equity
or properties of the Company and the Subsidiaries, taken as a whole (a "Material
Adverse Effect"). Each of the Company and the Subsidiaries has all requisite
power and authority, and all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses, filings and permits
(collectively, the "Consents") of, with and from all judicial, regulatory and
other legal or governmental agencies and bodies and all third parties, foreign
and domestic, to own, lease and operate its properties and conduct its business
as it is now being conducted and as disclosed in the Registration Statement and
the Prospectus, except for such Consents the absence of which would not
reasonably be expected to have a Material Adverse Effect. Each of the Company
and the Subsidiaries is in compliance with all applicable laws, rules,
regulations, ordinances, directives, judgments, decrees and orders, foreign and
domestic, except where failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect.
(h) This Agreement has been duly authorized, executed and
delivered by the Company.
(i) The execution, delivery, and performance of this
Agreement and consummation of the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus do not and will not (i) conflict
with, require consent under or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any Lien, upon any property or assets of the Company or any
Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement, instrument, franchise, license or permit to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or their respective properties, operations or assets may be bound, (ii) violate
or conflict with any provision of the certificate or articles of incorporation,
by-laws, certificate of formation, limited liability company agreement,
partnership agreement or other organizational documents of the Company or any
Subsidiary, or (iii) violate or conflict with any
- 5 -
law, rule, regulation, ordinance, directive, judgment, decree or order
applicable to the Company of any judicial, regulatory or other legal or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company, except (in the case of clauses (i) and (iii) above) as would not
reasonably be expected to have a Material Adverse Effect.
(j) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body, foreign or domestic, having
jurisdiction over the Company or any third party is required for the execution,
delivery and performance of this Agreement by the Company or consummation of the
transactions contemplated by this Agreement by the Company, including the
issuance, sale and delivery of the Shares to be issued, sold and delivered
hereunder, except the registration under the Securities Act of the Shares, which
has become effective, and such Consents as may be required under state or
foreign securities or blue sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") or NASD Regulation, Inc.
("NASDR") in connection with the purchase and distribution of the Shares by the
Underwriters, each of which has been obtained and is in full force and effect.
(k) Except as disclosed in the Registration Statement and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any Subsidiary, would reasonably be expected to have a Material Adverse
Effect; and to the Company's knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated.
(l) The financial statements, including the notes thereto,
and the supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly in all material
respects the financial position as of the dates indicated and the cash flows and
results of operations for the periods specified of the Company and its
consolidated subsidiaries; except as otherwise stated in the Registration
Statement and the Prospectus, said financial statements have been prepared in
conformity with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved; and the supporting
schedules included or incorporated by reference in the Registration Statement
and the Prospectus present fairly in all material respects the information
required to be stated therein. No other financial statements or supporting
schedules are required to be included in the Registration Statement. The other
financial information included or incorporated by reference in the Registration
Statement and the Prospectus present fairly in all material respects the
information included therein and have been prepared on a basis consistent with
that of the financial statements that are included or incorporated by reference
in the Registration Statement and the Prospectus and the books and records of
the respective entities presented therein.
(m) The statistical, industry-related and market-related data
included in the Registration Statement and the Prospectus are based on or
derived from sources which the Company in good faith believes are reliable and
accurate, and such data agree in all material respects with the sources from
which they are derived.
- 6 -
(n) The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and files reports with the Commission on
▇▇▇▇▇. The Common Stock and the Company's Class A common stock, par value $0.01
per share ("Class A common stock"), are registered pursuant to Section 12(b) of
the Exchange Act and the outstanding shares of Common Stock (including the
Shares) and Class A common stock are listed on the NYSE and the PCX (each, as
defined in Section 13(b) below) and the Company has taken no action designed to
terminate, or likely to have the effect of terminating, the registration of the
Common Stock or the Class A common stock under the Exchange Act or de-listing
the Common Stock or the Class A common stock from the NYSE or the PCX, nor has
the Company received any notification that the Commission or the NYSE or the PCX
is contemplating terminating such registrations or listings.
(o) The Company maintains a system of internal accounting
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with United States 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 accounting for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(p) Neither the Company nor to the knowledge of the Company
any of its affiliates (within the meaning of Rule 144 under the Securities Act)
has taken, directly or indirectly, any action which constitutes or is designed
to cause or result in, or which could reasonably be expected to constitute,
cause or result in, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(q) Neither the Company nor to the knowledge of the Company
any of its affiliates has, prior to the date hereof, made any offer or sale of
any securities which could be "integrated" for purposes of the Securities Act or
the Rules and Regulations with the offer and sale of the Shares pursuant to the
Registration Statement. Except as disclosed in the Registration Statement and
the Prospectus, neither Company nor to the knowledge of the Company any of its
affiliates has sold or issued any Relevant Security during the six-month period
preceding the date of the Prospectus, including but not limited to any sales
pursuant to Rule 144A or Regulation D or S under the Securities Act, other than
shares of Common Stock issued pursuant to employee benefit plans, qualified
stock option plans or the employee compensation plans or pursuant to outstanding
options, rights or warrants as described in the Registration Statement and the
Prospectus.
(r) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
- 7 -
(s) The conditions for use of Form S-3 to register the
Offering under the Securities Act, as set forth in the General Instructions to
such Form, have been satisfied.
(t) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the Rules
and Regulations, and, when read together with the other information in the
Prospectus, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements in such document, in the light of the circumstances under which they
were made, not misleading.
(u) The Company is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, and after giving effect to
application of the net proceeds of the Offering, will not be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended, and is not and will not be an entity "controlled" by an
"investment company" within the meaning of such act.
(v) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act, the Exchange Act or the Rules and
Regulations and which have not been so described or filed.
(w) No relationship, direct or indirect, exists between or
among any of the Company or, to the knowledge of the Company, any affiliate of
the Company, on the one hand, and any director, officer, or affiliate of the
Company or, to the knowledge of the Company, any shareholder, customer or
supplier of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement or the Prospectus which is not so described and described
as required. There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus. The Company has not,
in violation of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, directly or indirectly, including
through a Subsidiary, extended or maintained credit, arranged for the extension
of credit, or renewed an extension of credit, in the form of a personal loan to
or for any director or executive officer of the Company.
(x) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, shareholders, partners,
employees, Subsidiaries or affiliates that may affect the Underwriters'
compensation as determined by the NASD.
- 8 -
(y) The Company and each Subsidiary owns or leases all such
properties as are necessary to the conduct of its business as presently operated
as described in the Registration Statement and the Prospectus. The Company and
the Subsidiaries have good and marketable title to all the properties and assets
reflected as owned by them in the financial statements included in the
Prospectus, in each case free and clear of all Liens except such as are
described in the Registration Statement and the Prospectus or such as would not
reasonably be expected to have a Material Adverse Effect; and any real property
and buildings held under lease or sublease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as would not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary has received any notice of any
claim adverse to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held
under lease or sublease by the Company or any Subsidiary, which claim, if the
subject of an unfavorable decision, would reasonably be expected to have a
Material Adverse Effect.
(z) The Company and each Subsidiary (i) owns or possesses
adequate right to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures,
"Intellectual Property") reasonably necessary for the conduct of their
respective businesses as being conducted and as described in the Registration
Statement and Prospectus and (ii) have no reason to believe that the conduct of
their respective businesses does or will conflict with, and have not received
any notice of any claim of conflict with any such right of others, which
conflict would reasonably be expected to have a Material Adverse Effect. There
is no infringement by third parties of any such Intellectual Property of which
the Company is aware that would reasonably be expected to have a Material
Adverse Effect.
(aa) The Company and the Subsidiaries maintain insurance in
such amounts and covering such risks as the Company reasonably considers
adequate for the conduct of its business and the value of its properties and as
is customary for companies engaged in similar businesses in similar industries,
all of which insurance is in full force and effect, except where the failure to
maintain such insurance would not reasonably be expected to have a Material
Adverse Effect. There are no material claims by the Company or any Subsidiary
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause. The Company
reasonably believes that it will be able to renew its existing insurance as and
when such coverage expires or will be able to obtain replacement insurance
adequate for the conduct of the business and the value of its properties at a
cost that would not have a Material Adverse Effect.
(bb) The Company has in effect insurance covering the Company,
its directors, officers and the Underwriters in such amounts as it reasonably
believes to be sufficient for liabilities or losses arising in connection with
this Offering, including, without limitation, liabilities or losses arising
under the Securities Act, the Exchange Act, the Rules and Regulations and
applicable foreign securities laws.
- 9 -
(cc) Each of the Company and the Subsidiaries has accurately
prepared and timely filed all federal, state, foreign and other tax returns that
are required to be filed by it and has paid or made provision for the payment of
all taxes, assessments, governmental or other similar charges, including without
limitation, all sales and use taxes and all taxes which the Company or any
Subsidiary is obligated to withhold from amounts owing to employees, creditors
and third parties, with respect to the periods covered by such tax returns
(whether or not such amounts are shown as due on any tax return), except, in all
cases, for any such amounts that the Company is contesting in good faith and
except in any case in which the failure to so file or pay would not in the
aggregate have a Material Adverse Effect. No deficiency assessment with respect
to a proposed adjustment of the Company's or any Subsidiary's federal, state,
local or foreign taxes is pending or, to the Company's knowledge, threatened
which could reasonably be expected in the aggregate to have a Material Adverse
Effect. Since December 31, 2003, the Company and the Subsidiaries have not
incurred any material liability for taxes other than in the ordinary course of
its business. There is no material tax lien, whether imposed by any federal,
state, foreign or other taxing authority, outstanding against the assets,
properties or business of the Company or any Subsidiary except for statutory
liens for current taxes not yet due and payable.
(dd) No labor disturbance by the employees of the Company or
any Subsidiary exists or, to the Company's knowledge, is imminent and the
Company is not aware of any existing or imminent labor disturbances by the
employees of any of its or any Subsidiary's principal suppliers, manufacturers',
customers or contractors, which, in the case of any of the foregoing, would
reasonably be expected to have a Material Adverse Effect.
(ee) No "prohibited transaction" (as defined in either Section
406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")), "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or other event of the kind described in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under Section
4043 of ERISA has been waived) has occurred with respect to any employee benefit
plan for which the Company or any Subsidiary would have any liability which
could (individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect; each employee benefit plan for which the Company or any
Subsidiary would have any liability is in compliance in all material respects
with applicable law, including (without limitation) ERISA and the Code; the
Company has not incurred and does not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from any "pension
plan"; and each plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or by failure to act, which could
reasonably be expected to cause the loss of such qualification.
(ff) Except such as would not, individually or in the
aggregate, have a Material Adverse Effect, the Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other
- 10 -
approvals required of them under applicable Environmental Laws to conduct
their business and (iii) are in compliance with all terms and conditions of any
such permit, license or approval.
(gg) Neither the Company, any Subsidiary nor, to the Company's
knowledge, any of its employees or agents has at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States of any jurisdiction
thereof.
(hh) Neither the Company nor any Subsidiary (i) is in
violation of its certificate or articles of incorporation, by-laws, certificate
of formation, limited liability company agreement, partnership agreement or
other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to which any of
its property or assets is subject or (iii) is in violation in any respect of any
law, rule, regulation, ordinance, directive, judgment, decree or order of any
judicial, regulatory or other legal or governmental agency or body, foreign or
domestic, except (in the case of clauses (ii) and (iii) above) violations or
defaults that would not (individually or in the aggregate) reasonably be
expected to have a Material Adverse Effect.
(ii) The Company is in compliance with all the applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are currently in effect and
require compliance on or before the date hereof. The Company is taking steps it
reasonably deems appropriate to ensure that it will be in compliance with other
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are not currently
in effect upon the effectiveness of such provisions.
(jj) The Company has implemented the "disclosure controls and
procedures" (as defined in Rules 13a-15 and 15d-15 of the Exchange Act) required
in order for the Chief Executive Officer and Chief Financial Officer of the
Company to engage in the review and evaluation process mandated by the Exchange
Act. To the extent required by the Exchange Act, the Company's "disclosure
controls and procedures" are reasonably designed to ensure that all information
(both financial and non-financial) required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Rules and Regulations, and that all such information is accumulated and
communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of the Company required
under the Exchange Act with respect to such reports.
Any certificate signed by or on behalf of the Company and delivered to
the Representative or to counsel for the Underwriters pursuant to this Agreement
shall be deemed to be a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
- 11 -
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder severally represents and warrants to, and agrees with, each
of the Underwriters as of the date hereof and as of the Closing Date and each
Additional Closing Date that:
(a) Such Selling Shareholder has the legal right and power
and all authorization and approval required by applicable law to execute and
deliver this Agreement, to perform its obligations hereunder and to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder. This
Agreement has been duly authorized, executed and delivered by such Selling
Shareholder.
(b) Such Selling Shareholder agrees that the Shares to be
sold by such Selling Shareholder are subject to the interests of the
Underwriters, that any arrangements made for custody of the Shares are to that
extent irrevocable, and that the obligations of such Selling Shareholder
hereunder shall not be terminated, except as provided in this Agreement, by any
act of such Selling Shareholder, by operation of law or by the occurrence of any
other event. If such Selling Shareholder should die or become incapacitated, or
if any other event should occur affecting the legal status or capacity of such
Selling Shareholder before the delivery of the Shares to be sold by a Selling
Shareholder hereunder, the documents evidencing the Shares to be sold by such
Selling Shareholder shall be delivered in accordance with the terms and
conditions of this Agreement as if such event had not occurred.
(c) Such Selling Shareholder has, and on the Closing Date
will have, valid title to, or a valid "security entitlement" within the
meaning of Section 8-501 of the Uniform Commercial Code as in effect on the
date hereof in the State of New York (the "New York UCC") in respect of, and
is, and on the Closing Date will be, the lawful owner of the Shares (other
than Shares (the "Conversion Shares") issuable upon conversion of shares of
the Preferred Stock) to be sold by such Selling Shareholder hereunder, and on
the Closing Date with respect to the Conversion Shares will have valid title
to, or a valid "security entitlement" within the meaning of Section 8-501 of
the New York UCC in respect of, and will be the lawful owner of such
Conversion Shares. Upon payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, delivery of such Shares, as directed
by the Underwriters, to Cede & Co. ("Cede") or such other nominee as may
be designated by The Depository Trust Company ("DTC"), registration of such
Shares in the name of Cede or such other nominee and the crediting of such
Shares on the books of DTC to securities account of the Representative
(assuming that neither DTC the Representative nor any Underwriter has notice
of any adverse claim (within the meaning of Section 8-105 of the New York
UCC) to such Shares), (A) DTC shall be a "protected purchaser" of such
Shares within the meaning of ▇▇▇▇▇▇▇ ▇-▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇, (▇) under
Section 8-501 of the New York UCC, the Representative will acquire a valid
security entitlement in respect of such Shares and (C) no action based on
any "adverse claim", within the meaning of Section 8-102 of the New York UCC,
to such Shares may be asserted against the Representative with respect to
such security entitlement; for purposes of this representation, such Selling
Shareholder may assume that when such payment, delivery and crediting occur,
(x) such Shares will have been registered in the name of Cede or another
nominee designated by DTC, in each case on the Company's share registry in
accordance with its certificate of incorporation, bylaws and applicable law,
(y) DTC will be registered as a "clearing corporation" within the meaning of
Section 8-102 of the New York UCC and (z) appropriate entries to the account
of the Representative on the records of DTC will have been made pursuant to
the New York UCC.
(d) No Consent of, from or with any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance by the Selling
Shareholder of this Agreement or consummation by such Selling Shareholder of the
transactions contemplated herein, except such as have been obtained under the
Securities Act and such as may be required under the state or foreign securities
laws, the blue sky laws of any jurisdiction, the NASD or NASDR in connection
with the purchase and distribution of such Selling Shareholder's Shares by the
Underwriters.
(e) The execution, delivery and performance of this Agreement
by such Selling Shareholder and consummation of any of the other transactions
contemplated herein by such Selling Shareholder or the fulfillment of the terms
hereof by such Selling Shareholder will not (A) conflict with, result in a
breach or violation of, or constitute a default (or an event that with notice or
lapse of time, or both, would constitute a default) under, or result in the
- 12 -
creation or imposition of any Lien, upon any property or assets of such Selling
Shareholder pursuant to any law, statute, rule or regulation or the terms of any
indenture or other agreement or instrument to which such Selling Shareholder is
party or bound, or to which any of the property or assets of such Selling
Shareholder is subject, or (B) result in any violation or breach of any
judgment, order, decree statute, rule or regulation applicable to such Selling
Shareholder of any court or any public, governmental or regulatory agency or
body, administrative agency or arbitrator having jurisdiction over such Selling
Shareholder.
(f) Such Selling Shareholder does not have any registration
or other similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in the offering
of the Shares, except for such rights as have been waived or which are described
in the Prospectus (and which have been complied with).
(g) Such Selling Shareholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares that are to be sold
by the Company or any other Selling Shareholder to the Underwriters pursuant to
this Agreement; and such Selling Shareholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(h) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling Shareholder and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with this offering.
(i) Such Selling Shareholder has reviewed and is familiar
with the Registration Statement and the Prospectus and (i) has no knowledge of
any material adverse fact, condition or information with regard to the Company
or the Subsidiaries which is not disclosed in the Registration Statement and the
Prospectus which has had or could reasonably be expected to have a Material
Adverse Effect on the Company and the Subsidiaries taken as a whole, (ii) has no
knowledge of any misstatement of a material fact or failure to state a material
fact necessary to make the statements in the Prospectus, in light of the
circumstances under which they were made, not misleading, (iii) is not prompted
to sell the Shares to be sold by the Selling Shareholder by any information
concerning the Company or any Subsidiary which is not set forth in the
Registration Statement and the Prospectus and (iv) has no reason to believe that
any representation or warranty of the Company set forth in Section 1 above is
untrue.
(j) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or that could be reasonably
expected to, cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(k) Such Selling Shareholder has not distributed and will not
distribute, prior to the later of the Additional Closing Date, if any, and the
completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering
- 13 -
and sale of the Shares by the Selling Shareholders other than a Preliminary
Prospectus, the Prospectus or the Registration Statement.
Any certificate signed by or on behalf of the Selling Shareholder and
delivered to the Representative or to counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by such
Selling Shareholder to each Underwriter as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company and each Selling Shareholder, severally
and not jointly, agree to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company and the Selling
Shareholders, at a purchase price per share of $_______, the number of Firm
Shares set forth opposite their respective names on Schedule I hereto together
with any additional number of Shares which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment of the purchase price for, and delivery of
certificates representing, the Firm Shares shall be made at the office of ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP ("Underwriters' Counsel"), or at such other place
as shall be agreed upon by the Lead Managers and the Company, at 10:00 A.M., New
York City time, on the third or (as permitted under Rule 15c6-1 under the
Exchange Act) fourth business day (unless postponed in accordance with the
provisions of Section 10 or 11 hereof) following the date of the effectiveness
of the Registration Statement (or, if the Company has elected to rely upon Rule
430A under the Securities Act, the third or (as permitted under Rule 15c6-1
under the Exchange Act) fourth business day after the determination of the
public offering price of the Shares), or such other time not later than ten
business days after such date as shall be agreed upon by the Lead Managers and
the Company (such time and date of payment and delivery being herein called the
"Closing Date").
(c) Payment of the purchase price for the Firm Shares shall
be made by wire transfer in same day funds to or as directed by the Company and
each Selling Shareholder, as the case may be, upon delivery of certificates for
the Firm Shares to the Representative through the facilities of The Depository
Trust Company for the respective accounts of the several Underwriters. Each
Selling Shareholder hereby agrees that (i) it will pay all stock transfer taxes,
stamp duties and other similar taxes, if any, payable upon the sale or delivery
of the Firm Shares to be sold by the Selling Shareholders to the several
Underwriters, or otherwise in connection with the performance of the Selling
Shareholders' obligations hereunder and (ii) the underwriters are authorized to
deduct for such payment any such amounts from the proceeds to the Selling
Shareholders hereunder and to hold such amounts for the account of the Selling
Shareholders. Certificates for the Firm Shares shall be registered in such name
or names and shall be in such denominations as the Lead Managers may request at
least two business days before the Closing Date. The Company and the Selling
Shareholders will permit the Lead Managers to examine and package such
certificates for delivery at least one full business day prior to the Closing
Date.
- 14 -
(d) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants to the Underwriters,
acting severally and not jointly, the option to purchase up to ________
Additional Shares at the same purchase price per share to be paid by the
Underwriters to the Company and the Selling Shareholders for the Firm Shares as
set forth in Section 3(a) above, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time and from time to time, in whole or in part on one or
more occasions, on or before the thirtieth day following the date of the
Prospectus, by written notice by the Lead Managers to the Company. Such notice
shall set forth the aggregate number of Additional Shares as to which the option
is being exercised and the date and time, as reasonably determined by the Lead
Managers, when the Additional Shares are to be delivered (any such date and time
being herein sometimes referred to as the "Additional Closing Date"); PROVIDED,
HOWEVER, that no Additional Closing Date shall occur earlier than the Closing
Date or earlier than the second full business day after the date on which the
option shall have been exercised nor later than the eighth full business day
after the date on which the option shall have been exercised (unless such time
and date are postponed in accordance with the provisions of Section 10 or 11
hereof).
If the option is exercised as to all or any portion of the
Additional Shares, each Underwriter, acting severally and not jointly, agrees to
purchase from the Company that proportion of the total number of Additional
Shares then being purchased which the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto (or such number increased as
set forth in Section 10 hereof) bears to the total number of Firm Shares that
the Underwriters have agreed to purchase hereunder, subject, however, to such
adjustments to eliminate any fractional shares as the Lead Managers in their
sole discretion shall make.
(e) Payment of the purchase price for, and delivery of
certificates representing, the Additional Shares shall be made at the office of
Underwriters' Counsel, or at such other place as shall be agreed upon by the
Lead Managers and the Company, at 10:00 A.M., New York City time, on the
Additional Closing Date, or such other time as shall be agreed upon by the Lead
Managers and the Company.
(f) Payment of the purchase price for the Additional Shares
to be sold by the Company shall be made by wire transfer in same day funds to or
as directed by the Company upon delivery of certificates for the Additional
Shares to the Representative through the facilities of The Depository Trust
Company for the respective accounts of the several Underwriters. Certificates
for the Additional Shares shall be registered in such name or names and shall be
in such denominations as the Lead Managers may request at least two business
days before the Additional Closing Date. The Company will permit the Lead
Managers to examine and package such certificates for delivery at least one full
business day prior to the Additional Closing Date.
4. OFFERING. Upon authorization of the release of the Firm Shares
by the Lead Managers, the Underwriters propose to offer the Shares for sale to
the public upon the terms and conditions set forth in the Prospectus.
5. COVENANTS OF THE COMPANY; COVENANTS OF THE SELLING SHAREHOLDERS.
- 15 -
(a) The Company covenants and agrees with the Underwriters
that:
(i) The Registration Statement and any amendments
thereto have been declared effective, and if Rule 430A is used or the filing of
the Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company
will file the Prospectus (properly completed if Rule 430A has been used)
pursuant to Rule 424(b) within the prescribed time period and will provide
evidence satisfactory to the Lead Managers of such timely filing. If the Company
elects to rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434.
The Company will notify you immediately (and, if
requested by the Lead Managers, will confirm such notice in writing) (A) when
the Registration Statement and any amendments thereto become effective, (B) of
any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information, (C)
of the Company's intention to file or prepare any supplement or amendment to the
Registration Statement or the Prospectus, (D) of the mailing or the delivery to
the Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the
Securities Act, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of the initiation, or the threatening, of any proceedings
therefor, (F) after the Company receives notice of the receipt of any comments
from the Commission, and (G) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
reasonably practicable. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed pursuant to Rule 424(b) or Rule
434) that differs from the prospectus on file at the time of the effectiveness
of the Registration Statement or file any document under the Exchange Act if
such document would be deemed to be incorporated by reference into the
Prospectus to which the Lead Managers shall reasonably object in writing after
being timely furnished in advance a copy thereof. The Company will provide the
Lead Managers with copies of all such amendments, filings and other documents a
sufficient time prior to any filing or other publication thereof to permit the
Lead Managers a reasonable opportunity to review and comment thereon.
(ii) The Company shall comply with the Securities Act
and the Exchange Act to permit completion of the distribution as contemplated in
this Agreement, the Registration Statement and the Prospectus. If at any time
when a prospectus relating to the Shares is required to be delivered under the
Securities Act or the Exchange Act in connection with the sales of Shares, any
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company, include
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances existing at the time of delivery to the
purchaser, not misleading, or if to comply with the Securities Act, the Exchange
Act or the Rules and Regulations it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement, or to file any document
incorporated by
- 16 -
reference in the Registration Statement or the Prospectus or in any amendment
thereof or supplement thereto, the Company will notify you promptly and prepare
and file with the Commission, subject to Section 5(a)(i) hereof, an appropriate
amendment or supplement (in form and substance reasonably satisfactory to the
Lead Manager) which will correct such statement or omission or which will effect
such compliance and will use commercially reasonable efforts to have any
amendment to the Registration Statement declared effective as soon as
practicable.
(iii) The Company will promptly deliver to each of you
and Underwriters' Counsel a signed copy of the Registration Statement, as
initially filed and all amendments thereto, including all consents and exhibits
filed therewith, and will maintain in the Company's files manually signed copies
of such documents for at least five years after the date of filing. The Company
will promptly deliver to each of the Underwriters such number of copies of any
Preliminary Prospectus, the Prospectus, the Registration Statement, all
amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto by such times and to such places, as you
may reasonably request.
(iv) The Company consents to the use and delivery of
the April Preliminary Prospectus by the Underwriters in accordance with Rule 430
and Section 5(b) of the Securities Act.
(v) The Company will use reasonable efforts, in
cooperation with the Lead Managers, at or prior to the time of effectiveness of
the Registration Statement, to qualify the Shares for offering and sale under
the securities laws relating to the offering or sale of the Shares of such
jurisdictions, domestic or foreign, as the Lead Managers may designate and to
maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(vi) The Company will make generally available to its
security holders and to the Underwriters as soon as practicable, but in any
event not later than twelve months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act), an earnings
statement of the Company and the Subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158).
(vii) During the period of 90 days from the date of
the Prospectus, without the prior written consent of the Representative, the
Company (A) will not, directly or indirectly, issue, offer, sell, agree to
issue, offer or sell, solicit offers to purchase, grant any call option, warrant
or other right to purchase, purchase any put option or other right to sell,
pledge, borrow or otherwise dispose of any Relevant Security, or make any
announcement of any of the foregoing, (B) will not establish or increase any
"put equivalent position" or liquidate or decrease any "call equivalent
position" (in each case within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder) with respect to any Relevant
Security, and (C) will not otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of a Relevant Security, whether or not such
transaction is to be settled
- 17 -
by delivery of Relevant Securities, other securities, cash or other
consideration; and the Company will obtain an undertaking in substantially the
form of Annex III hereto of each of its officers and directors and each of the
Selling Shareholders not to engage in any of the aforementioned transactions on
their own behalf, other than the sale by the Company and the Selling
Shareholders of Shares as contemplated by this Agreement and the Company's
issuance of Common Stock upon (A) the conversion or exchange of convertible or
exchangeable securities outstanding on the date hereof; (B) the exercise of
currently outstanding options; and (C) the grant and exercise of options under,
or the issuance and sale of shares pursuant to, employee stock option plans in
effect on the date hereof, each as described in the Registration Statement and
the Prospectus. During the period of 90 days from the date of the Prospectus,
without the prior written consent of the Representative, the Company will not
file a registration statement under the Securities Act in connection with any
transaction by the Company or any person that is prohibited pursuant to the
foregoing, except for registration statements on Form S-8 relating to employee
benefit plans.
(viii) During the period of three years from the
effective date of the Registration Statement, the Company will furnish to you
copies of all reports or other communications (financial or other) furnished
to security holders, and will deliver to you (A) as soon as they are
available, copies of any reports, financial statements and proxy or
information statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company
is listed; and (B) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial information to be on a consolidated basis to the
extent the accounts of the Company and the Subsidiaries are consolidated in
reports furnished to its security holders generally or to the Commission), in
each case, only to the extent such information is publicly available.
(ix) The Company will apply the net proceeds from the
sale of the Shares as set forth under the caption "Use of Proceeds" in the
Prospectus.
(x) The Company will use reasonable efforts to list
the Shares, subject to notice of issuance, on the NYSE and the PCX and maintain
the listing of the Shares on the NYSE and the PCX.
(xi) The Company, during the period when the
Prospectus is required to be delivered under the Securities Act or the Exchange
Act, will file all documents required to be filed with the Commission pursuant
to the Securities Act, the Exchange Act and the Rules and Regulations within the
time periods required thereby.
(xii) The Company will use reasonable efforts to do
and perform all things required to be done or performed under this Agreement by
the Company prior to the Closing Date or the Additional Closing Date, as the
case may be, and to satisfy all conditions precedent to the delivery of the Firm
Shares and the Additional Shares.
(xiii) The Company will not take, and will cause its
Subsidiaries and use reasonable efforts to cause its affiliates (within the
meaning of Rule 144 under the Securities Act) not to take, directly or
indirectly, any action which constitutes or is designed to cause or result in,
or which could reasonably be expected to constitute, cause or result in, the
- 18 -
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
(b) Each Selling Shareholder covenants and agrees with each
Underwriter:
(i) To deliver to the Representative prior to the
Closing Date, a properly completed and executed United States Treasury
Department Form W-9, which in each case may be replaced by any other applicable
form or statement specified by Treasury Department regulations in lieu thereof;
(ii) To cooperate to the extent reasonably necessary
to cause the Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time and to do and perform all things
to be done and performed under this Agreement prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Shares pursuant to this
Agreement;
(iii) To pay or to cause to be paid all transfer
taxes, stamp duties and other similar taxes with respect to the Shares, if any,
to be sold by such Selling Shareholder; and
(iv) To deliver to the Lead Managers on or prior to
the date of this Agreement the lock-up agreement referenced in Section 7(h)
hereof.
6. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated by this Agreement, the Registration Statement and the Prospectus
are consummated or this Agreement is terminated, the Company and the Selling
Shareholders hereby agree to pay all costs and expenses incident to the
performance of their obligations hereunder, including the following: (i) all
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and any
and all amendments and supplements thereto and the mailing and delivering of
copies thereof to the Underwriters and dealers; (ii) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Securities Act and the Offering; (iii) the
cost of producing this Agreement and any agreement among Underwriters, blue sky
survey, closing documents and other instruments, agreements or documents
(including any compilations thereof) in connection with the Offering; (iv) all
expenses in connection with the qualification of the Shares for offering and
sale under state or foreign securities or blue sky laws as provided in Section
5(a)(v) hereof, including the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection with
any blue sky survey; (v) the filing fees incident to, and the reasonable fees
and disbursements of counsel for the Underwriters in connection with, securing
any required review by the NASD of the terms of the Offering; (vi) all fees and
expenses in connection with listing the Shares on the NYSE and the PCX; (vii)
all travel expenses of the Company's officers and employees and any other
expense of the Company incurred in connection with attending or hosting meetings
with prospective purchasers of the Shares; (viii) any stock transfer taxes
incurred in connection with this Agreement or the Offering; and (ix) the fees
and expenses related to the offering of Shares by the Selling Shareholders. The
Company also will pay or cause to be paid: (x) the cost of
- 19 -
preparing stock certificates representing the Shares; (y) the cost and charges
of any transfer agent or registrar for the Shares; and (z) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 6. It is understood,
however, that except as provided in this Section, and Sections 8, 9 and 13
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel and stock transfer taxes on resale of any of the
Shares by them.
The Selling Shareholders will pay all fees and expenses related to the
offering of the Shares to be sold by them, including (i) the fees and
disbursements of their counsel, if any, and (ii) any applicable stock transfer
or other taxes related to the offering of their Shares. Notwithstanding the
foregoing, nothing herein shall affect any agreement that the Company and the
Selling Shareholders may make for the sharing or allocation of such costs and
expenses.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company and the Selling Shareholders herein contained, as of
the date hereof and as of the Closing Date (for purposes of this Section 7
"Closing Date" shall refer to the Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished
to you or to Underwriters' Counsel pursuant to this Section 7 of any
misstatement or omission, to the performance by the Company and the Selling
Shareholders of their respective obligations hereunder, and to each of the
following additional conditions:
(a) The Registration Statement shall have become effective
and all necessary regulatory or stock exchange approvals shall have been
received not later than 2:00 P.M., New York time, on the date of this Agreement
or at such later time and date as shall have been consented to in writing by the
Lead Managers; if the Company shall have elected to rely upon Rule 430A or Rule
434 under the Securities Act, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 5(a)(i) hereof and a
form of the Prospectus containing information relating to the description of the
Shares and the method of distribution and similar matters shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the written
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Company,
dated the Closing Date addressed to the Underwriters in the form attached hereto
as Annex I.
(c) At the Closing Date you shall have received the written
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President, Law and Administration,
General Counsel and Secretary of the Company, dated the Closing Date addressed
to the Underwriters in the form attached hereto as Annex II.
- 20 -
(d) LaSalle Bank, N.A. shall have delivered its agreement,
in a form reasonably acceptable to the Representative, to release any Liens
or other interest it may have in any of the Selling Shareholders' Shares.
(e) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Lead Managers' and to Underwriters'
Counsel, and the Underwriters shall have received from Underwriters' Counsel a
favorable written opinion, dated as of the Closing Date, with respect to the
issuance and sale of the Shares, the Registration Statement and the Prospectus
and such other related matters as the Lead Managers may reasonably require, and
the Company shall have furnished to Underwriters' Counsel such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters.
(f) At the Closing Date you shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company, dated
the Closing Date to the effect that (i) the condition set forth in subsection
(a) of this Section 7 has been satisfied, (ii) as of the date hereof and as of
the Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company and the Subsidiaries have not sustained any loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, which would
reasonably be expected to have a Material Adverse Effect, and (v) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus there has not been any Material Adverse Change or
any development involving a prospective Material Adverse Change.
(g) At the time this Agreement is executed and at the Closing
Date, you shall have received a comfort letter, from Ernst & Young LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the Underwriters
and in form and substance satisfactory to the Underwriters and Underwriters'
Counsel.
(h) Subsequent to the execution and delivery of this
Agreement or, if earlier, the dates as of which information is given in the
Registration Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto), there shall not have been any change in
the capital stock (other than pursuant to the exercise of stock options or to
the conversion of Preferred Stock described in the Registration Statement and
the Prospectus as outstanding or the grant of stock options under stock option
plans described in the Registration Statement and Prospectus) or long-term debt
of the Company or any Subsidiary or any change or development involving a
change, whether or not arising from transactions in the ordinary course of
business, in the business, condition (financial or otherwise), results of
operations, shareholders' equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole, including but not limited to the occurrence of
any fire, flood, storm, explosion, accident or other calamity at any of the
properties owned or leased by the Company or any of its Subsidiaries, the effect
of which, in any such case described above, is, in the judgment of the Lead
Managers, so material and adverse as to make it impracticable or inadvisable to
proceed with the Offering on the terms and in the manner contemplated in the
Prospectus (exclusive of any supplement).
- 21 -
(i) You shall have received a duly executed lock-up agreement
from each person who is a director or officer of the Company, each Selling
Shareholder and each other person listed on Schedule III hereto, in each case
substantially in the form attached hereto as Annex III.
(j) At the Closing Date, the Shares shall have been approved
for listing upon notice of issuance on the NYSE and the PCX.
(k) At the Closing Date, the NASD shall have confirmed that
it has no objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(l) At the Closing Date, you shall have received a
certificate of an authorized representative of the Selling Shareholders, dated
the Closing Date, to the effect that the representations and warranties of the
Selling Shareholders set forth in Section 2 hereof are accurate and that each of
the Selling Shareholders has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date.
(m) On or prior to the Closing Date, you shall have received
a properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof) from each Selling Shareholder.
(n) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 7 shall not be satisfactory in
form and substance to the Lead Managers and to Underwriters' Counsel, all
obligations of the Underwriters hereunder may be cancelled by the Lead Managers
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Shares may be cancelled by the Lead
Managers at, or at any time prior to, the Additional Closing Date. Notice of
such cancellation shall be given to the Company in writing, or by telephone. Any
such telephone notice shall be confirmed promptly thereafter in writing.
8. INDEMNIFICATION.
(a) (i) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation in accordance
with the terms of this Agreement), joint or several, to which they or any of
them may become subject under the
- 22 -
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereof,
or any related Preliminary Prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent but only to
the extent that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Lead Managers expressly for use therein. The parties
agree that such information provided by or on behalf of any Underwriter through
the Lead Managers consists solely of the material referred to in the last
sentence of Section 1(b) hereof. This indemnity agreement will be in addition to
any liability which the Company may otherwise have, including but not limited to
other liability under this Agreement. The foregoing indemnity agreement with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter who failed to deliver a Prospectus (as then amended or supplemented,
provided to the several Underwriters in the requisite quantity and on a timely
basis to permit proper delivery on or prior to the Closing Date) to the person
asserting any losses, claims, damages and liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if such material misstatement or omission
or alleged material misstatement or omission was cured, as determined by a court
of competent jurisdiction in a decision not subject to further appeal, in such
Prospectus and such Prospectus was required by law to be delivered at or prior
to the written confirmation of sale to such person.
(ii) The Company shall indemnify and hold harmless
each Selling Shareholder and each person, if any, who controls any Selling
Shareholder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not
limited to reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts
paid in settlement of any claim or litigation in accordance with the terms of
this Agreement), joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
or any amendment thereof, or any related Preliminary Prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will
not be liable in any such case to the extent but only to the extent that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Selling
Shareholder expressly for use therein.
(b) Each Selling Shareholder, severally and not jointly,
shall indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to reasonable attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation in accordance with the terms of this Agreement),
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact relating to a Selling Shareholder contained in the Registration
Statement for the registration of the Shares, or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact relating to such Selling Shareholder
required to be stated therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that the Selling Shareholders will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is
- 23 -
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Lead Managers expressly for use therein (the parties agree that such
information provided by or on behalf of any Underwriter through the Lead
Managers consists solely of the material referred to in the last sentence of
Section 1(b) hereof); PROVIDED FURTHER, HOWEVER, that such Selling Shareholder
will be liable in any such case to the extent but only to the extent that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such Selling Shareholder expressly for use therein,
it being agreed that the only such information is that which is included under
the heading "Principal and Selling Shareholders" which relates to such Selling
Shareholder; and; PROVIDED FURTHER, HOWEVER, that in no such case shall any
Selling Shareholder be liable or responsible for any amount in excess of the
proceeds (net of the underwriting discount but before deducting other expenses)
applicable to the Shares sold by such Selling Shareholder pursuant to the
transactions contemplated hereby. The foregoing indemnity agreement with respect
to any Preliminary Prospectus shall not inure to the benefit of any Underwriter
who failed to deliver a Prospectus (as then amended or supplemented, provided to
the several Underwriters in the requisite quantity and on a timely basis to
permit proper delivery on or prior to the Closing Date) to the person asserting
any losses, claims, damages and liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such material misstatement or omission or
alleged material misstatement or omission was cured, as determined by a court of
competent jurisdiction in a decision not subject to further appeal, in such
Prospectus and such Prospectus was required by law to be delivered at or prior
to the written confirmation of sale to such person. This indemnity agreement
will be in addition to any liability that any Selling Shareholder may otherwise
have including under this Agreement.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each Selling Shareholder, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation in accordance with the terms of this Agreement), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability,
- 24 -
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter through the Lead Managers
specifically for use therein; PROVIDED, HOWEVER, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder. The parties agree that such information provided by or on
behalf of any Underwriter through the Lead Managers consists solely of the
material referred to in the last sentence of Section 1(b) hereof. This indemnity
will be in addition to any liability which any Underwriter may otherwise have,
including but not limited to other liability under this Agreement.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of any claims or the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 8 to the extent that it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in the
defense of such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; PROVIDED HOWEVER, that
counsel to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such reasonable fees and expenses shall be
borne by the indemnifying parties. It is understood that the indemnifying party
shall not be liable for the reasonable fees and expenses of more than one
separate counsel (plus local counsel) for all such indemnified parties. No
indemnifying party shall, without the prior written consent of the indemnified
parties, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened claim, investigation, action
or proceeding in respect of which indemnity or contribution may be or could have
been sought by an indemnified party under this Section 8 or Section 9 hereof
(whether or not the indemnified party is an actual or potential party thereto),
unless (x) such settlement, compromise or judgment
- 25 -
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
9. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 8 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Selling Shareholders on the one hand and the Underwriters on the other hand
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company and any Selling Shareholder,
any contribution received by the Company and any Selling Shareholder from
persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company or any Selling Shareholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
officers of the Company who signed the Registration Statement and directors of
the Company) as incurred to which the Company, any Selling Shareholder and one
or more of the Underwriters may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand from
the Offering or, if such allocation is not permitted by applicable law, in such
proportions as are appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand
shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Shareholders bears to (y) the
underwriting discount or commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of each of the Company and the Selling Shareholders on the one hand and of
the Underwriters on the other hand 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 a Selling Shareholder on the one hand or
the Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholders and the Underwriters further
agree that it would not be just and equitable if contribution pursuant to this
Section 9 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 9. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this
Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or
- 26 -
defending against any litigation, or any investigation or proceeding by any
judicial, regulatory or other legal or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 9, (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the discounts and commissions applicable to the
Shares underwritten by it and distributed to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission, (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation and (iii) no Selling
Shareholder shall be required to contribute an amount in excess of the proceeds
(net of underwriting discounts but before deducting expenses) applicable to the
Shares sold by such Selling Shareholder hereunder. For purposes of this Section
9, each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company and any Selling Shareholder, as
applicable, subject in each case to clauses (i) and (ii) of the immediately
preceding sentence. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 9 or otherwise. The obligations of the
Underwriters to contribute pursuant to this Section 9 are several in proportion
to the respective number of Shares to be purchased by each of the Underwriters
hereunder and not joint.
10. UNDERWRITER DEFAULT.
(a) If any Underwriter or Underwriters shall default in its
or their obligation to purchase Firm Shares or Additional Shares hereunder, and
if the Firm Shares or Additional Shares with respect to which such default
relates (the "Default Shares") do not (after giving effect to arrangements, if
any, made by the Lead Managers pursuant to subsection (b) below) exceed in the
aggregate 10% of the number of Firm Shares or Additional Shares, each
non-defaulting Underwriter, acting severally and not jointly, agrees to purchase
from the Company that number of Default Shares that bears the same proportion of
the total number of Default Shares then being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto
bears to the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Lead Managers in their sole discretion shall make.
(b) In the event that the aggregate number of Default Shares
exceeds 10% of the number of Firm Shares or Additional Shares, as the case may
be, the Lead Managers may in their discretion arrange for itself or for another
party or parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase the Default Shares on the
- 27 -
terms contained herein. In the event that within five calendar days after such a
default the Lead Managers do not arrange for the purchase of the Default Shares
as provided in this Section 10, this Agreement or, in the case of a default with
respect to the Additional Shares, the obligations of the Underwriters to
purchase and of the Company to sell the Additional Shares shall thereupon
terminate, without liability on the part of the Company or the Selling
Shareholders with respect thereto (except in each case as provided in Sections
6, 8, 9, 12 and 13) or the Underwriters, but nothing in this Agreement shall
relieve a defaulting Underwriter or Underwriters of its or their liability, if
any, to the other Underwriters and the Company and the Selling Shareholders for
damages occasioned by its or their default hereunder.
(c) In the event that any Default Shares are to be purchased
by the non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, the Lead Managers or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may be for a
period, not exceeding five business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents and arrangements, and the Company agrees to file promptly
any amendment or supplement to the Registration Statement or the Prospectus
which, in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 10 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
11. SELLING SHAREHOLDER DEFAULT.
(a) If any Selling Shareholder or Selling Shareholders shall
default in its or their obligation to sell and deliver any Shares hereunder,
then the Lead Managers may, by notice to the Company, terminate this Agreement
without any liability on the part of any non-defaulting party except that the
provisions of Sections 1, 2, 6, 8, 9, 12 and 13 hereof shall remain in full
force and effect. No action taken pursuant to this Section 11 shall relieve any
Selling Shareholder so defaulting from liability, if any, in respect of such
default.
(b) In the event that such default occurs and the Company and
Underwriters agree to proceed with the Offering, then the Underwriters may, at
the option of the Lead Managers, or the Company shall have the right, in each
case by notice to the other, to postpone the Closing Date or Additional Closing
Date, as the case may be, for a period not exceeding five business days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion
of Underwriters' Counsel, may thereby be made necessary or advisable; and in no
event shall the Company be obligated to increase the number of Shares it is
required to sell hereunder.
12. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations
and warranties, covenants and agreements of the Underwriters, the Company and
the Selling Shareholders contained in this Agreement or in certificates of
officers of the Company or any Subsidiary or of the Selling Shareholders
submitted pursuant hereto, including the agreements contained in Section 6, the
indemnity agreements contained in Section 8 and the contribution
- 28 -
agreements contained in Section 9, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company or any
Selling Shareholder, any of their officers and directors or any controlling
person thereof, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations contained in Sections 1 and 2 and the
agreements contained in Sections 6, 8, 9, 12 and 13 hereof shall survive any
termination of this Agreement, including termination pursuant to Section 10, 11
or 13 hereof.
13. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon the later of
(i) receipt by the Lead Managers and the Company of notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. Notwithstanding any termination of this Agreement, the provisions of
this Section 13 and of Sections 1, 2, 6, 8, 9, 12 and 14 through 19, inclusive,
shall be in full force and effect at all times after the execution hereof.
(b) The Lead Managers shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Lead Managers will in the immediate future materially disrupt,
the market for the Company's securities or securities in general; or (ii) if
trading on The New York Stock Exchange ("the NYSE") or the Pacific Exchange (the
"PCX") shall have been suspended or been made subject to material limitations,
or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, on the NYSE or the
PCX or by order of the Commission or any other governmental authority having
jurisdiction; or (iii) if a banking moratorium has been declared by any state or
federal authority or if any material disruption in commercial banking or
securities settlement or clearance services shall have occurred; or (iv) any
downgrading shall have occurred in the Company's corporate credit rating or the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act) or if any such organization shall have publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities; or (v) (A) if there shall
have occurred any outbreak or escalation of hostilities or acts of terrorism
involving the United States or there is a declaration of a national emergency or
war by the United States or (B) if there shall have been any other calamity or
crisis or any change in political, financial or economic conditions if the
effect of any such event in (A) or (B), in the judgment of the Lead Managers,
makes it impracticable or inadvisable to proceed with the offering, sale and
delivery of the Firm Shares or the Additional Shares, as the case may be, on the
terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 13
shall be in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than pursuant to (i) notification by the Lead
Managers as provided in Section 13(b) hereof or (ii) Section 10(b) hereof), or
if the sale of the Shares provided for herein
- 29 -
is not consummated because any condition to the obligations of the Underwriters
set forth herein is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the Lead
Managers, reimburse the Underwriters for all out-of-pocket expenses (including
the reasonable fees and expenses of their counsel), incurred by the Underwriters
in connection herewith.
14. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered,
or faxed and confirmed in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co.
Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ Parish,
Senior Managing Director, Equity Capital Markets, with a copy to Underwriter's
Counsel at ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
(b) if sent to the Company or any Selling Shareholder, shall
be mailed, delivered, or faxed and confirmed in writing to the Company and its
counsel at the addresses set forth in the Registration Statement;
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 8 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to Bear ▇▇▇▇▇▇▇, which address
will be supplied to any other party hereto by Bear ▇▇▇▇▇▇▇ upon request. Any
such notices and other communications shall take effect at the time of receipt
thereof.
15. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Underwriters, the Company and the Selling
Shareholders and the controlling persons, directors, officers, employees and
agents referred to in Sections 8 and 9 hereof, and their respective successors
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and said controlling persons and their respective successors,
officers, directors, heirs and legal representatives, and it is not for the
benefit of any other person, firm or corporation. The term "successors and
assigns" shall not include a purchaser, in its capacity as such, of Shares from
any of the Underwriters.
16. GOVERNING LAW AND JURISDICTION; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
- 30 -
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
19. TIME IS OF THE ESSENCE. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
- 31 -
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
PLAYBOY ENTERPRISES, INC.
By:
----------------------------------------
Name:
Title:
---------------------------------------------
[Selling Shareholder(s)]
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
---------------------------------------
Name:
Title:
On behalf of itself and the other
Underwriters named in Schedule I hereto.
- 32 -
SCHEDULE I
Number of Additional
Total Number of Firm Shares to be Purchased if
Underwriter Shares to be Purchased Option is Fully Exercised
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Banc of America Securities LLC
Total.............
------------------------ ------------------------
SCHEDULE II
Number of Additional
Number of Firm Shares Shares to be Sold if Option
Selling Shareholder to be Sold is Fully Exercised
Total.............
------------------------ ------------------------
EXHIBIT A
Subsidiaries
ANNEX I
[Opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP]
ANNEX II
[Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇]
ANNEX III
Form of Lock-Up Agreement
_________________, 2004
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
As Representative of the several
Underwriters referred to below
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Equity Capital Markets
Playboy Enterprises, Inc. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed public
offering (the "Offering") by Playboy Enterprises, Inc., a Delaware corporation
(the "Company"), of its Class B common stock, par value $0.01 per share (the
"Stock").
In order to induce you and the other underwriters for which you act as
representative (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co.
Inc. ("Bear ▇▇▇▇▇▇▇"), during the period from the date hereof until ninety (90)
days from the date of the final prospectus for the Offering (the "Lock-Up
Period"), the undersigned (a) will not, directly or indirectly, offer, sell,
agree to offer or sell, solicit offers to purchase, grant any call option or
purchase any put option with respect to, pledge, borrow or otherwise dispose of
any Relevant Security (as defined below), and (b) will not establish or increase
any "put equivalent position" or liquidate or decrease any "call equivalent
position" with respect to any Relevant Security (in each case within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder), or otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in
whole or in part, any economic consequence of ownership of a Relevant Security,
whether or not such transaction is to be settled by delivery of Relevant
Securities, other securities, cash or other consideration. As used herein
"Relevant Security" means the Stock, any other equity security of the Company or
any of its subsidiaries and any security convertible into, or exercisable or
exchangeable for, any Stock or other such equity security.
Notwithstanding the foregoing, (i) the undersigned may transfer Relevant
Securities by bona fide gift, will or intestate succession, provided that the
resulting transferee(s) agrees to be bound by the restrictions set forth in this
Agreement, (ii) the undersigned may transfer Relevant Securities to any trust
for the direct or indirect benefit of the undersigned or an immediate family
member (i.e., any relationship by blood, marriage or adoption, not more remote
than first cousin), provided that the resulting transferee(s) agrees to be bound
by the restrictions set forth in this Agreement, (iii) the undersigned may
exercise options under stock option plans in effect on the date hereof, each as
described in the Registration Statement and the Prospectus and (iv) the
undersigned may sell the Stock set forth opposite the undersigned's name on
Schedule I to the
Underwriting Agreement to be entered into among the Company,
the Underwriters and the selling stockholders named therein.
The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities, except as expressly
permitted by this Agreement, to decline to transfer, and to note stop transfer
restrictions on the stock register and other records relating to, Relevant
Securities for which the undersigned is the record holder and, in the case of
Relevant Securities for which the undersigned is the beneficial but not the
record holder, agrees during the Lock-Up Period to cause the record holder to
cause the relevant transfer agent to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to, such
Relevant Securities. The undersigned hereby further agrees that, without the
prior written consent of Bear ▇▇▇▇▇▇▇, during the Lock-up Period the undersigned
(x) will not file or participate in the filing with the Securities and Exchange
Commission of any registration statement, or circulate or participate in the
circulation of any preliminary or final prospectus or other disclosure document
with respect to any proposed offering or sale of a Relevant Security and (y)
will not exercise any rights the undersigned may have to require registration
with the Securities and Exchange Commission of any proposed offering or sale of
a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
This Agreement shall terminate if the Offering has not been consummated
by June 30, 2004.
Very truly yours,
By:
-----------------------------------
Print Name:
---------------------------
2
