EXHIBIT 1.1
2,750,000 Shares
CENTRAL GARDEN & PET SUPPLY
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
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_____________, 1996
Alex. Brown & Sons Incorporated
Hambrecht & Quist LLC
Wasserstein Perella Securities, Inc.
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Gentlemen:
Central Garden & Pet Company, a Delaware corporation (the ``Company'')
proposes to sell to the several underwriters (the ``Underwriters'') named in
Schedule I hereto for whom you are acting as representatives (the
``Representatives'') an aggregate of 2,750,000 shares of the Company's Common
Stock, $0.01 par value (the ``Firm Shares''), of which 2,500,000 shares will be
issued and sold by the Company (the "Firm Company Shares") and 250,000 shares
will be sold by certain stockholders of the Company (the "Selling Stockholders")
named in Schedule II hereto (the "Firm Selling Stockholder Shares"). The
respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto. The
Company also proposes to sell at the Underwriters' option an aggregate of up to
412,500 additional shares of the Company's Common Stock (the ``Option Shares'')
as set forth below.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the Over-allotment option in whole or in part for the
accounts of the several Underwriters. The Firm Shares and the Option Shares (to
the extent the aforementioned option is exercised) are herein collectively
called the ``Shares.''
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. (a) Representations and Warranties of the Company and the Selling
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Stockholders. The Company and the Selling Stockholders, jointly and severally,
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represent and warrant to each of the Underwriters as follows:
(i) A registration statement on Form S-3 (File No. 333- ) with
respect to the Shares has been carefully prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the ``Act''),
and the Rules and Regulations (the ``Rules and Regulations'') of the Securities
and Exchange Commission (the ``Commission'') thereunder and has been filed with
the Commission. The Company meets all of the requirements for filing on Form
S-3. Copies of such registration statement, including any amendments thereto,
the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the ``Registration Statement,'' which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. ``Prospectus'' means (a) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Shares, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a ``Preliminary Prospectus.'' Any reference
herein to the Registration Statement, any Preliminary Prospectus or the
Prospectus, as the case may be, 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").
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and corporate authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each of the
2.
subsidiaries of the Company as listed in Exhibit 21 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995 (collectively,
the ``Subsidiaries'') has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and corporate authority to own or lease its
properties and conduct its business as described in the Registration Statement.
The Subsidiaries are the only subsidiaries, direct or indirect, of the Company.
The Company and each of the Subsidiaries are duly qualified to transact business
in all jurisdictions in which the conduct of their business requires such
qualification, except where such failure would not have a material adverse
effect on the Company and its Subsidiaries taken as a whole. The outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned by the
Company or another Subsidiary free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
(iii) The outstanding shares of Common Stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
Shares to be issued and sold by the Company have been duly authorized and when
issued and paid for as contemplated herein will be validly issued, fully paid
and non-assessable; and no preemptive rights of stockholders exist with respect
to any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
(iv) The information set forth under the caption ``Capitalization''
in the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the jurisdiction of
the Company's incorporation.
(v) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
material statements which are required to be stated therein by, and will in all
material respects conform, to the requirements of the Act and the Rules and
Regulations. The Registration Statement and any amendment hereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any
3.
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendments and supplements
thereto do not contain, and will not contain, any untrue statement of material
fact; and do not omit, and will not omit, to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to information
contained in or omitted from the Registration Statement or the Prospectus, or
any such amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any Underwriter
through the Representatives, specifically for use in the preparation thereof.
The documents incorporated by reference in the Registration Statement, any
Preliminary Prospectus and the Prospectus, when they were filed with the
Commission, conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder, and
none of such documents 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.
(vi) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements
and related schedules have been prepared in accordance with generally accepted
principles of accounting, consistently applied throughout the periods involved,
except as disclosed herein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company. The pro forma financial information included in the Registration
Statement and the Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, have been properly compiled on the
pro forma bases described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or circumstances
referred to therein. No other financial statements or schedules of the Company
or any other entity are required to be included, in or incorporated into the
Registration Statement pursuant to any requirement of the Act or any Rules and
Regulations, including Rule 3-05 of Regulation S-X.
(vii) Deloitte & Touche LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(viii) Ernst & Young LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration
4.
Statement, are independent public accountants as required by the Rules and
Regulations.
(ix) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise which if
determined adversely to the Company or any of its Subsidiaries might result in
any material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects (so
far as the Company can reasonably foresee) of the Company and of the
Subsidiaries taken as a whole or to prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement.
(x) The Company and the Subsidiaries have good and marketable title
to all of the properties and assets reflected in the financial statements (or as
described in the Registration Statement) hereinabove described, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those reflected
in such financial statements (or as described in the Registration Statement) or
which are not material in amount. The Company and the Subsidiaries occupy their
leased properties under valid and binding leases conforming in all material
respects to the description thereof set forth in the Registration Statement.
(xi) The Company and the Subsidiaries have filed all Federal, State,
local and foreign income tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are not
being contested in good faith. All tax liabilities have been adequately
provided for in the financial statements of the Company.
(xii) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise), or
prospects of the Company and its Subsidiaries taken as a whole, whether or not
occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is probable
of being entered into by the Company or the Subsidiaries, other than
transactions in the ordinary course of business and changes and transactions
described in the Registration Statement, as it may be amended or supplemented.
The Company and the Subsidiaries have no material contingent obligations which
are not disclosed in the Company's financial statements which are included in
the Registration Statement.
(xiii) Except as disclosed in the Prospectus, neither the Company nor
any of the Subsidiaries is or with the giving of notice or lapse of time or
both,
5.
will be, in violation of or in default under its Charter or Bylaws or
under any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it, or any of its properties, is
bound and which default is of material significance in respect of the condition,
financial or otherwise of the Company and its Subsidiaries taken as a whole or
the business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries taken
as a whole. The execution and delivery of this Agreement and the consummation
of the transactions herein contemplated and the fulfillment of the terms hereof
will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any Subsidiary is a party,
or of the Charter or Bylaws of the Company or any order, rule or regulation
applicable to the Company or any Subsidiary of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction.
(xiv) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company and each Selling Stockholder of this Agreement and the consummation of
the transactions herein contemplated (except such additional steps as may be
required by the Commission, the National Association of Securities Dealers, Inc.
(the ``NASD'') or such additional steps as may be necessary to qualify the
Shares for public offering by the Underwriters under state securities or Blue
Sky laws) has been obtained or made and is in full force and effect.
(xv) The Company and each of the Subsidiaries holds all material
licenses, certificates and permits from governmental authorities which are
necessary to the conduct of their businesses; and the Company has no knowledge
that either the Company or any of the Subsidiaries has infringed any patents,
patent rights, trade names, trademarks or copyrights, which infringement is
material to the business of the Company and the Subsidiaries taken as a whole.
The Company knows of no material infringement by others of patents, patent
rights, trade names, trademarks or copyrights owned by or licensed to the
Company.
(xvi) The Company and the Selling Stockholders, and to the Company's
best knowledge, none of its affiliates, have taken or may take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares. The Company acknowledges that the Underwriters may
engage in passive market making transactions in the Shares on the Nasdaq
National Market in accordance with Rule 10b-6A under the Exchange Act.
6.
(xvii) Neither the Company nor any Subsidiary is an ``investment
company'' within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
(xviii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xix) The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(xx) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (``ERISA''); no ``reportable event'' (as defined in ERISA) has
occurred with respect to any ``pension plan'' (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any ``pension plan'' or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the ``Code''); and each ``pension
plan'' for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(xxi) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
An Act Relating to Disclosure of Doing Business with Cuba.
(b) Representations and Warranties of the Selling Stockholders. The
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Selling Stockholders represent and warrant to, and agrees with, each of the
Underwriters as follows:
(i) Each of the Selling Stockholders has, and on the Closing Date
hereinafter mentioned will have, good and marketable title to the Shares
proposed to be sold by the Selling Stockholders hereunder on such Closing Date
and full right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver such Shares hereunder, free and clear of all voting
7.
trust arrangements, liens, encumbrances, equities, security interests,
restrictions and claims whatsoever; and upon delivery of and payment for such
Shares hereunder, the Underwriters will acquire good and marketable title
thereto, free and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, voting trusts or other defects of title
whatsoever.
(ii) Each of the Selling Stockholders has executed and delivered a
Power of Attorney and caused to be executed and delivered on his behalf a
Custody Agreement (hereinafter collectively referred to as the "Stockholders'
Agreement") and in connection herewith such Selling Stockholder further
represents, warrants and agrees that the Selling Stockholder has deposited in
custody, under the Stockholder's Agreement, with the agent named therein (the
"Agent") as custodian, certificates in negotiable form for the Shares to be sold
hereunder by the Selling Stockholder, for the purpose of further delivery
pursuant to this Agreement. The Selling Stockholder agrees that the Shares to be
sold by the Selling Stockholder on deposit with the Agent are subject to the
interests of the Company and the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of the
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Stockholders' Agreement, by any act of the Selling
Stockholder, by operation of law, by the death or incapacity of the Selling
Stockholder or by the occurrence of any other event. If the Selling Stockholder
should die or become incapacitated, or if any other event should occur, before
the delivery of the Shares to be sold by the Selling Stockholder hereunder, the
documents evidencing Shares to be sold by the Selling Stockholder then on
deposit with the Agent shall be delivered by the Agent in accordance with the
terms and conditions of this Agreement as if such death, incapacity or other
event had not occurred, regardless of whether or not the Agent shall have
received notice thereof. This Agreement and the Stockholders' Agreement have
been duly executed and delivered by or on behalf of the Selling Stockholder and
the form of such Stockholders' Agreement has been delivered to you.
(iii) The performance of this Agreement and the Stockholders'
Agreement and the consummation of the transactions contemplated hereby and by
the Stockholders' Agreement will not result in a breach or violation by the
Selling Stockholder of any of the terms or provisions of, or constitute a
default by the Selling Stockholder under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease, franchise, license
or other agreement or instrument to which the Selling Stockholder is a party or
by which the Selling Stockholder or any of his properties is bound, any statute,
or any judgment, decree, order, rule or regulation of any court or governmental
agency or body applicable to the Selling Stockholder or any of his properties.
(iv) Each of the Selling Stockholders has not taken and will not
take, directly or indirectly, any action designed to stabilize or manipulate, or
which has constituted or which might reasonably be expected to cause or result
in
8.
stabilization or manipulation, of the price of any security of the Company to
facilitate the sale or resale of the Shares to be sold by the Selling
Stockholder.
(v) The Registration Statement, each Preliminary Prospectus and the
Prospectus, insofar as it has related to the Selling Stockholder, has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
(c) Each of the Selling Stockholder agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise dispose
of any shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock, for a period of 90 days after the first date that
any of the Common Shares are released by you for sale to the public, without the
prior written consent of Alex. Brown & Sons Incorporated.
2. Purchase, Sale and Delivery of the Firm Shares.
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(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, (i) the Company
agrees to sell to the Underwriters 2,500,000 of the Firm Shares, and (ii) the
Selling Stockholders agree to sell to the Underwriters an aggregate of 500,000
of the Firm Shares. Each Underwriter agrees, severally and not jointly, to
purchase, from the Company and the Selling Stockholders at a price of $[ ] per
share, the number of Firm Shares set forth opposite the name of each Underwriter
in Schedule I hereof, subject to adjustments in accordance with Section 9
hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made (i)
for the Firm Shares to be sold by the Company in New York Clearing House funds
by certified or bank cashier's checks drawn to the order of the Company and (ii)
for the Firm Shares to be sold by the Selling Shareholders in New York Clearing
House Funds by certified or bank cashier's checks drawn to the order of the
Agent against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such payment and delivery are to be made
at the offices of Alex. Brown & Sons Incorporated, 135 East Baltimore Street,
Baltimore, Maryland, at 10:00 a.m., Baltimore time, on the third (or if the
Shares are priced, as contemplated by Rule 15c6-1(c) of the Securities Exchange
Act of 1934, as amended (the ``Exchange Act'') after 4:30 P.M., Washington D.C.
time, the fourth) business day after the date of this Agreement or at such other
time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
``Closing Date.'' (As used herein, ``business day'' means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and are not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives request in writing not later than the
9.
second full business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day prior to the
Closing Date.
(c) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase the Option
Shares at the price per share as set forth in the first paragraph of this
Section 2. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to be delivered.
The time and date at which certificates for Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than three
nor later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred to
as the ``Option Closing Date''). If the date of exercise of the option is three
or more days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date. The number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the total
number of Option Shares being purchased as the number of Firm Shares being
purchased by such Underwriter bears to 5,000,000, adjusted by you in such manner
as to avoid fractional shares. The option with respect to the Option Shares
granted hereunder may be exercised only to cover over-allotments in the sale of
the Firm Shares by the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in New York Clearing House funds by certified or bank
cashier's check drawn to the order of the Company against delivery of
certificates therefor at the offices of Alex. Brown & Sons Incorporated, 135
East Baltimore Street, Baltimore, Maryland.
3. Offering by the Underwriters.
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It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
10.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a Master
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. Covenants of the Company.
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(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations, (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company will advise the Representatives promptly (A) when
the Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue
11.
such qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or
before the Closing Date, four signed copies of the Registration Statement and
all amendments thereto including all exhibits filed therewith, and will deliver
to the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(vii) The Company will, for a period of five years from the Closing
Date, deliver to the Representatives copies of annual reports and copies of all
other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Exchange Act.
12.
The Company will deliver to the Representatives similar reports with respect to
significant subsidiaries, as that term is defined in the Rules and Regulations,
which are not consolidated in the Company's financial statements.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of 120 days after the
date of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of Alex. Brown & Sons Incorporated.
The foregoing sentence shall not apply to (A) options to purchase Common Stock
granted or Common Stock issued under the Company's presently authorized stock
option plans and equity incentive plans described in the Prospectus, (B) Common
Stock issued upon exercise of the Warrant held by Monsanto Company as described
in the Prospectus, and (C) Common Stock issued upon conversion of the Series A
Preferred Stock held by Monsanto Company as described in the Prospectus.
(ix) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the Nasdaq National Market.
(x) The Company has caused each officer, director and stockholder of
the Company identified by the Representatives to furnish to you, on or prior to
the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person shall agree
not to offer, sell, sell short or otherwise dispose of any shares of Common
Stock of the Company or other capital stock of the Company, or any other
securities convertible, exchangeable or exercisable for Common Shares or
derivative of Common Shares owned by such person or request the registration for
the offer or sale of any of the foregoing (or as to which such person has the
right to direct the disposition of) for a period of 120 days after the date of
this Agreement, directly or indirectly, except with the prior written consent of
Alex. Brown & Sons Incorporated (``Lockup Agreements'').
(xi) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus.
(xii) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the Investment Company Act of 1940, as amended (the ``1940 Act'').
(xiii) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
13.
(xiv) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
5. Costs and Expenses.
-------------------
Whether or not the transactions contemplated hereunder are consummated or
this Agreement becomes effective or is terminated, the Company will pay and
unless otherwise paid by the Company, the Selling Stockholders agree to pay, in
such proportions as they may agree among themselves all costs, expenses and fees
incident to the performance of the obligations of the Company under this
Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company; the cost of printing and delivering to, or as requested
by, the Underwriters copies of the Registration Statement, Preliminary
Prospectuses, the Prospectus, this Agreement, the Underwriters' Selling
Memorandum, the Underwriters' Invitation Letter, the Additional Listing
Application, the Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. (the ``NASD'') of
the terms of the sale of the Shares; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under State securities or Blue Sky laws. The
Company agrees to pay all costs and expenses of the Underwriters, including the
fees and disbursements of counsel for the Underwriters, incident to the offer
and sale of directed shares of the Common Stock by the Underwriters to employees
and persons having business relationships with the Company and its Subsidiaries.
The Company shall not, however, be required to pay for any of the Underwriters'
expenses (other than those related to qualification under NASD regulation and
State securities or Blue Sky laws). This Section 5 shall not affect any
agreement relating to the payment of expenses between the Company and the
Selling Stockholders.
6. Conditions of Obligations of the Underwriters.
----------------------------------------------
The several obligations of the Underwriters to purchase the Firm Shares on
the Closing Date and the Option Shares, if any, on the Option Closing Date are
subject to the accuracy, as of the Closing Date or the Option Closing Date, as
the case may be, of the representations and warranties of the Company contained
herein, and to the performance by the Company of its covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendment thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any request of
the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the
14.
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company, shall be contemplated
by the Commission and no injunction, restraining order, or order of any nature
by a Federal or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Orrick, Herrington &
Sutcliffe, counsel for the Company, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Underwriters (and stating that it may
be relied upon by counsel to the Underwriters) to the effect that:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(ii) The Company has the full corporate power and corporate authority
to own, lease and operate its business as described in the Prospectus; and
the Company is duly qualified to do business as a foreign corporation and
is in good standing in all jurisdictions in the United States in which the
Company is required to be qualified and in which the failure so to qualify
taken in the aggregate would have a material adverse effect on the
business, operations or financial condition of the Company.
(iii) The outstanding shares of capital stock of the Company and the
warrant issued to Monsanto Company have been duly and validly authorized
and issued and are fully paid and nonassessable and free of preemptive
rights and issued in compliance with all federal securities laws.
(iv) The Shares to be issued by the Company pursuant to the terms of
the Underwriting Agreement will be, when duly countersigned by the
Company's transfer agent and registrar and upon issuance and delivery
against payment therefor in accordance with the terms thereof, duly
authorized, validly issued and fully paid and nonassessable, and the
shareholders of the Company have no preemptive rights with respect to the
issuance of the Shares.
(v) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly
executed and delivered by the Company.
(vi) The Registration Statement has become effective under the 1933
Act and, to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of
15.
such counsel's knowledge, are pending or contemplated under the 1933 Act.
(vii) The documents incorporated by reference in the Prospectus
(except for any financial statements and schedules and financial and
statistical information included in such documents as to which such counsel
need express no opinion), when they were filed with the Commission,
complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder.
(viii) The terms and provisions of the capital stock of the Company
conform in all material respects to the description thereof contained in
the Registration Statement and the Prospectus and the form of certificate
evidencing the shares to be delivered hereunder are in due and proper form
under Delaware law.
(ix) To the best of such counsel's knowledge, no authorization,
consent, approval of or qualification with, any governmental authority is
required for the performance by the Company of its obligations under the
Underwriting Agreement, except such as have been made or obtained under the
1933 Act or such as may be required under state or other blue sky laws in
connection with the purchase and distribution of the Shares (on which we
express no opinion) by the Underwriters.
(x) To the best of such counsel's knowledge, all contracts,
indentures, mortgages, loan agreements, leases, or other documents that are
required to be filed as exhibits to the Registration Statement or required
to be described in the Registration Statement, have been filed as Exhibits
thereto or described therein.
(xi) The execution and delivery by the Company of, and performance by
the Company of its obligations under, the Underwriting Agreement, do not
conflict with or violate the Company's Amended and Restated Certificate of
Incorporation or Bylaws, or to the best of such counsel's knowledge (1)
constitute a breach of or constitute a default under, the affiliation
arrangements, as defined in the Prospectus, and any agreement or other
instrument binding upon the Company or any of its subsidiaries and
identified to us by the Company as material, as set forth as Exhibits 10.1
to 10.51 to the Registration Statement, and (2) do not conflict with or
violate any judgment, order or decree of any court or governmental
authority against the Company or by which any of its properties is bound.
(xii) To the best of such counsel's knowledge, and except as
disclosed in the Registration Statement and the Prospectus, there is no
action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency now pending or threatened
16.
against or affecting the Company which would require disclosure in the
Prospectus.
(xiii) To the best of such counsel's knowledge, except as set forth
in the Registration Statement and the Prospectus, no holders of securities
of the Company have registration rights with respect to such securities.
(xiv) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any security convertible into or exchangeable for
capital stock of the Company.
(xv) This Agreement and the Stockholders' Agreement have been duly
authorized, executed and delivered by or on behalf of each Selling
Stockholder; the Agent has been duly and validly authorized to act as the
custodian of the Common Shares to be sold by each Selling Stockholder; to
the best of such counsel's knowledge, the performance of this Agreement and
the Stockholders' Agreement and the consummation of the transactions herein
contemplated by each Selling Stockholder will not result in a breach of, or
constitute a default under, any material indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease, franchise,
license or other material agreement or instrument to which each Selling
Stockholder is a party or by which each Selling Stockholder or any of his
properties may be bound, or violate any statute, judgment, decree, order,
rule or regulation known to such counsel of any court or governmental body
having jurisdiction over each Selling Stockholder or any of his properties;
and to the best of such counsel's knowledge, no approval, authorization,
order or consent of any court, regulatory body, administrative agency or
other governmental body is required for the execution and delivery of this
Agreement or the Stockholders' Agreement or the consummation by each
Selling Stockholder of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect under
the Act and such as may be required under the rules of the NASD and
applicable Blue Sky laws;
(xvi) To the best of such counsel's knowledge, each Selling
Stockholder has full right, power and authority to enter into this
Agreement and the Stockholders' Agreement and to sell, transfer and deliver
the Common Shares to be sold on such Closing Date by each Selling
Stockholder hereunder and good and marketable title to such Shares so sold,
free and clear of all liens encumbrances, equities, claims, restrictions,
security interests, voting trusts, or other defects of title whatsoever,
has been transferred to the Underwriters (whom counsel may assume to be
bona fide purchasers) who have purchased such Shares hereunder; and
17.
(xvii) To the best of such counsel's knowledge, the Stockholders'
Agreement are valid and binding agreements of each Selling Stockholder,
enforceable in accordance with their terms except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally.
In rendering such opinion, such counsel may rely as to matters of
local law on opinions of local counsel, and as to matters of fact, the
certificate of officers of the Company and of governmental officials, in which
case their opinion is to state that they are so doing and that the Underwriters
are justified in relying on such opinions or certificates and copies of said
opinions or certificates are to be attached to the opinion or delivered at the
Closing. Such counsel shall also include statements to the effect that (1) such
counsel believes that, as of the effective date of the Registration Statement,
the Registration Statement and the Prospectus complied as to form in all
material respects with the requirements of the 1933 Act; and (2) nothing has
come to such counsel's attention that would lead such counsel to believe that
either at the effective date of the Registration Statement or at the applicable
Closing Date the Registration Statement or the Prospectus, or any such amendment
or supplement, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that such counsel need not express such an opinion as to
the financial statements, schedules and financial data contained in the
Registration Statement or the Prospectus.
(c) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Knox Ricksen, counsel
for the Company and its Subsidiaries, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) to the effect that:
(i) Each of the Subsidiaries of the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California.
(ii) Each of the Subsidiaries of the Company has the full corporate
power and corporate authority to own, lease and operate its business as
described in the Prospectus; and each of the Subsidiaries of the Company is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions in the United States in which such subsidiary is required to be
qualified and in which the failure so to qualify taken in the aggregate would
have a material adverse effect on the business, operations or financial
condition of the Company.
(iii) The outstanding shares of capital stock of each of the
Subsidiaries of the Company have been duly and validly authorized and issued
18.
and are fully paid and nonassessable and free of preemptive rights and issued in
compliance with all federal securities laws.
(d) The Representatives shall have received from Brobeck, Phleger &
Harrison LLP, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, substantially to the effect
specified in subparagraphs (iv), (v) and (vi) of subparagraph (b) of this
Section 6, and that the Company is a duly organized and validly existing
corporation under the laws of the State of Delaware. In rendering such opinion
Brobeck, Phleger & Harrison LLP may rely as to all matters governed other than
by the laws of the State of California or Federal laws on the opinion of counsel
referred to in Paragraph (b) of this Section 6. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Brobeck,
Phleger & Harrison LLP may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(e) The Representatives shall have received at or prior to the Closing Date
from Brobeck, Phleger & Harrison LLP a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the State
securities or Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(f) The Representatives shall have received, on each of the dates hereof,
the Closing Date and the Option Closing Date, as the case may be, a letter dated
the date hereof, the Closing Date or the Option Closing Date, as the case may
be, in form and substance satisfactory to you, of Deloitte & Touche LLP
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations; and containing such other statements and
19.
information as is ordinarily included in accountants' ``comfort letters'' to
Underwriters with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and Prospectus.
(g) You shall have received, on each of the dates hereof, the Closing Date
and the Option Closing Date, as the case may be, in form and substance
satisfactory to you, of Ernst & Young LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating that in their opinion the financial
statements and schedules examined by them and included in the registration
Statement comply in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations;
containing such other statements and information as is ordinarily included in
accountants' "comfort letters' to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(h) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registrations
Statement has been issued, and no proceedings for such purpose have been
taken or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules 424 or
430A under the Act have been made;
(iv) He or she has carefully examined the Registration Statement and
the Prospectus and, in his or her opinion and to the best of his or her
knowledge, as of the effective date of the Registration Statement, the
statements contained in the Registration Statement were true and correct in
all material respects, and such Registration Statement and Prospectus did
not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and since
the effective date of the Registration Statement, no event has occurred
which should have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement or amendment;
20.
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects (so far as the Company can reasonably foresee) of
the Company and the Subsidiaries taken as a whole, whether or not arising
in the ordinary course of business.
(i) The Representatives shall have received, on each of the dates hereof,
the Closing Date and the Option Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, a certificate, dated such Closing
Date and addressed to you, signed by or on behalf or the Selling Stockholders to
the effect that the representations and warranties of the Selling stockholders
in this Agreement are true and correct, as if made at and as of such Closing
Date, and the Selling Stockholders have complied with all agreement and
satisfied all the conditions on his part to be performed or satisfied prior to
such Closing Date.
(j) Copies of opinions addressed to the Company dated the date before this
Agreement is executed and also on the First Closing Date and the Second Closing
Date, of (a) Middleberg, Riddle & Gianna, (b) Knox Ricksen, and (c) Farella
Braun & Martel, all of which are counsel to the Company, with respect to various
matters relating to the fire in the Company's Baton Rouge, Louisiana warehouse.
(k) The Company shall have furnished to the Representatives such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(l) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq National Market.
(m) The Lockup Agreements described in Section 4(x) are in full force and
effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Brobeck, Phleger & Harrison
LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by noting the Company of such termination in writing or by
21.
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be.
In such an event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. Conditions of the Obligations of the Company.
---------------------------------------------
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. Indemnification.
----------------
(a) The Company and the Selling Stockholders, jointly and severally, agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities to which such Underwriter or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
(ii) any inaccuracy in the representations and warranties of the Company or the
Selling Stockholders contained herein or any failure of the Company or the
Selling Stockholders to perform its obligations hereunder or under law, or (iii)
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; and
will reimburse each Underwriter and each such controlling person for any legal
or other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any action or proceeding;
provided, however, that neither the Company nor the Selling Stockholders will be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives specifically for use in the
preparation thereof. The Underwriters acknowledge that the Company and the
Selling Stockholders intend to agree, as among themselves and without limiting
the rights of the Underwriters under this
22.
Agreement, as to their respective amounts of such liability for which they each
shall be responsible. This indemnity agreement will be in addition to any
liability which the Company or the Selling Stockholders may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of the Act and the Selling Stockholders, against any losses,
claims, damages or liabilities to which the Company, the Selling Stockholders or
any such director, officer, or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made; and will reimburse any legal or other expenses reasonably
incurred by the Company, the Selling Stockholders or any such director, officer,
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however, that
each Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to this Section 8, such person (the ``indemnified party'') shall
promptly notify the person against whom such indemnity may be sought (the
``indemnifying party'') in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of
23.
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying party shall
have failed to assume the defense and employ counsel acceptable to the
indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by you in the case of parties indemnified pursuant to Section 8(a) and
by the Company in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgement for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder (whether
or not any indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under Section 8(a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company
24.
and the Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Selling Stockholders on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court already having jurisdiction over the
Company or any Selling Stockholders.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Selling Stockholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company or any Selling Stockholders, (ii)
acceptance of any
25.
Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter, to the Company, its directors or
officers, or any person controlling the Company or any Selling Stockholders,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
9. Default by Underwriters.
------------------------
If on the Closing Date or the Option Closing Date, as the case may be, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company, the Selling Stockholders,
you, as Representatives of the Underwriters, shall use your reasonable efforts
to procure within 36 hours thereafter one or more of the other Underwriters, or
any others, to purchase from the Company or the Selling Stockholders such
amounts as may be agreed upon and upon the terms set forth herein, the Firm
Shares or Option Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Firm Shares or Option Shares, as the case may be, agreed to be
purchased by the defaulting Underwriter or Underwriters, then (a) if the
aggregate number of shares with respect to which such default shall occur does
not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may be,
which they are obligated to purchase hereunder, to purchase the firm Shares or
Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of shares of
Firm Shares or Option Shares, as the case may be, with respect to which such
default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case
may be, covered hereby, the Company, the Selling Stockholders or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 36-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting Underwriters
or of the Company except to the extent provided in Section 8 hereof. In the
event of a default by any Underwriter or Underwriters, as set forth in this
Section 9, the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as Representatives,
may determine in order that the required changes in the Registration Statement
or in the Prospectus or in any other documents or arrangements may be effected.
The term ``Underwriter'' includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
26.
10. Notices.
--------
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, 101 California Street, 46th Floor, San Francisco, California
94111, Attention: Peter B. Breck; with a copy (i) to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202, Attention:
General Counsel and (ii) Brobeck, Phleger & Harrison LLP, One Market, Spear
Street Tower, San Francisco, California 94105, Attention: Thomas A. Bevilacqua,
Esq.; if to the Company or the Selling Stockholders, to Central Garden & Pet
Company, 3697 Mount Diablo Boulevard, Suite 310, P.O. Box 899, Lafayette,
California 94549, Attention: William E. Brown, with a copy to Orrick, Herrington
& Sutcliffe, Old Federal Reserve Bank Building, 400 Sansome Street, San
Francisco, California 94111, Attention John F. Seegal, Esq.
11. Termination.
------------
Without limiting the right to terminate this Agreement pursuant to any other
provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or
by you by notice to the Company at any time prior to the earlier of (i) the time
the Shares are released by you for sale by notice to the Underwriters, or (ii)
11:30 a.m. on the first business day following the date of this Agreement;
(b) This Agreement may also be terminated by you at any time prior to the
Closing Date if any of the following has occurred: (i) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole, whether or not arising in the ordinary course of business, (ii) any
outbreak or escalation of hostilities or declaration of war or national
emergency or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets of
the United States would, in your reasonable judgment, make it impracticable to
market the Shares or to enforce contracts for the sale of the Shares, (iii)
suspension of trading in securities generally on the New York Stock Exchange or
the American Stock Exchange or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such Exchange,
(iv) the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects or may materially and adversely
affect the business or operations of the
27.
Company, (v) declaration of a banking moratorium by United States or New York
State authorities, (vi) the suspension of trading of the Company's common stock
by the Commission on the Nasdaq National Market or (vii) the taking of any
action by any government body or agency in respect of its monetary or fiscal
affairs which in your reasonable opinion has a material adverse effect on the
securities markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. Failure of the Selling Stockholder to Sell and Deliver.
--------------------------------------------------------
If any of the Selling Stockholders shall fail to sell and deliver to the
Underwriters the Shares to be sold and delivered by such Selling Stockholder at
the Closing Date under the terms of this Agreement, then the Underwriters may,
at their option, by written notice from you to the Company and the Selling
Stockholders, either (i) terminate this Agreement without any liability on the
part of any Underwriter or, except as provided in Sections 5 and 8 hereof, the
Company or the Selling Stockholders, or (ii) purchase the shares which the
Company has agreed to sell and deliver in accordance with the terms hereof. In
the event of a failure by the Selling Stockholders to sell and deliver as
referred to in this Section, either you or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected.
13. Successors.
-----------
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
14. Information Provided by Underwriters.
-------------------------------------
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page (insofar as
such information relates to the Underwriters), legends required by Item 502(d)
of Regulation S-K under the Act and the information under the caption
``Underwriting'' in the Prospectus.
28.
15. Miscellaneous.
--------------
The reimbursement, indemnification and contribution agreements contained
in this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
Any Person executing and delivering this Agreement as Attorney-in-fact for
any Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by the Attorney-in-fact will
be binding on such Selling Stockholder.
29.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.
Very truly yours,
CENTRAL GARDEN & PET COMPANY
By
--------------------------------
William E. Brown
Chief Executive Officer
THE SELLING STOCKHOLDERS
By:
--------------------------------
(Attorney-in-Fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
ALEX. BROWN & SONS INCORPORATED
HAMBRECHT & QUIST LLC
WASSERSTEIN PERELLA SECURITIES, INC.
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By:
--------------------------------
Authorized Officer
30.
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares Number of Firm Shares to
to be Purchased be Purchased From the
Underwriter From the Company Selling Stockholders
- --------------------------- ----------------------- -------------------------
Alex. Brown & Sons
Incorporated.............. 1,500,000
Hambrecht & Quist LLC.... 1,500,000
Wasserstein Perella
Securities, Inc...........
--------- -------
TOTAL 2,500,000 250,000
========= =======
31.