1
UNDERWRITING AGREEMENT
1,250,000 Shares
▇▇▇▇▇▇▇ Manufacturing Co., Inc.
Common Stock
(Without Par Value)
, 1998
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
as Representatives of the
several Underwriters
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The persons named in Schedule B hereto (the "Firm Selling Shareholders")
propose to sell to the underwriters listed in Schedule A hereto (collectively,
the "Underwriters"), for whom you are acting as representatives (in such
capacity, the "Representatives"), and the Underwriters propose to purchase from
such Firm Selling Shareholders, an aggregate of 1,250,000 shares of common
stock, without par value (the "Common Stock"), of ▇▇▇▇▇▇▇ Manufacturing Co.,
Inc., a California corporation (the "Company"), which are referred to herein as
the "Underwritten Shares."
In addition, for the sole purpose of covering over-allotments in
connection with the sale of the Underwritten Shares, the person named in
Schedule C hereto (the "Optional Selling Shareholder," and together with the
Firm Selling Shareholders, the "Selling Shareholders") propose to sell to the
several Underwriters, at the option of the Underwriters, up to an additional
187,500 shares of Common Stock (the "Option Shares"). The Underwritten Shares
and any Option Shares purchased by the Underwriters are herein referred to as
the "Shares."
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The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-3 (File No. 333-44603), including a prospectus, relating to
the Shares. The registration statement as amended at the time when it became or
shall become effective, or, if post-effective amendments are filed with respect
thereto, as amended by such post-effective amendments at the time of their
effectiveness, including in each case information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is hereinafter referred to as the "Registration
Statement," and the prospectus constituting a part of the Registration Statement
in the form first used to confirm sales of Shares is hereinafter referred to as
the "Prospectus," except that if any revised prospectus shall be provided to the
Underwriters by the Company for use in connection with the offering of the
Shares which differs from the Prospectus (whether or not any such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) under
the Securities Act), the term "Prospectus" shall refer to each such revised
prospectus from and after the time it is first provided to the Underwriters for
such use. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement. 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, as
of the effective date of the Registration Statement or the date of such
preliminary prospectus or the Prospectus, as the case may be, and any reference
to "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") that are deemed to be incorporated
by reference therein.
The Company and the Selling Shareholders agree with you and the other
several Underwriters on whose behalf you are acting, in connection with the
several purchases of the Shares by the Underwriters, as follows:
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1. Each of the Firm Selling Shareholders hereby agrees, severally
and not jointly, to sell the number of Underwritten Shares set forth opposite
its or his name on Schedule B hereto to the several Underwriters as hereinafter
provided, and each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees, severally and not jointly, to purchase from each Firm Selling
Shareholder the number of Underwritten Shares (subject to such adjustment as the
Representatives may determine to avoid fractional shares) which bears the same
proportion to the number of Underwritten Shares to be sold by such Firm Selling
Shareholder as the number of Underwritten Shares set forth opposite the name of
such Underwriter in Schedule A hereto bears to the total number of Underwritten
Shares, in each case at a purchase price of $ per Share (the "Purchase Price").
In addition, the Optional Selling Shareholder agrees to sell the number
of Option Shares set forth opposite its name on Schedule C hereto to the several
Underwriters as hereinafter provided, and the Underwriters, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Optional Selling Shareholder up to the maximum number of
Option Shares set forth opposite the Optional Selling Shareholder's name on
Schedule C hereto at the Purchase Price, for the sole purpose of covering
over-allotments (if any) in the sale of Underwritten Shares by the several
Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to
be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule A hereto bears to the aggregate number of Underwritten
Shares, subject, however, to such adjustments to eliminate any fractional
interests as the Representatives in their sole discretion shall make. If any,
but fewer than all, Option Shares are to be purchased, the respective numbers of
Option Shares to be purchased by each Underwriter from the Optional Selling
Shareholder hereto shall be proportionate to the maximum number of Option Shares
that the Underwriters have the option hereunder to purchase from such person.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of the Prospectus
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(in the form first used to confirm sales of Shares), by written notice from the
Representatives to the Optional Selling Shareholder. Such notice shall set forth
the aggregate number of Option Shares as to which the option is being exercised
and the date and time when such Option Shares are to be delivered and paid for,
which may be the same date and time as the Closing Date (as hereinafter defined)
but shall not be earlier than the Closing Date or later than the tenth full
Business Day (as hereinafter defined) after the date of such notice. Any such
notice shall be given at least two Business Days prior to the date and time of
delivery specified therein.
Pursuant to powers of attorney (the "Powers of Attorney"), which shall
be satisfactory to counsel for the Underwriters, granted by each Selling
Shareholder, ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will act as
representatives of the Selling Shareholders. The foregoing representatives (the
"Representatives of the Selling Shareholders") are authorized, on behalf of each
Selling Shareholder, to execute any documents necessary or desirable in
connection with the sale of the Underwritten Shares and Option Shares to be sold
hereunder by each Selling Shareholder, to make delivery of the certificates of
such Underwritten Shares and Option Shares, to receive the proceeds of the sale
of such Underwritten Shares and Option Shares, to give receipts for such
proceeds, to pay therefrom the expenses, if any, to be borne by each Selling
Shareholder in connection with the sale and public offering of the Underwritten
Shares and Option Shares, to pay therefrom any amounts owed to the Company by
Selling Shareholders, to distribute the balance of such proceeds to the Selling
Shareholders, to receive notices on behalf of each Selling Shareholder and to
take such other action as may be necessary or desirable in connection with the
transactions contemplated by this Agreement.
2. The Company and each of the Selling Shareholders understand that
the Underwriters intend (i) to make a public offering of the Underwritten Shares
as soon as the Representatives deem advisable after the Registration Statement
and this Agreement have become effective and (ii) initially to offer the
Underwritten Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the accounts specified by the Representatives of
the Selling Shareholders to the Representatives, in the case of the Underwritten
Shares, on , 1998, or at such other time on the same or such other date, not
later than the fifth Business Day thereafter, as the Representatives and the
Representatives of the Selling Share-
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holders may agree upon in writing or, in the case of the Option Shares, on the
date and time specified by the Representatives in the written notice of the
Underwriters' election to purchase such Option Shares. The time and date of such
payment for the Underwritten Shares are referred to herein as the "Closing
Date," and the time and date of such payment for the Option Shares, if other
than the Closing Date, are referred to herein as the "Additional Closing Date."
As used herein, the term "Business Day" means any day other than a day on which
banks are permitted or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the certificates for the Shares to be purchased on such date registered in such
names and in such denominations as the Representatives shall request in writing
not later than two full Business Days prior to the Closing Date or the
Additional Closing Date, as the case may be, with any transfer taxes payable in
connection with the transfer to the Underwriters of the Shares duly paid by the
Selling Shareholders. The certificates for the Shares will be made available for
inspection and packaging by the Representatives at the office of ▇.▇. ▇▇▇▇▇▇
Securities Inc. set forth above not later than 1:00 P.M., New York City time, on
the Business Day prior to the Closing Date or the Additional Closing Date, as
the case may be.
4. The Company represents and warrants to each of the Underwriters
that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement, as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with the
Securities Act, and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter expressly for use
therein;
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(b) all of the issued and outstanding shares of Common Stock have been
duly authorized by the Company, are validly issued and are fully paid and
nonassessable and are not subject to any preemptive or other similar rights;
when the Shares are delivered by the Selling Shareholders and paid for by
the Underwriters in accordance with the terms of this Agreement, such Shares
will be validly issued, fully paid and nonassessable and will not be subject
to any preemptive or other similar rights; the Company's capital stock
conforms in all material respects to the description thereof contained in
the Registration Statement and the Prospectus;
(c) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and as of the date of filing
thereof did not, and did not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as of
the date of the Prospectus and any amendment or supplement thereto, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Prospectus, as amended or supplemented at the
Closing Date and the Additional Closing Date, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that this
representation and warranty shall not apply to statements or omissions in
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter expressly for use therein; and the
documents incorporated by reference in the Prospectus, when they were filed
with the Commission, conformed in all material respects to the requirements
of the Exchange Act and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated by
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reference in the Prospectus, when such documents are filed with the
Commission, will conform in all material respects to the requirements of the
Exchange Act, and will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading;
(d) Coopers & ▇▇▇▇▇▇▇ L.L.P., who are reporting upon the audited
consolidated financial statements of the Company and its subsidiaries (the
"Subsidiaries") and the related schedules included or incorporated by
reference in the Registration Statement as of December 31, 1996 and 1997 and
for each of the three years in the period ended December 31, 1997, are
independent public accountants as required by the Securities Act;
(e) the audited consolidated financial statements referred to in
subsection (d) of this Section 4, as well as the unaudited interim
consolidated financial statements included or incorporated by reference in
the Registration Statement and the Prospectus, present fairly (i) the
consolidated financial position of the Company and the Subsidiaries taken as
a whole as of the dates indicated and (ii) the combined results of
operations and combined cash flows of the Company and the Subsidiaries taken
as a whole for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (subject, in the case
of the unaudited interim financial statements, if any, to normal year end
adjustments); and the supporting schedules included or incorporated by
reference in the Registration Statement present fairly the information
required to be stated therein;
(f) the Company and its Subsidiaries are conducting and intend to
conduct their businesses so as to comply in all material respects with
applicable federal, state and local government statutes and regulations,
except where such failure to comply would not have a material adverse effect
on the business, prospects, operations or condition, financial or otherwise,
of the Company and the Subsidiaries taken as a whole (a "Material Adverse
Effect"); and neither the Company nor any of its Subsidiaries is charged
with or, to the knowledge of the Company, is under investigation with
respect to, any violation of any of such statutes or regulations or is the
subject of any
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pending or, to the knowledge of the Company, threatened proceeding by any
regulatory authority relating to any such violation, except where such
violation or proceeding would not have a Material Adverse Effect;
(g) the Company owns, beneficially and of record, free and clear of any
mortgage, pledge, security interest, lien, claim or other encumbrance or
restriction on transferability or voting, directly or indirectly through
Subsidiaries, all of the outstanding equity securities of each of the
Subsidiaries listed on Annex A hereto, which constitute all of the
subsidiaries of the Company; all of the issued and outstanding capital stock
of the Subsidiaries has been duly authorized and validly issued and is fully
paid and nonassessable; and except as set forth in the Registration
Statement and the Prospectus, there are no outstanding (i) securities or
obligations convertible into or exchangeable for any shares of capital stock
of the Company or any Subsidiary, (ii) rights, warrants or options to
acquire or purchase any shares of capital stock of the Company or any
Subsidiary or any such convertible or exchangeable securities or
obligations, or (iii) obligations or understandings to issue or sell any
shares of capital stock of the Company or any Subsidiary, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options;
(h) the statistical and market-related data included in the Registration
Statement and the Prospectus are based on or derived from sources which are
believed by the Company to be reliable and accurate;
(i) except for compensation to be paid to the Underwriters under this
Agreement, the Company knows of no outstanding claims for services, either
in the nature of a finder's fee or origination fee, with respect to any of
the transactions contemplated hereby;
(j) since the date of the latest consolidated financial statements of
the Company and the Subsidiaries included or incorporated by reference in
the Registration Statement and the Prospectus, except as disclosed or
contemplated or incorporated by reference in the Registration Statement and
the Prospectus, there has not been (A) any change in the Company's issued
capital stock or options, except pursuant to the exercise of options, or (B)
any material adverse change in the management, business, prospects,
operations or condition, financial or otherwise, of
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the Company and the Subsidiaries, taken as a whole (a "Material Adverse
Change," and any event or state of facts which could result in a Material
Adverse Change is herein referred to as "Prospective Material Adverse
Change");
(k) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as disclosed or
contemplated or incorporated by reference therein, (i) there have been no
transactions entered into by the Company or any of the Subsidiaries, other
than those in the ordinary course of business, which are material to the
Company and the Subsidiaries, taken as a whole, and (ii) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock;
(l) each of the Company and the Subsidiaries has been duly organized
under the laws of its jurisdiction of incorporation; and each of the Company
and the Subsidiaries is a validly existing corporation in good standing
under the laws of its jurisdiction of incorporation, has full corporate
power and authority to own its properties and conduct its business as
described in the Registration Statement and the Prospectus and is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions where the ownership of its property or the conduct of
its business requires such qualification and where the failure so to qualify
could have a Material Adverse Effect;
(m) this Agreement and the custody agreement among the Company, as
custodian, and the Selling Shareholders (the "Custody Agreement") have been
duly authorized, executed and delivered by the Company;
(n) the execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement, and the consummation
of the transactions contemplated herein, (i) have been duly authorized by
all necessary corporate action on the part of the Company, (ii) do not and
will not result in any violation of the articles of incorporation or by-laws
of the Company and (iii) do not and will not conflict with, or result in a
breach or violation of, any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right to accelerate the
maturity or require the prepayment of any indebtedness un-
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der, or result in the creation or imposition of any lien, charge or
encumbrance upon any material property or assets of the Company or any
Subsidiary under (A) any indenture, mortgage, loan agreement, note, lease,
partnership agreement or other agreement or instrument to which the Company
or any Subsidiary is a party or by which any of them may be bound or to
which any of their properties or assets may be subject, (B) any existing
applicable law, rule or regulation (other than the securities or Blue Sky
laws of the various states and other jurisdictions of the United States of
America) or (C) any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their respective
properties or assets;
(o) no authorization, approval, consent or license of, or filing with,
any government, governmental instrumentality or court, domestic or foreign
(other than as have been made and obtained and are in full force and effect
under the Securities Act or as may be required under the securities or Blue
Sky laws of the various states and other jurisdictions of the United States
of America), is required for the performance of the Company's obligations
under this Agreement;
(p) neither the Company nor any Subsidiary (i) is in violation of its
articles of incorporation or by-laws or (ii) is or with the giving of notice
or lapse of time or both would be in violation of, or in default under or in
the performance or observance of, any obligation, agreement, covenant or
condition contained in any indenture, mortgage, loan agreement, note, lease,
partnership agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its respective properties
or assets are subject or of any permit, order, decree, judgment, statute,
rule or regulation applicable to the Company or any Subsidiary, except for
such violations or defaults that, individually or in the aggregate, would
not have a Material Adverse Effect;
(q) except as described in the Registration Statement and the
Prospectus, there is no action, suit or proceeding before or by any
government, governmental instrumentality or court, domestic or foreign, now
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any Subsidiary or any affiliate of the Company that (i) is
reasonably likely to have a Mate-
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rial Adverse Effect or that is reasonably likely to have a material adverse
effect on the consummation of the transactions contemplated in this
Agreement or (ii) is required to be described in the Registration Statement
or the Prospectus or any document incorporated by reference therein that is
not so described. The aggregate of all pending legal and governmental
proceedings known to the Company, to which the Company or any Subsidiary or
any affiliate of the Company is a party or that affect any of their
properties or assets that are not described in the Registration Statement
and the Prospectus, including ordinary routine litigation incidental to its
business, is not reasonably likely to have a Material Adverse Effect;
(r) there are no contracts or documents that are required to be
described or referred to in the Registration Statement or the Prospectus, or
to be filed as exhibits to the Registration Statement, that are not
described, referred to or filed as required;
(s) the Company and each Subsidiary has good and marketable title to all
properties and assets described in the Registration Statement and the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except (i) as described or reflected in the
Registration Statement and the Prospectus or any document incorporated by
reference therein or (ii) for liens, charges, encumbrances or restrictions
which would not have a Material Adverse Effect. All of the leases and
subleases material to the business of the Company and the Subsidiaries are
in full force and effect, with such exceptions as would not have a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any
notice of any material claim that has been asserted by anyone adverse to the
rights of the Company or any Subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of such entity to
the continued possession of the leased or subleased premises under any such
lease or sublease;
(t) each of the Company and each of its Subsidiaries owns, possesses or
has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
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or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, except in each case where
the failure to obtain licenses, permits, certificates, consents, orders,
approvals and other authorizations, or to make all declarations and filings,
would not have a Material Adverse Effect, and neither the Company nor any
Subsidiary has received any notice of any proceeding relating to revocation
or modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the Registration
Statement and the Prospectus or any document incorporated by reference
therein and except, in each case, where such revocation or modification
would not have a Material Adverse Effect; and the Company and each
Subsidiary is in compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date hereof, except where
noncompliance with such laws or regulations would not have a Material
Adverse Effect;
(u) each of the Company and each of its Subsidiaries owns or possesses
the patents, patent licenses, trademarks, service marks, trade names,
copyrights and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
(collectively, the "Intellectual Property") reasonably necessary to carry on
the business conducted by each as of the date hereof, except to the extent
that the failure to own or possess such Intellectual Property would not have
a Material Adverse Effect, and, except as described in the Registration
Statement and the Prospectus or any document incorporated by reference
therein, neither the Company nor any Subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property, except for notices the content of which if
accurate would not have a Material Adverse Effect;
(v) there are no labor disputes with the employees of the Company or any
of the Subsidiaries which are likely to have a Material Adverse Effect;
(w) each of the Company and each of its Subsidiaries is in compliance
with all applicable existing federal, state, local and foreign laws and
regulations relating to protection of human health or the environment or
imposing liability or standards of conduct concerning any Hazardous Material
(as hereinafter defined) (collectively, the
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"Environmental Laws"), except, in each case, where noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect.
The term "Hazardous Material" means (i) any "hazardous substance" as defined
by the Comprehensive Environmental Response, Compensation and Liabiity Act
of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum
product, (iv) any polychlorinated biphenyl and (v) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law. There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries under any Environmental Law which, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect;
(x) except as set forth in the Registration Statement and the Prospectus
or any document incorporated by reference therein, no authorization,
approval or consent of any governmental authority or agency is required
(other than those which have already been obtained) under the laws of any
jurisdiction in which the Company or any of its Subsidiaries conduct their
respective businesses in connection with the ownership by the Company of
capital stock of any Subsidiary, any foreign exchange controls or the
repatriation of any amount from or to the Company and the Subsidiaries,
except to the extent that the failure to obtain such authorization, approval
or consent will not have a Material Adverse Effect;
(y) the Company has not taken and will not take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the Common Stock,
and the Company has not distributed and will not distribute any prospectus
or other offering material in connection with the offering and sale of the
Shares other than any preliminary prospectus filed with the Commission or
the Prospectus;
(z) neither the filing of the Registration Statement or any amendment
thereto nor the offer or sale of the Shares as contemplated by this
Agreement gives rise to any rights for or relating to the registration under
the Securities Act of any securities of the Company or any Subsidiary;
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(aa) the Company and the Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have
paid all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being
contested in good faith, except for such filings and payments the failure to
timely make or contest would not have a Material Adverse Effect; and, except
as disclosed in the Registration Statement and the Prospectus, there is no
tax deficiency which has been or might reasonably be expected to be asserted
or threatened against the Company or any Subsidiary which could have a
Material Adverse Effect; and
(bb) the Company has delivered to the Underwriters written agreements,
in form and substance satisfactory to the Underwriters, of the persons named
in Schedule D hereto, pursuant to which each has agreed not to sell, offer,
agree to sell or otherwise dispose of, directly or indirectly, any shares of
Common Stock, any options, warrants or rights to purchase Common Stock, or
any securities exercisable for or convertible into Common Stock for a period
of 90 days after the date of this Agreement, without the prior written
consent of ▇.▇. ▇▇▇▇▇▇ Securities Inc.
5. Each Selling Shareholder, severally and not jointly, represents
and warrants to each Underwriter that:
(a) such Selling Shareholder now is and at the Closing Date and
Additional Closing Date (if applicable to such Selling Shareholder) will be,
the lawful owner of the number of Shares to be sold by such Selling
Shareholder pursuant to this Agreement and has and, at the time of delivery
thereof, will have valid and marketable title to such Shares, and upon
delivery of and payment for such Shares the Underwriters will acquire valid
and marketable title to such Shares free and clear of any claim, lien,
encumbrance, security interest, restriction on transfer or other defect in
title;
(b) such Selling Shareholder has, and at the Closing Date and Additional
Closing Date (if applicable to such Selling Shareholder) will have, full
legal right, power and capacity, and any approval required by law or
otherwise (other than those imposed by the Securities Act and the securities
or blue sky laws of certain jurisdictions), to sell, assign, transfer and
deliver such Shares in the
15
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manner provided in this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
the fulfillment of the terms hereof will not conflict with or result in the
breach of any of the terms, provisions or conditions of, or constitute a
default under, any note, indenture, mortgage, deed or declaration of trust,
agreement, will or other instrument, if any, to which such Selling
Shareholder is a party or by which such Selling Shareholder is bound, or, to
the best of such Selling Shareholder's knowledge, any existing law, order,
rule, regulation, writ, injunction, judgment or decree of any government,
governmental instrumentality, agency or body, arbitration tribunal, or
court, domestic or foreign, having jurisdiction over such Selling
Shareholder or such Selling Shareholder's property;
(c) this Agreement and the Custody Agreement have been duly executed and
delivered by such Selling Shareholder;
(d) when the Registration Statement becomes effective and at all times
subsequent thereto through the latest of the Closing Date, the Additional
Closing Date or the termination of the offering of the Shares, such parts of
the Registration Statement and Prospectus, and any supplements or amendments
thereto, as they relate to such Selling Shareholder 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;
(e) such Selling Shareholder has duly and irrevocably authorized the
Representatives of the Selling Shareholders, on behalf of such Selling
Shareholder, to execute and deliver this Agreement and any other document
necessary or desirable in connection with the transactions contemplated
hereby and to deliver the Shares to be sold by such Selling Shareholder and
receive payment therefor pursuant hereto;
(f) the sale of such Selling Shareholder's Shares pursuant to this
Agreement is not prompted or influenced by any information concerning the
Company which is not set forth in the Prospectus; and
(g) such Selling Shareholder has no reason to believe that the
representations and warranties of the Com-
16
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pany contained in this Agreement are not true and correct in all material
respects.
6. The Company covenants and agrees with the several Underwriters
as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective (if the Registration Statement shall not have been declared
effective prior to the execution hereof) at the earliest possible time and,
if applicable, to file the Prospectus with the Commission within the time
periods specified by Rule 424(b) and Rule 430A under the Securities Act;
(b) to deliver, at the expense of the Selling Shareholders, to the
Representatives four signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits, and, during the period mentioned in paragraph (e) below, to each
of the Underwriters and to dealers effecting transactions in the Common
Stock as many copies of the Prospectus (including all amendments and
supplements thereto) as the Underwriters and such dealers may reasonably
request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representatives
a copy of the proposed amendment or supplement for review and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(d) to advise the Representatives promptly, and to confirm such advice
in writing, (i) when the Registration Statement shall have become or becomes
effective, (ii) when any amendment to the Registration Statement shall have
become effective, (iii) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding
for that purpose and (v) of the receipt by the Company of any notification
with respect to any suspension of the qualification of the Shares for offer
and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use its best efforts to prevent the
issuance of any such stop
17
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order or notification and, if issued, to obtain as soon as possible the
withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the reasonable opinion of counsel for the
Company or the Underwriters a prospectus relating to the Shares is required
by law to be delivered in connection with sales by an Underwriter or dealer,
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if it is necessary to amend or supplement the Prospectus
to comply with law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addresses
the Representatives will furnish to the Company) to which Shares may have
been sold by the Underwriters and to any other dealers upon written request,
such amendments or supplements to the Prospectus as may be necessary so that
the statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus will comply with law;
(f) to use its best efforts to register or qualify the Shares for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such registration
or qualification in effect so long as reasonably required for distribution
of the Shares; provided that the Company shall not be required to qualify
the Shares in any jurisdiction where, as a result of such qualification, the
Company would be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(g) not later than April 1, 1999, to make generally available to its
security holders and to the Underwriters as soon as practicable an earnings
statement covering a period of at least twelve months beginning with the
first fiscal quarter of the Company occurring after the effective date of
the Registration Statement, which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder;
(h) so long as the Shares are outstanding, for one year after the
Closing Date, to furnish to the Rep-
18
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resentatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or any national
securities exchange;
(i) for a period of 90 days after the date of this Agreement, not to,
issue, sell, offer, agree to sell, or otherwise dispose of, directly or
indirectly, any shares of Common Stock, any options, rights or warrants to
purchase Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock without the prior written consent of ▇.▇.
▇▇▇▇▇▇ Securities Inc.; provided that, without such prior written consent,
the Company may grant options or issue or sell shares under its 1994 Stock
Option Plan, 1994 Employee Stock Bonus Plan or 1995 Independent Director
Stock Option Plan and the Company may issue shares of Common Stock pursuant
to the exercise of stock options; and
(j) to have furnished to the Representatives at or prior to the date of
this Agreement true and correct copies of all of the Powers of Attorney, the
fully executed Custody Agreement and all other currently effective written
agreements between the Company or any of its Subsidiaries and each Selling
Shareholder and relating to the transactions contemplated by this Agreement.
7. (a) Each of the Selling Shareholders covenants and agrees with the
several Underwriters as follows:
(i) to do or perform all things required to be done or performed
by such Selling Shareholder prior to the Closing Date or any
Additional Closing Date, as the case may be, to satisfy all
conditions precedent to the delivery of the Shares pursuant to this
Agreement; and
(ii) to pay or cause to be paid all taxes, if any, on the
transfer and sale of the Shares being sold by such Selling
Shareholder.
(b) ▇▇▇▇▇▇▇ PSB Fund covenants and agrees with the several
Underwriters to pay all costs and expenses incident to the performance of
the Company's and the Selling Shareholders' obligations hereunder, including
without limiting the generality of the foregoing, all costs and expenses (i)
incident to the preparation, issuance, execution and delivery of the
19
-19-
Shares, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any
preliminary prospectuses (including in each case all exhibits, amendments
and supplements thereto), (iii) incurred in connection with the registration
or qualification of the Shares under the laws of such jurisdictions as the
Representatives may designate (including fees of counsel for the
Underwriters and their disbursements related to such registration or
qualification), (iv) in connection with the listing of Shares on the New
York Stock Exchange, (v) related to any filing with, and review by, the
NASD, and (vi) in connection with the printing (including word processing
and duplication costs) and delivery of this Agreement, all other agreements
relating to underwriting and syndication arrangements, the Custody
Agreement, the Powers of Attorney, the Blue Sky Survey and the furnishing to
the Underwriters and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided
(collectively, the "Offering Expenses").
8. The several obligations of the Underwriters hereunder to
purchase the Underwritten Shares are subject to the performance by each of the
Company and the Selling Shareholders of its obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement shall not have been declared effective
prior to the execution hereof, the Registration Statement shall have become
effective (or if a post-effective amendment is required to be filed under
the Securities Act, such post-effective amendment shall have become
effective) not later than 5:00 P.M., New York City time, on the date hereof;
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect, and no proceedings for such purpose shall be pending
before or threatened by the Commission; and any requests for additional
information by the Commission shall have been complied with to the
reasonable satisfaction of the Representatives.
(b) The representations and warranties of the Company and the Selling
Shareholders contained herein shall be true and correct on and as of the
Closing Date as if made on and as of the Closing Date, and each of the
Company and each Selling Shareholder shall have complied with all agreements
and all conditions on his, her or its part
20
-20-
to be performed or satisfied hereunder at or prior to the Closing Date.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall not have been any
Material Adverse Change or any development involving a Prospective Material
Adverse Change other than as set forth or contemplated in the Registration
Statement and the Prospectus, the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Underwritten Shares on the terms and
in the manner contemplated in the Registration Statement and the Prospectus.
(d) (i) The Underwriters shall have received on and as of the Closing
Date, a certificate of an executive officer of the Company reasonably
satisfactory to the Representatives to the effect set forth in subsections
(a) and (b) (as subsection (b) pertains to the Company) of this Section 8
and to the further effect that since the respective dates as of which
information is given in the Registration Statement and the Prospectus there
has not occurred any Material Adverse Change or any development involving a
Prospective Material Adverse Change other than as set forth or contemplated
in the Registration Statement and the Prospectus; and (ii) the Underwriters
shall have received on and as of the Closing Date, a certificate from the
Representatives of the Selling Shareholders to the effect set forth in
subsection (b) of this Section 8 (as subsection (b) pertains to the Selling
Shareholders).
(e) The Underwriters shall have received on the Closing Date a signed
opinion of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company and the
Selling Shareholders, dated the Closing Date and addressed to the
Underwriters and satisfactory to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Underwriters, to the effect that:
(i) the Company has been duly organized and is validly existing and
in good standing under the laws of the State of California and has the
corporate power and corporate authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus;
21
-21-
(ii) each of the Subsidiaries organized under the laws of a State of
the United States has been duly organized and is validly existing and in
good standing under the laws of the state of its organization and has
the corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus;
(iii) ▇▇▇▇▇▇▇ Dura-Vent Company, Inc., a California corporation, is
qualified to do business and is in good standing as a foreign
corporation under the laws of the State of Mississippi; and ▇▇▇▇▇▇▇
Strong-Tie Company Inc., a California corporation, is qualified to do
business and is in good standing as a foreign corporation under the laws
of the States of Florida, Illinois, Ohio and Texas;
(iv) all of the shares of capital stock of the Company and each
Subsidiary outstanding immediately prior to the date of this Agreement
have been duly authorized and validly issued and are fully paid and
nonassessable;
(v) the Shares to be sold by the Selling Shareholders, when issued
and delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be validly issued, fully paid and
nonassessable and free of preemptive or other similar rights;
(vi) this Agreement and the Custody Agreement have been duly
authorized, executed and delivered by the Company;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, and
the consummation by the Company of the transactions contemplated herein,
do not and will not (a) violate any provision of the articles of
incorporation or by-laws of the Company or any Subsidiary organized
under the laws of a State of the United States; (b) contravene any
provision of any law, rule or regulation known to such counsel to be
applicable to the Company or any of its Subsidiaries (the "Applicable
Laws"); (c) contravene any judgment, order or decree known to such
counsel by which the Company or any Subsidiary
22
-22-
is bound or by which any of their properties or assets may be affected;
(d) conflict with, result in any breach of or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute
a default) under, or give rise to any right to accelerate the maturity
or require the prepayment of any indebtedness under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any Subsidiary pursuant to the
terms of, any agreement known to such counsel to which the Company or
any Subsidiary is a party or any of their properties or assets is
subject; or (e) require any consent, approval or authorization or order
of, or qualification with, any government, governmental instrumentality
or court, domestic or foreign, except such as have been obtained under
the Securities Act and such as may be required by securities laws of the
states and other jurisdictions of the United States and other countries
in connection with the offer and sale of the Shares;
(viii) to such counsel's knowledge, there is no (a) action, suit or
proceeding before or by any government, governmental instrumentality or
court now pending or threatened against or affecting the Company or any
Subsidiary or any of their respective properties or assets that is
required to be described in the Registration Statement or the Prospectus
or in a document incorporated by reference therein and is not so
described or (b) contract, license, agreement, lease or other document
that is required to be described in or referred to in the Registration
Statement or the Prospectus or in a document incorporated by reference
therein, or to be filed as an exhibit to the Registration Statement or
such document, that is not described, referred to or filed as required,
and such contracts and documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material
respects;
(ix) the capital stock of the Company, including the Shares,
conforms as to legal matters in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(x) to such counsel's knowledge, neither the filing of the
Registration Statement nor the offer or
23
-23-
sale of the Shares to the Underwriters in the manner contemplated in
this Agreement gives rise to any rights for or relating to the
registration under the Securities Act of any other securities of the
Company or any Subsidiary;
(xi) the Registration Statement and the Prospectus and all
amendments and supplements thereto (except for the financial statements,
schedules and other financial and statistical data and information
included in the Registration Statement and the Prospectus, as to which
counsel need not express an opinion) comply as to form in all material
respects with the requirements of the Securities Act;
(xii) each document incorporated by reference in the Registration
Statement and the Prospectus (except for the financial statements
included therein as to which such counsel need express no opinion)
complied as to form in all material respects, when filed with the
Commission, with the Exchange Act;
(xiii) to such counsel's knowledge, each of the Company and each
Subsidiary incorporated under the laws of a State of the United States
holds all material licenses, approvals, certificates and permits from
governmental and regulatory authorities in the United States which are
necessary to own or lease their respective properties and assets and to
the conduct of their respective businesses;
(xiv) the Registration Statement has been declared effective under
the Securities Act and, to such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened under the
Securities Act;
(xv) to such counsel's knowledge, neither the Company nor any
Subsidiary incorporated under the laws of a State of the United States
is in violation of its articles of incorporation or by-laws or in breach
of or default (nor has any event occurred which, with notice or lapse of
time or both would constitute a default) under or in performance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease, license or other
agreement or instrument known to such counsel to which the Company
24
-24-
or any such Subsidiary is a party or by which any of them may be bound
or to which any of their properties or assets is subject or affected or
of any permit, order, decree, judgment, statute, rule or regulation
applicable to the Company or any such Subsidiary known to such counsel
except such as would not have a Material Adverse Effect;
(xvi) this Agreement, the Custody Agreement and a Power of Attorney
have been duly authorized, executed and delivered by or on behalf of
each of the Selling Shareholders and constitute valid and binding
agreements of each Selling Shareholder;
(xvii) to such counsel's knowledge, each Selling Shareholder has
full legal right and power, and has obtained any authorization or
approval required by law (other than those imposed by the Securities Act
and the securities or blue sky laws of certain jurisdictions), to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Shareholder in the manner provided in this Agreement;
(xviii) to such counsel's knowledge, delivery of certificates for
the Shares to be sold by each Selling Shareholder pursuant hereto will
pass valid and marketable title thereto to the Underwriters, free and
clear of any claim, lien, encumbrance, security interest, restriction on
transfer or other defect in title; and
(xix) each of the Representatives of the Selling Shareholders has
been duly authorized by each Selling Shareholder to execute and deliver
on behalf of each Selling Shareholder this Agreement and any other
document necessary or desirable in connection with the transactions
contemplated hereby and to deliver the Shares to be sold by the Selling
Shareholders and receive payment therefor pursuant hereto.
In rendering such opinions, such counsel may rely as to factual matters
on, and may assume the accuracy of, the representations and warranties of the
Company and the Selling Shareholders in this Agreement, the Custody Agreement
and the Powers of Attorney. Such counsel may also rely on customary and
reasonable assumptions and render such opinions subject to customary and
reasonable qualifications and exceptions. The opinions rendered pursuant to
clause (xvii) of this Sec-
25
-25-
tion 8(e) may be rendered subject to (1) the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating to or
affecting the rights of creditors, and (2) limitations imposed by law or general
principles of equity on the availability of equitable remedies or the
enforcement of provisions of any agreement. In rendering any such opinion
relating to or regarding the Optional Selling Shareholder, such counsel may rely
on the opinion of ▇▇▇▇▇▇▇▇ and ▇▇▇, general counsel for the Optional Selling
Shareholder.
Such counsel shall also state that no facts have come to such counsel's
attention which would lead such counsel to believe that the Registration
Statement, at the time it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus, as of its date and as of the Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (such counsel need not make any statement with respect to
the financial statements, schedules and other financial and statistical data
included in the Registration Statement and the Prospectus).
(f) On the effective date of the Registration Statement (the "Effective
Date") and the effective date of the most recently filed post-effective
amendment, if any, to the Registration Statement and also on the Closing
Date, Coopers & ▇▇▇▇▇▇▇ L.L.P. shall have furnished to the Underwriters
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to the Representatives, containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to certain financial information
relating to the Company and the Subsidiaries contained or incorporated by
reference in the Registration Statement and the Prospectus.
(g) The Underwriters shall have received on the Closing Date, an opinion
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Underwriters, with respect to
the validity of the Shares, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
26
-26-
(h) The Underwriters shall have received on and as of the Closing Date a
certificate of the chief financial officer of the Company to the effect that
neither the Company nor any of the Subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease, license or other agreement or instrument to which it is a party
or by which it may be bound or to which any of its properties may be subject
and which default could have a Material Adverse Effect.
(i) On or prior to the Closing Date, the Company shall have furnished to
the Representatives such further certificates and documents as the
Representatives shall reasonably request.
The several obligations of the Underwriters to purchase Option Shares
are subject to the conditions set forth in paragraphs (a)-(i) above on and as of
the Additional Closing Date (references therein to the Closing Date shall be
deemed references to the Additional Closing Date for this purpose), except that
the certificates called for by paragraphs (d) and (h), the opinions called for
by paragraphs (e) and (g) and the letter called for by paragraph (f) shall be
dated as of, and delivered on, the Additional Closing Date.
9. The Company agrees to indemnify and hold harmless each
Underwriter, its officers and directors, and each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or 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, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter expressly for use therein.
27
-27-
Each of the Selling Shareholders agrees, jointly and severally, to
indemnify and hold harmless each Underwriter, its officers and directors, and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or 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, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter expressly for use therein; provided, that no Selling Shareholder
shall be liable hereunder for any amount in excess of the total proceeds (before
deducting expenses) received by such Selling Shareholder from the Underwriters
for the Shares sold by such Selling Shareholder hereunder.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, each person who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act and the Selling
Shareholders to the same extent as the foregoing indemnity from the Company and
the Selling Shareholders to each Underwriter, but only with reference to
information relating to such Underwriter furnished to the Company in writing by
such Underwriter expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
For purposes of this Section 9, the only written information furnished by the
Underwriters to the Company expressly for use in the Registration Statement and
the Prospectus is the information in the last paragraph on the cover page of the
Prospectus, the paragraph at the bottom of the second page of the Prospectus
and, under the caption "Underwriting" in the Prospectus, the first paragraph
(including the table listing the Underwriters) and the second and sixth
paragraphs below the table listing the Underwriters.
28
-28-
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person or persons against whom such indemnity may be sought (each an
"Indemnifying Person") in writing, and such Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) such Indemnifying Person and
such Indemnified Person shall have mutually agreed to the contrary, (ii) such
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to such Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include an Indemnifying
Person and an Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that an Indemnifying Person shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Underwriters and such control persons of Underwriters shall be designated in
writing by ▇.▇. ▇▇▇▇▇▇ Securities Inc.; any such separate firm for the Company,
its directors, its officers who sign the Registration Statement, control persons
of the Company and the Selling Shareholders shall be designated in writing by
the Company. The Indemnifying Person shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, such Indemnifying
Person agrees to indemnify each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
preceding sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses
incurred by counsel as contemplated by the third sentence of this paragraph,
such Indemnifying Person agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such set-
29
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tlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first three paragraphs of
this Section 9 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders in the aggregate on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Shareholders in the aggregate on the one hand and the Underwriters
on the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders in the aggregate on the one hand and the Underwriters on
the other hand shall be deemed to be in the same respective proportions as the
net proceeds from the offering (before deducting expenses payable by the Company
and the Selling Shareholders) received by the Selling Shareholders and the total
underwriting discounts received by the Underwriters, in each case as set forth
on the cover of the Prospectus, bear to the aggregate public offering price of
the Shares. The relative fault of the Company and the Selling Shareholders in
the aggregate on the one hand and 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 and the Selling
Shareholders or by the Under-
30
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writers and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Each of the Company, the Selling Shareholders and the Underwriters
agrees that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Company and the
Selling Shareholders on the one hand and the Underwriters on the other were each
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9, (i) in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
in no event shall a Selling Shareholder be required to contribute any amount in
excess of the amount paid by the Underwriters to the Selling Shareholder upon
the sale of such Selling Shareholder's Underwritten Shares. 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. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of shares of Common Stock constituting Underwritten Shares set
forth opposite their names in Schedule A hereto, and not joint. The Selling
Shareholders' obligations to contribute pursuant to this Section 9 are several
in proportion to the respective number of shares of Common Stock constituting
Underwritten Shares set forth opposite their names in Schedule B hereto, and not
joint.
The indemnity and contribution agreements contained in this Section 9
are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
31
-31-
The indemnity and contribution agreements contained in this Section 9
and the representations and warranties of the Company and the Selling
Shareholders as set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any other person who controls the Company or any Selling Shareholder and (iii)
acceptance of and payment for any of the Shares.
10. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given to
the Company and the Selling Shareholders, if after the execution and delivery of
this Agreement and prior to the Closing Date (or, in the case of the Option
Shares, prior to the Additional Closing Date) (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
London Stock Exchange, the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market, the Chicago Board Option Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by Federal or
New York State authorities, or (iii) there shall have occurred an outbreak of
hostilities or an escalation of hostilities or any change in financial markets
or any calamity or crisis that, in the judgment of the Representatives, is
material and adverse and which, in the judgment of the Representatives, makes it
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
11. If this Agreement shall be terminated by the Representatives
because of any failure or refusal on the part of the Company or any Selling
Shareholder to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or any Selling Shareholder shall be
unable to perform its or his respective obligations under this Agreement, the
Company agrees to reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel) incurred by the Underwriters
in connection with this Agreement or the offering contemplated hereunder.
12. If, on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase the Shares which it or they have agreed to purchase hereunder on such
date, and the
32
-32-
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
number of Shares to be purchased on such date, the other Underwriters shall be
obligated severally, in the proportions that the numbers of Underwritten Shares
set forth opposite their respective names in Schedule A hereto bears to the
aggregate number of Underwritten Shares set forth opposite the names of all such
nondefaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 12 by an
amount in excess of one-ninth of the number of Shares which such Underwriter is
obligated to purchase on such date hereunder without the written consent of such
Underwriter. If, on the Closing Date or the Additional Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date,
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares are not made within 36 hours after such default, this
Agreement (or the obligations of the several Underwriters to purchase the Option
Shares, as the case may be) shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or any Selling Shareholder. In any such
case either the Representatives or the Company shall have the right to postpone
the Closing Date (or, in the case of the Option Shares, the Additional Closing
Date), but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
13. Any action by the Representatives hereunder may be taken by the
Representatives jointly or by ▇.▇. ▇▇▇▇▇▇ Securities Inc. alone on behalf of the
Representatives, and any such action taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. alone
shall be binding upon the Representatives. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be given to the Representatives, c/o ▇.▇. ▇▇▇▇▇▇ Securities
33
-33-
Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (facsimile (▇▇▇) ▇▇▇-▇▇▇▇),
Attention: Syndicate Department. Notices to the Company shall be given to it at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile (510)
847-9114), Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, with copies to ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and if to the Selling Shareholders notices should be delivered
or sent to the Representatives of the Selling Shareholders at the offices of
the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(facsimile (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇,
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
14. This Agreement shall inure to the benefit of and be binding upon
the Underwriters, the Company and the Selling Shareholders and any controlling
person referred to herein and their respective successors, heirs and legal
representatives. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Company and the Selling Shareholders and their respective
successors, heirs and legal representatives and the controlling persons and
officers and directors referred to in Section 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. No purchaser of
Shares from any Underwriter shall be deemed to be a successor by reason merely
of such purchase.
15. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws provisions thereof.
34
S-1
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
▇▇▇▇▇▇▇ MANUFACTURING CO., INC.
By: _____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
By: _____________________________________
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
THE FIRM SELLING SHAREHOLDERS
By: _____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-Fact
Accepted: , 1998
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
For themselves and as the
Representatives of the several
Underwriters named in
Schedule A hereto.
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: _____________________________
Name:
Title:
35
SCHEDULE A
Number of Shares of
Common Stock Constituting
Underwritten Shares
To Be Purchased
---------------
Underwriter
-----------
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------
Total 1,250,000
36
SCHEDULE B
FIRM SELLING SHAREHOLDERS
Number of
Name Shares
---- ---------
▇▇▇▇▇▇▇ PSB Fund 1,200,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ 50,000
---------
Total 1,250,000
37
SCHEDULE C
OPTIONAL SELLING SHAREHOLDER
Number of
Name Option Shares
---- -------------
▇▇▇▇▇▇▇ PSB Fund 187,500
-------
Total 187,500
38
SCHEDULE D
LOCKUP AGREEMENTS
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Manufacturing Co., Inc. Profit Sharing Trust for
Salaried Employees
▇▇▇▇▇▇▇ Manufacturing Co., Inc. Profit Sharing Trust for Hourly
Employees
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust DTD August 21, 1992
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust DTD August 21, 1992
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ PSB Fund
39
ANNEX A
DIRECT AND INDIRECT SUBSIDIARIES
Percentage
Subsidiary Name Owned
--------------- ----------
▇▇▇▇▇▇▇ Strong-Tie Company Inc.
a California corporation 100%
▇▇▇▇▇▇▇ Dura-Vent Company, Inc.
a California corporation 100%
▇▇▇▇▇▇▇ Manufacturing International
Corporation
a Barbados corporation 100%
▇▇▇▇▇▇▇ Strong-Tie International, Inc.
a California corporation 100%
▇▇▇▇▇▇▇ Strong-Tie France, Limited
a French corporation 100%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇ ▇▇▇▇▇▇ corporation 100%
▇▇▇▇▇▇▇ Strong-Tie Canada, Limited
a Canadian corporation 100%
▇▇▇▇▇▇▇ Strong-Tie Japan, Inc.
a California corporation 100%
▇▇▇▇▇▇▇ Strong-Tie Australia, Inc.
a California corporation 100%
