3,900,000 SHARES
SUBURBAN OSTOMY SUPPLY CO., INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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September __, 1996
DEAN WITTER REYNOLDS INC.
BEAR STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY, L.L.C.
WHEAT FIRST BUTCHER SINGER
As Representatives of the several Underwriters
c/o Dean Witter Reynolds Inc.
2 World Trade Center
65th Floor
New York, New York 10048
Dear Sirs:
1. Introductory. Suburban Ostomy Supply Co., Inc., a Massachusetts
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corporation (the "Company"), proposes to issue and sell, pursuant to the terms
of this Agreement, to the several Underwriters named in Schedule A hereto (the
"Underwriters" which term also shall include any underwriter substituted as
hereinafter provided in Section 11) an aggregate of 3,900,000 shares of Common
Stock (the "Common Stock") of the Company. The aggregate of 3,900,000 shares so
to be sold by the Company is herein called the "Firm Stock". The Company, Summit
Ventures III, L.P., Summit Investors II, L.P. and Summit Subordinated Debt, L.P.
(collectively the "Selling Shareholders") also propose to sell severally to the
Underwriters, on a pro rata basis, at the option of the Underwriters, an
aggregate of not more than 585,000 additional shares of Common Stock as provided
in Section 3 of this Agreement. The aggregate of 585,000 shares so proposed to
be sold is herein called the "Optional Stock". The Firm Stock and the Optional
Stock are collectively referred to herein as the "Stock." Dean Witter Reynolds
Inc., Bear Stearns & Co. Inc., William Blair & Company, L.L.C. and Wheat First
Butcher Singer are acting as representatives of the several Underwriters and in
such capacity are hereinafter referred to as the "Representatives".
Before the purchase and public offering of the Stock by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Stock will
be governed by this Agreement, as supplemented by the Pricing Agreement. From
and after the date of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement.
2. Representations and Warranties of the Company and the Selling
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Shareholders.
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(a) The Company represents and warrants to, and agrees with, the
several Underwriters, as of the date hereof and as of the date of the Pricing
Agreement (such later date being hereinafter referred to as the "Representation
Date"), that:
(i) A registration statement on Form S-1 (File No. 333-06621)
with respect to the Stock, a copy of which has heretofore been delivered to you,
has been carefully prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the published rules
and regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Act, and has been filed with the
Commission under the Act; and the Company has so prepared and proposes so to
file prior to the effective date of such registration statement an amendment to
such registration statement including the final form of prospectus (which may
omit such information as permitted by Rule 430A of the Rules and Regulations).
Such registration statement as amended and the prospectus constituting a part
thereof (including in each case the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) or Rule 434 of the Rules and Regulations) are
hereinafter referred to as the "Registration Statement" and the "Prospectus",
respectively, except that if any revised prospectus shall be provided to the
Underwriters by the Company for use in connection with the offering of the Stock
which differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective (whether or not such prospectus is
required to be filed by the Company pursuant to Rule 424(b) of the Rules and
Regulations), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first provided to the Underwriters for such use. If the
Company elects to rely on Rule 434 under the Rules and Regulations, all
references to the Prospectus shall be deemed to include, without limitation, the
form of prospectus and the term sheet, taken together, provided to the
Underwriters by the Company in reliance on Rule 434 under Rules and Regulations
(the "Rule 434 Prospectus"). If the Company files a registration statement to
register a portion of the Securities and relies on Rule 462(b) for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to "Registration
Statement" herein shall be deemed to be to both the registration statement
referred to above (No. 333-06621) and the Rule 462 Registration Statement, as
each such registration statement may be amended pursuant to the Act.
(ii) When the Registration Statement becomes effective and as of
the Representation Date, the Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Act and the Rules
and Regulations. At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement will not include 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. The
Prospectus, at the time the Registration Statement becomes effective and as of
the Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in connection
with the offering of the Stock which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, in which
case at the time it is first provided to the Underwriters for such use) and at
the Closing Date (as hereinafter defined), will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing representations,
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warranties and agreements shall not apply to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof.
(iii) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus and except as disclosed in
the Prospectus, (A) neither the Company nor any of its subsidiaries has incurred
any liabilities or obligations (indirect, direct or contingent) or entered into
any oral or written agreements or other transactions not in the ordinary course
of business that, singly or in the aggregate, could reasonably be expected to be
material to the Company and its subsidiaries considered as a whole or that could
reasonably be expected to result in a material reduction in the earnings of the
Company and its subsidiaries considered as a whole, (B) neither the Company nor
any of its subsidiaries has sustained any loss or interference with its business
or properties from strike, fire, flood, windstorm, accident or other calamity
(whether or not covered
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by insurance) that, singly or in the aggregate, could reasonably be expected to
be material to the Company and its subsidiaries considered as a whole, (C) there
has been no material change in the indebtedness of the Company, no change in the
capital stock of the Company and no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock, and (D)
there has not been any Material Adverse Effect (as hereinafter defined).
Material Adverse Effect means any change that would, singly or in the aggregate,
result in a material adverse change in the condition (financial or otherwise),
business, prospects or results of operations of the Company and its subsidiaries
considered as a whole, whether or not arising in the ordinary course of
business.
(iv) The financial statements, together with the related notes
and schedules, set forth in the Prospectus and elsewhere in the Registration
Statement, fairly present, on the basis stated in the Registration Statement,
the financial position and the results of operations and changes in financial
position of the Company and its consolidated subsidiaries at the respective
dates or for the respective periods therein specified. Such financial statements
and related notes and schedules have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis except as may be
set forth in the Prospectus. The selected financial data set forth in the
Prospectus under the caption "Selected Consolidated Financial Data" fairly
presents, on the basis stated in, the information set forth therein. The pro
forma financial statements of the Company and the related notes thereto included
in the Registration Statement and the Prospectus have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(v) Arthur Andersen LLP, who have expressed their opinions on
the audited financial statements and related schedules included in the
Registration Statement, are independent public accountants as required by the
Act and the Rules and Regulations.
(vi) The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing as corporations under
the laws of their respective jurisdictions of organization, with power and
corporate authority to own, lease and operate their properties and to conduct
their businesses as described in the Registration Statement and Prospectus; and
the Company is and each of its subsidiaries are duly qualified to do business
and in good standing as foreign corporations in all other jurisdictions where
their ownership or leasing of properties or the conduct of their businesses
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect.
(vii) The Company has authorized, issued and outstanding capital
stock as set forth under the heading "Capitalization" in the Prospectus (except
for subsequent issuances, if any, pursuant to reservations or agreements
referred to in the Prospectus); the issued and outstanding shares of Common
Stock (including the outstanding shares of the Stock) of the Company conform to
the description thereof in the Prospectus and have been duly authorized and
validly issued and are fully paid and nonassessable; the stockholders of the
Company have no preemptive rights with respect to any shares of capital stock of
the Company and all outstanding shares of capital stock of each corporate
subsidiary have been duly authorized and validly issued, and are fully paid and
nonassessable and are owned directly by the Company or by another subsidiary of
the Company free and clear of any liens, encumbrances, equities or claims.
(viii) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein and in the Pricing
Agreement, will be duly and validly issued and fully paid and nonassessable and
will conform to the description thereof in the Prospectus.
(ix) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any subsidiary is the
subject, that are required to be disclosed in the Registration Statement (other
than as described therein), or which, if determined adversely to the Company or
any subsidiary, would result in a Material Adverse Effect or which might
materially and adversely affect the consummation of this Agreement; and
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to the best of the Company's knowledge no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(x) Neither the Company nor any of its subsidiaries is, or with
the giving of notice or passage of time or both would be, in breach or violation
of any of the terms or provisions of or in default under (A) any statute, rule
or regulation applicable to the Company or any of its subsidiaries, (B) any
indenture, contract, lease, mortgage, deed of trust, note or other agreement or
instrument to which the Company or such subsidiary is a party or by which it may
be bound, (C) its certificate of incorporation, by-laws or other organizational
documents, and (D) any order, decree or judgment of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries,
in each case (other than clause (C) of this Section 2(a)(x)), where such breach,
violation or default would result in a Material Adverse Effect. The performance
of this Agreement and the consummation of the transactions herein contemplated
will not, with the giving of notice or passage of time or both, result in a
breach or violation of any of the terms or provisions of or constitute a default
under (W) any statute, rule or regulation applicable to the Company or any of
its subsidiaries, (X) any indenture, contract, mortgage, lease, deed of trust,
note or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it is bound, (Y) the Company's or any such
subsidiary's certificate of incorporation, by-laws or other organizational
documents, or (Z) any order, decree judgment of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or any
of their respective properties.
(xi) No labor dispute with the employees of the Company or any of
its subsidiaries exists or is imminent; and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors which might be expected to result in a
Material Adverse Effect.
(xii) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body is required
for the issuance and sale of the Stock by the Company or for the consummation by
the Company of the transactions contemplated by this Agreement, including,
without limitation, the use of the proceeds from the sale of the Stock to be
sold by the Company in the manner contemplated in the Prospectus under the
caption "Use of Proceeds," except such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or under the Act or the
securities or Blue Sky laws of any jurisdiction in connection with the purchase
and distribution of the Stock by the Underwriters.
(xiii) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company.
(xiv) The Company and its subsidiaries own or have obtained
valid licenses for all trademarks, trademark registrations, service marks,
service mark registrations, trade names and copyrights described in the
Prospectus as being owned, licensed or used by the Company or any of its
subsidiaries or that are necessary for the conduct of their respective
businesses as described in the Prospectus (collectively, "Intellectual
Property") and neither the Company nor any of its subsidiaries is aware of any
claim (or of any facts that would form a reasonable basis for any claim) to the
contrary or any challenge by any third party to the rights of the Company or any
of its subsidiaries with respect to any such Intellectual Property or to the
validity or scope of any such Intellectual Property and neither the Company nor
any of its subsidiaries has any claim against a third party with respect to the
infringement by such third party of any such Intellectual Property, which claims
or challenges, if adversely determined, would have a Material Adverse Effect.
(xv) The Company and its subsidiaries are in possession of and
operating in compliance with all such certificates, permits, licenses,
franchises, consents, approvals, authorizations, grants, easements, orders and
clearances as are necessary or required to own, lease or operate their
respective properties and to conduct their respective businesses in the manner
described in the Prospectus ("Licenses") and all such Licenses are valid and in
full force and effect except where the failure to possess such licenses would
not have a Material Adverse Effect. The Company and each of its subsidiaries are
in compliance in all material respects with their respective obligations under
such Licenses and neither the Company nor any or its subsidiaries has
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received any notice of proceeding that would allow, and no event has occurred
that allows, or after notice or lapse of time or both would allow, revocation,
modification, suspension or termination of any such License or a material
violation of any such laws or regulations. No such License contains a burdensome
restriction on the Company or any of its subsidiaries that is not adequately
disclosed in the Registration Statement and the Prospectus.
(xvi) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(xvii) The Company and its subsidiaries have good and marketable
title to all properties (real and personal) owned by the Company and its
subsidiaries, free and clear of any mortgage, pledge, lien, security interest,
claim or encumbrance of any kind that may materially interfere with the use of
such properties or the conduct of the business of the Company and its
subsidiaries as a whole; and all material properties held under lease or
sublease by the Company or its subsidiaries are held under valid, subsisting and
enforceable leases or subleases with such exceptions as are not material and do
not interfere with the use made or proposed to be made of such properties by the
Company or its subsidiaries.
(xviii) The Company and its subsidiaries maintains accurate
books and records reflecting their respective assets and maintain internal
accounting controls which provide reasonable assurance that (A) transactions are
executed with management's authorization, (B) transactions are recorded as
necessary to permit preparation of financial statements and to maintain
accountability for assets, (C) access to assets is permitted only in accordance
with management's authorization and (D) the reported accountability of assets is
compared with existing assets at reasonable intervals.
(xix) The Company has complied, and will continue to comply,
with all provisions of Section 517.075 of the Florida Statutes (Chapter 92-198,
Laws of Florida) and the rules thereunder.
(xx) The Company and its subsidiaries have filed all federal,
state, local and foreign tax returns required to be filed, such returns are
complete and accurate in all material respects, and all taxes shown by such
returns or otherwise assessed that are due or payable have been paid, except
such taxes as are being contested in good faith and as to which adequate
reserves have been provided. The charges, accruals and reserves on the books of
the Company and its subsidiaries in respect of any tax liability for any year
not finally determined are adequate to meet any assessments or reassessments for
additional taxes; and there has been no tax deficiency asserted and, to the best
knowledge of the Company, no tax deficiency might be asserted or threatened
against the Company or any of its subsidiaries that could have a Material
Adverse Effect.
(xxi) Each "employee benefit plan" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), in which
employees of the Company or any of its subsidiaries are eligible to participate
is in compliance in all material respects with the applicable provisions of
ERISA and the Internal Revenue Code of 1986, as amended. Neither the Company nor
any of its subsidiaries has any liability under Title IV of ERISA, nor does the
Company or any of its subsidiaries expect that any such liability will be
incurred, that could have a Material Adverse Effect.
(xxii) No transaction has occurred between or among the Company,
its subsidiaries and any of their respective officers, directors or affiliates
or, the best of the Company's knowledge, any affiliate of any such officer or
director, that is required to be described in the Registration Statement that is
not so described.
(xxiii) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the registration Statement that are
not described or filed as required. The contracts so described in the
Registration Statement and the Prospectus are in full force and effect and
neither the Company nor any of its subsidiaries nor, to the best knowledge of
the Company, any other party is in breach of or default under any such
contracts.
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(xxiv) Except as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company or
any of its subsidiaries any brokerage or finder's fee or any other fee,
commission or similar payment in connection with the Stock to be sold by the
Company.
(b) Any certificate signed by an officer of the Company and delivered
to the Representatives or counsel for the Underwriters shall be deemed a
representation and warranty of the Company to each Underwriter as to the matters
covered thereby.
(c) In the event the Selling Shareholders sell any Optional Stock
pursuant to this Agreement, the Selling Shareholders, acting severally and not
jointly, represent and warrant to, and agree with, the several Underwriters
that:
(i) Each Selling Shareholder has full right, power and authority
to enter into this Agreement. Each Selling Shareholder has duly executed and
delivered this Agreement.
(ii) Each Selling Shareholder has full right, power and authority
to sell, transfer, assign and deliver the Stock being sold by such Selling
Shareholder hereunder. Immediately prior to the delivery of the shares of Stock
being sold by such Selling Shareholder, such Selling Shareholder was the sole
registered owner of such shares of Stock and had good and valid title to such
shares of Stock, free and clear of all adverse claims as defined in Section 8-
302 of the Uniform Commercial Code and, upon registration of such shares of
Stock in the names of the Underwriters or their nominees, assuming that such
purchasers purchased such shares of Stock in good faith without notice of any
adverse claims as defined in Section 8-302 of the Uniform Commercial Code, such
purchasers will have acquired all the rights of such Selling Shareholder in such
shares of Stock free of any adverse claim, any lien in favor of the Company or
restrictions on transfer imposed by the Company.
(iii) The performance of this Agreement and the consummation of
the transactions herein contemplated will not, with the giving of notice or the
passage of time or both, result in a breach or violation of any of the terms or
provisions of or constitute a default under any statute, rule or regulation
applicable to such Selling Shareholder, or any indenture, mortgage, deed of
trust, note or other material contract, agreement or instrument to which such
Selling Shareholder is a party or by which it is bound, or any judgment, order
or decree of any court or governmental agency or body having jurisdiction over
such Selling Shareholder or any of its properties, or, if such Selling
Shareholder is a corporation, the certificate or articles of incorporation or
by-laws of such Selling Shareholder.
(iv) Without the prior written consent of Dean Witter Reynolds
Inc. on behalf of the Underwriters, each Selling Shareholder will not, during
the period commencing on the date hereof and ending 180 days after the date of
the final prospectus relating to the offering (the Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer of dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are now owned by the undersigned or are hereafter acquired), or
(2) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such Selling
Shareholder of the transactions contemplated by this Agreement, except such as
may be required by the NASD or under the Act or the securities or Blue Sky laws
of any jurisdiction in connection with the purchase and distribution of the
Stock by the Underwriters.
(vi) Such Selling Shareholder has not (A) taken, directly or
indirectly, any action designed to cause or result in, or that has constituted
or could reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the
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Stock or (B) since the filing of the Registration Statement (1) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of, the Stock
or (2) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(vii) All information furnished or to be furnished to the
Company by or on behalf of each Selling Shareholder for use in connection with
the preparation of the Registration Statement and the Prospectus, insofar as it
relates to such Selling Shareholder, is or will be true and correct in all
respects and, with respect to the Registration Statement, does not and will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and, with respect to the Prospectus, does not and will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(viii) Nothing has come to such Selling Shareholder's attention
that has caused such Selling Shareholder to believe that (A) at the time the
Registration Statement becomes effective and at the Representation Date, it will
include 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 (B) the Prospectus, at the time the Registration Statement
becomes effective and as of the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the Underwriters
by the Company for use in connection with the offering of the Stock which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the time it is first
provided to the Underwriters for such use) and at the Closing Date, the
Prospectus will include any untrue statement of material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing representations, warranties and agreements in this subsection (viii)
are limited to the information in the Registration Statement set forth under the
caption "Principal Stockholders" that pertains to the Selling Shareholder (the
"Selling Shareholder Information") and shall not apply to information contained
in or omitted from the Registration Statement or the Prospectus in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof.
Each Selling Shareholder agrees that the obligations of such Selling
Shareholder hereunder shall not be terminated by operation of law, whether by
the death or incapacity of such Selling Shareholder, or any other event, that if
such Selling Shareholder should die or become incapacitated or any other event
occur, before the delivery of the Stock hereunder, certificates for the Stock to
be sold by such Selling Shareholder shall be delivered on behalf of such Selling
Shareholder in accordance with the terms and conditions of this Agreement.
Each Selling Shareholder further agrees that neither such Selling
Shareholder nor any of its officers, directors, or affiliates will (a) take,
directly or indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to cause or to result in, or
that could reasonably be expected to constitute, the stabilization or
manipulation of the price of any securities of the Company to facilitate the
sale or resale of any of the shares of the Stock, (b) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of, the Stock or (c) pay to
or agree to pay any person any compensation for soliciting another to purchase
any other securities of the Company.
3. Purchase by, and Sale and Delivery to, Underwriters; Closing Date. On
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the basis of the representations, warranties, covenants and agreements herein
contained, and subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters the Firm Stock, and subject to the terms and
conditions herein set forth, the Underwriters agree, severally and not jointly,
to purchase from the Company, at the price per share set forth in the Pricing
Agreement, the number of shares of Firm Stock set forth opposite their names in
Schedule A (except as otherwise provided in the Pricing Agreement), subject to
adjustment in accordance with Section 11 hereof.
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If the Company has elected not to rely upon Rule 430A under the Rules
and Regulations, the initial public offering price and the purchase price per
share to be paid by the several Underwriters for the Firm Stock each have been
determined and set forth in the Pricing Agreement, dated the date hereof, and an
amendment to the Registration Statement and the Prospectus will be filed before
the Registration Statement becomes effective.
If the Company has elected to rely upon Rule 430A under the Rules and
Regulations, the purchase price per share to be paid by the several Underwriters
for the Firm Stock shall be an amount equal to the initial public offering
price, less an amount per share to be determined by agreement between the
Representatives and the Company. The initial public offering price per share of
the Firm Stock shall be a fixed price to be determined by agreement between the
Representatives and the Company. The initial public offering price and the
purchase price, when so determined, shall be set forth in the Pricing Agreement.
In the event that such prices have not been agreed upon and the Pricing
Agreement has not been executed and delivered by all parties thereto by the
close of business on the fourteenth business day following the date of this
Agreement, this Agreement shall terminate forthwith, without liability of any
party to any other party, unless otherwise agreed to by the Company and the
Representatives.
(a) The Company will deliver the Firm Stock to the Representatives
for the respective accounts of the several Underwriters (in the form of
definitive certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 Noon, New York Time, on the business day preceding the Closing Date or,
if no such direction is received, in the names of the respective Underwriters in
the amount set forth opposite each Underwriter's name on Schedule A hereto),
against payment of the purchase price therefor by certified or official bank
check or checks in same day funds, payable to the order of the Company, all at
the offices of Latham & Watkins, 855 Third Avenue, New York, New York. The time
and date of delivery and closing shall be at 10:00 A.M., on the third full
business day after the Registration Statement becomes effective (or, if the
Company has elected to rely upon Rule 430A, the third full business day after
execution of the Pricing Agreement); provided, however, that such date and time
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may be accelerated or extended by agreement between the Company and the
Representatives or postponed pursuant to the provisions of Section 12 hereof.
The time and date of such payment and delivery are herein referred to as the
"Closing Date". The Company shall make the certificates for the Stock available
to the Representatives for examination on behalf of the Underwriters not later
than 3:00 P.M., New York Time, on the business day preceding the Closing Date.
(b) In addition, for the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Stock as contemplated by
the Prospectus, the Company and the Selling Shareholders hereby grant the
Underwriters an option to purchase, severally and not jointly, up to 585,000
shares in the aggregate of the Optional Stock. The purchase price per share to
be paid for the Optional Stock shall be the same price per share as for the Firm
Stock, less the amount of any dividend declared by the Company and payable on
any Optional Stock and as to which the record date has occurred after the date
of the Pricing Agreement. The option granted hereby may be exercised as to all
or any part of the Optional Stock at any time not more than 30 days subsequent
to the effective date of this Agreement. No Optional Stock shall be sold and
delivered unless the Firm Stock previously has been, or simultaneously is, sold
and delivered. The right to purchase the Optional Stock or any portion thereof
may be surrendered and terminated at any time upon notice by the Representatives
to the Company and the Selling Shareholders.
The option granted hereby may be exercised by the Representatives on
behalf of the Underwriters by giving written notice the "Option Notice" to the
Company setting forth the number of shares of the Optional Stock to be purchased
by them and the date and time for delivery of and payment for the Optional
Stock. Such date and time for delivery of and payment for the Optional Stock
(which may be the First Closing Date) is herein called the "Option Closing Date"
and shall not be later than ten days after written notice is given. The Company
shall have the option to sell to the Underwriters up to 100% but in no event
less than 50% of the Optional Stock requested by the Representatives in the
Option Notice. In the event the Company elects to sell less than 100% (but in no
event less than 50%) of the Optional Stock requested in the Option Notice, the
Selling Shareholders shall sell to the Underwriters the number of shares of
Optional Stock equal to the difference between the number of shares of
8
Optional Stock to be sold by the Company and the number of shares of Optional
Stock requested by the Representatives in the Option Notice. The Optional Stock
to be sold by the Selling Shareholders shall not exceed 50% of the Optional
Stock requested in the Option Notice. The Optional Stock to be sold by the
Selling Shareholders shall be allocated among the Selling Shareholders in
proportion to the number of shares of Common Stock owned by each. Optional Stock
shall be purchased for the account of each Underwriter in the same proportion as
the number of shares of Firm Stock set forth opposite such Underwriter's name in
Schedule A hereto bears to the total number of shares of Firm Stock (subject to
adjustment by the Representatives to eliminate odd lots). Upon exercise of the
option by the Representatives, the Company and, if applicable, the Selling
Shareholders agree to sell to the Underwriters the number of shares of Optional
Stock set forth in the written notice of exercise and the Underwriters agree,
severally and not jointly, subject to the terms and conditions herein set forth,
to purchase such shares of Optional Stock.
The Company, and, if applicable, the Selling Shareholders will deliver
the Optional Stock to the Representatives for the respective accounts of the
several Underwriters (in the form of definitive certificates, issued in such
names and in such denominations as the Representatives may direct by notice in
writing to the Company, and, if applicable, the Selling Shareholders given at or
prior to 12:00 Noon, New York Time, on the business day preceding the Option
Closing Date or, if no such direction is received, in the names of the
respective Underwriters), against payment of the purchase price therefor by
certified or official bank check or checks in same day funds, payable to the
order of the Company, and, if applicable, the Selling Shareholders at the
offices of Latham & Watkins, 855 Third Avenue, New York, New York. The Company,
and, if applicable, the Selling Shareholders shall make the certificates for the
Optional Stock available to the Representatives for examination on behalf of the
Underwriters not later than 3:00 P.M., New York Time, on the business day
preceding the Option Closing Date.
It is understood that Dean Witter Reynolds Inc., individually and not
as Representatives of the several Underwriters, may (but shall not be obligated
to) make payment to the Company and, if applicable, to the Selling Shareholders
on behalf of any Underwriter or Underwriters, for the Stock to be purchased by
such Underwriter or Underwriters. Any such payment by Dean Witter Reynolds Inc.
or other Representatives shall not relieve such Underwriter or Underwriters from
any of its or their other obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters propose to make an initial public offering of the Stock at the
initial public offering price. The Representative shall promptly advise the
Company of the making of the initial public offering.
4. Covenants and Agreements of the Company. The Company covenants and
----------------------------------------
agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective under the Act, will advise the Representatives
promptly as to the time at which the Registration Statement becomes effective,
will advise the Representatives promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose, and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible the lifting thereof, if issued. If the Company elects to rely on Rule
434 under the Rules and Regulations, the Company will prepare a "term sheet"
that complies with the requirements of Rule 434 under the Rules and Regulations.
If Company elects not to rely on Rule 434, the Company will provide the
Underwriters with copies of the form of Prospectus, in such number as the
Underwriters may reasonably request, and file or transmit for filing with the
Commission such Prospectus in accordance with Rule 424(b) of the Rules and
Regulations by the close of business in New York on the business day immediately
succeeding the date of the Pricing Agreement. If the Company elects to rely on
Rule 434, the Company will provide the Underwriters with copies of the form of
Rule 434 Prospectus, in such number as the Underwriters may reasonably request,
and file or transmit for filing with the Commission the form of Rule 434
Prospectus complying with Rule 434(c)(2) of the Act in accordance with Rule
424(b) of the Act by the close of business in New York on the business day
immediately succeeding the date of the Pricing Agreement.
(b) The Company will advise the Representatives promptly of any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional
9
information, and will not at any time file any amendment to the Registration
Statement or supplement to the Prospectus which shall not previously have been
submitted to the Representatives a reasonable time prior to the proposed filings
thereof or to which the Representatives shall reasonably object in writing or
which is not in compliance with the Act and the Rules and Regulations.
(c) The Company will prepare and file with the Commission, promptly
upon the request of the Representatives, any amendments or supplements to the
Registration Statement or the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in connection with the offering
of the Stock which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424 of the Rules and
Regulations or any term sheet prepared in reliance on Rule 434 of the Rules and
Regulations) which in the opinion of the Representatives may be necessary to
enable the several Underwriters to continue the distribution of the Stock and
will use its best efforts to cause the same to become effective as promptly as
possible.
(d) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Stock is required to be delivered
under the Act any event relating to or affecting the Company or any of its
subsidiaries occurs or has occurred as a result of which the Prospectus would
include an untrue statement of a material fact, or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary, at any time
to amend the Prospectus to comply with the Act, the Company will promptly notify
the Representatives thereof and will prepare an amended or supplemented
prospectus (in form and substance satisfactory to counsel to the Underwriters)
which will correct such statement or omission; and, in case any Underwriter is
required to deliver a prospectus relating to the Stock nine months or more after
the effective date of the Registration Statement, the Company upon the request
of the Representative and at the expense of such Underwriter will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act.
(e) The Company will deliver to the Representatives, at or before the
Closing Date, signed copies of the Registration Statement and all amendments
thereto including all financial statements and exhibits thereto, and will
deliver to the Representatives such number of copies of the Registration
Statement, including such financial statements but without exhibits, and of all
amendments thereto, as the Representatives may reasonably request. The Company
will deliver or mail to or upon the order of the Representatives on the date of
the initial public offering, and thereafter from time to time during the period
when delivery of a prospectus relating to the Stock 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; provided, however,
--------- --------
that the expense of the preparation and delivery of any prospectus required for
use nine months or more after the effective date of the Registration Statement
shall be borne by the Underwriters required to deliver such prospectus.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 60 days after the close
of the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Act) which will be in reasonable detail (but
which need not be audited) and which will comply with Section 11(a) of the Act,
covering a period of at least twelve months beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in Rule 158) of the Registration Statement.
(g) The Company will cooperate with the Representatives to enable the
Stock to be qualified for sale under the securities laws of such jurisdictions
as the Representatives may designate and at the request of the Representatives
will make such applications and furnish such information as may be required of
it as the issuer of the Stock for that purpose; provided, however, that the
Company shall not be required to qualify to do business or to file a general
consent to service of process in any such jurisdiction. The Company will, from
time to time, prepare and file such statements and reports as are or may be
required of it as the issuer of the Stock to continue such qualifications in
effect for so long a period as the Representatives may reasonably request for
the distribution of the Stock.
10
(h) The Company will furnish to its shareholders annual reports
containing financial statements certified by independent public accountants and
shall also furnish quarterly summary financial information in reasonable detail
which may be unaudited. During the period of five years from the date hereof,
the Company will deliver to the Representatives and, upon request, to each of
the other Underwriters, copies of each annual report of the Company and each
other report furnished by the Company to its shareholders; and will deliver to
the Representatives, as soon as they are available, copies of any other reports
(financial or other) which the Company shall publish or otherwise make available
to any of its security holders as such, and as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or the NASD.
(i) The Company will file with the Nasdaq National Market all
documents and notices required by the Nasdaq National Market of companies that
have issued securities that are traded in the over-the-counter market and
quotations for which are reported by Nasdaq National Market.
(j) The Company will use the net proceeds received by it from the
sale of the Stock in the manner specified in the Prospectus under "Use of
Proceeds".
(k) The Company will file with the Commission such reports on Form SR
as may be required pursuant to Rule 463 under the Act.
(l) During a period of 180 days from the date of the Pricing
Agreement, the Company will not, without prior written consent of Dean Witter
Reynolds Inc., directly or indirectly, sell, offer to sell, grant any option for
the sale of, or enter into any agreement to sell, any Common Stock or any
security convertible into Common Stock (except for Common Stock issued pursuant
to reservations, agreements or employee benefit plans disclosed in the
Registration Statement.
(m) At the time this Agreement is executed, the Company shall have
furnished to the Representatives a letter from each officer and director of the
Company and shareholders of the Company addressed to the Representatives, in
which each such person agrees that, during a period of 180 days from the date of
the Pricing Agreement, such person will not, without the prior written consent
of Dean Witter Reynolds Inc., directly or indirectly, (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer of dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are now owned by the undersigned or are hereafter acquired), or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise.
5. Payment of Expenses. The Company will pay (directly or by
--------------------
reimbursement) all expenses incident to the performance of the obligations of
the Company and the Selling Shareholders under this Agreement, including but not
limited to all expenses and taxes incident to delivery of the Stock to the
Representatives, all expenses incident to the registration of the Stock under
the Act and the printing of copies of the Registration Statement, each
Preliminary Prospectus, the Prospectus, any amendments or supplements thereto
including any abbreviated terms sheet delivered by the Company pursuant to Rule
434 of the Rules and Regulations, the "Blue Sky" memorandum, the Agreement Among
Underwriters, Underwriters' Questionnaire and this Agreement and furnishing the
same to the Underwriters and dealers except as otherwise provided in Sections
4(d) and 4(e), the fees and disbursements of the Company's counsel and
accountants, all filing and printing fees and expenses (including legal fees and
disbursements of counsel for the Underwriters) incurred in connection with
qualification of the Stock for sale under the laws of such jurisdictions as the
Representatives may designate, all fees and expenses (including legal fees and
disbursements of counsel for the Underwriters) paid or incurred in connection
with filings made with the National Association of Securities Dealers, Inc. (the
"NASD"), the fees and expenses incurred in connection with the listing of the
Stock on Nasdaq National Market, the costs of preparing stock certificates, the
costs and fees
11
of any registrar or transfer agent and all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section.
6. Indemnification and Contribution.
---------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each employee, officer, partner, director and agent of the
Underwriter, and each person, if any, who controls such Underwriter within the
meaning of the Act, against any losses, claims, damages, liabilities or expenses
(including the reasonable cost of investigating and defending against any claims
therefor and counsel fees incurred in connection therewith), joint or several,
as incurred, which may be based upon the Act, or any other federal or state
statute or at common law, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the information deemed to be part of the
Registration Statement pursuant to Rule 430A(b) or Rule 434 of the Rules and
Regulations, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by such Underwriter, directly or through
the Representatives, specifically for use in the preparation thereof; provided
--------
that the Company shall not be liable with respect to any claims made against any
Underwriter or any such employee, officer, partner, director or agent or any
such controlling person under this subsection unless such Underwriter or
employee, officer, partner, director or agent or controlling person shall have
notified the Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Underwriter or employee, officer, partner, director
or agent or controlling person (such notification by an Underwriter shall
suffice as notification on behalf of its officers, partners, directors,
employees, agents and controlling persons), but failure to notify the Company of
any such claim shall not relieve it from any liability which it may have to such
Underwriter or employee, officer, partner, director or agent or controlling
person otherwise than on account of the indemnity agreement contained in this
Section 6(a).
The Company shall be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense for misstatements or
omissions in a Preliminary Prospectus of any suit brought to enforce any such
liability, but, if the Company elects to assume the defense, such defense shall
be conducted by counsel chosen by it and reasonably satisfactory to such
Underwriter or indemnified person as the case may be. In the event the Company
elects to assume the defense of any such suit and retain such counsel, the
Underwriter or Underwriters or other indemnified person or persons, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include such Underwriter or Underwriters other indemnified or person or persons,
and such Underwriter or Underwriters or other indemnified person or persons have
been advised by counsel that one or more legal defenses may be available to it
or them which may not be available to the Company, in which case the Company
shall not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of such counsel; provided that the
Company shall in no event be responsible for the fees and expenses of more than
one counsel for the Underwriters. The Company will not, without the prior
written consent, which shall not be unreasonably withheld, of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Underwriter or other indemnified
party is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent (i) includes an unconditional release of such
Underwriter and each such other indemnified person or persons from all liability
arising out of such claim, action, suit or proceeding and (ii) does not include
a statement as to or as admission of fault, culpability or a failure to act by
or on behalf of any indemnified party. The Company agrees that a breach of the
preceding sentence shall cause irreparable harm to the Underwriters and that the
Underwriters shall be entitled to injunctive relief from any appropriate court
ordering specific performance of said provision. This indemnity agreement will
be in addition to any liability which the Company might otherwise have.
12
(b) In the event the Selling Shareholders sell any Optional Stock
pursuant to this Agreement, each Selling Shareholder agrees to indemnify and
hold harmless each Underwriter, each employee, officer, partner, director and
agent of the Underwriter and each person, if any, who controls such Underwriter
with the meaning of the Act, against any losses, claims, damages, liabilities or
expenses (including, except as otherwise provided below, the reasonable cost of
investigating and defending against any claims therefor and counsel fees
incurred in connection therewith), joint or several, as incurred, which may be
based upon the Act, or any other statute or at common law, arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Selling Shareholder Information set forth in the Registration Statement (or any
amendment thereto), including the information deemed to be part of the
Registration Statement pursuant to Rule 430A(b) of the Rules and Regulations, if
applicable, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement of
a material fact contained in the Selling Shareholder Information set forth in
the Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Company by
such Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof; provided, however, that such Selling Shareholder
shall not be liable with respect to any claims made against any Underwriter or
any such employee, officer, partner, director or agent or any such controlling
person under this subsection unless such Underwriter, or employee, officer,
partner, director or agent or controlling person shall have notified such
Selling Shareholder in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Underwriter or employee or agent or controlling
person (such notification by an Underwriter shall suffice as notification on
behalf of its officers, partners, directors, employees, agents or controlling
persons), but failure to notify such Selling Shareholder of such claims shall
not relieve such Selling Shareholder from any liability which such Selling
Shareholder may have to such Underwriter or employee or agent or controlling
person otherwise than on account of its indemnity agreement contained in this
Section 6(b); and provided, further, that each Selling Shareholder shall only be
liable under this paragraph for that proportion of any such losses, claims,
damages, liabilities or expenses which the number of shares of the Optional
Stock sold by such Selling Shareholder bears to the total number of shares of
Stock sold hereunder and in no event shall such liability exceed the net
proceeds received by such Selling Shareholder from the sale of the Stock
hereunder.
Each Selling Shareholder shall be entitled to participate at his own
expense in the defense, or, if he so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Selling Shareholder elects
to assume the defense, such defense shall be conducted by counsel chosen by such
Selling Shareholder and reasonably satisfactory to such Underwriter or
indemnified person, as the case may be. In the event that any Selling
Shareholder elects to assume the defense of any such suit and retain such
counsel, the Underwriter or Underwriters or other indemnified person or persons,
defendant or defendants in the suit, may retain additional counsel but shall
bear the fees and expenses of such counsel unless (i) such Selling Shareholder
shall have specifically authorized the retaining of such counsel or (ii) the
parties to such suit include such Underwriter or Underwriters or other
indemnified person or persons and such Selling Shareholder and such Underwriter
or Underwriters or other indemnified person or persons have been advised by
counsel that one or more legal defenses may be available to it or them which may
not be available to such Selling Shareholder, in which case such Selling
Shareholder shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel,
provided the Selling Shareholder shall not be responsible for the fees and
expenses of more than one such counsel. The Selling Shareholder against whom
indemnity may be sought shall not be liable to indemnify any person for any
settlement of such claim effected without such Selling Shareholder's consent
which shall not be unreasonably withheld. This indemnity agreement will be in
addition to any liability which such Selling Shareholder might otherwise have.
(c) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who have signed the
Registration Statement, each of its employees, officers, directors and agents
and each person, if any, who controls the Company within the meaning of the Act
against any losses, claims, damages, liabilities or expenses (including the
reasonable cost of investigating and defending against
13
any claims therefor and counsel fees incurred in connection therewith), joint or
several, as incurred, which may be based upon the Act, or any other statute or
at common law, arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any amendment
thereto), including the information deemed to be part of the Registration
Statement pursuant to Rule 430A(b) of the Rules and Regulations, if applicable,
or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, but only insofar as any such statement or omission was
made in reliance upon, and in conformity with, written information furnished to
the Company by such Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof; provided, however, that in
--------- --------
no case is such Underwriter to be liable with respect to any claims made
against the Company or any person against whom the action is brought unless
the Company or such person shall have notified such Underwriter in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
the Company or such person, but failure to notify such Underwriter of such
claim shall not relieve it from any liability which it may have to the
Company or such person otherwise than on account of its indemnity agreement
contained in this Section 6(c). Such Underwriter shall be entitled to
participate at its own expense in the defense, or, if it so elects, to
assume the defense of any suit brought to enforce any such liability, but,
if such Underwriter elects to assume the defense, such defense shall be
conducted by counsel chosen by it and reasonably satisfactory to the
Company or such person, as the case may be. In the event that any
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Company, said employees, agents, officers and directors and
any other Underwriter or Underwriters or employee or employees or agent or
agents or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained
by them, respectively. The Underwriter against whom indemnity may be
sought shall not be liable to indemnify any person for any settlement of
any such claim effected without such Underwriter's consent. This indemnity
agreement will be in addition to any liability which such Underwriter might
otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) or (c) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Stock. 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,
as incurred, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Shareholders on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
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
Shareholders 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, Selling Shareholders or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company,
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contribution 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. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such claim. Notwithstanding the provisions of
this subsection 6(c), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the shares of
14
the Stock underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. A Selling Shareholder shall be obligated to
contribute for losses, claims, damages, liabilities and expenses only in such
proportion as the shares of Optional Stock sold by such Selling Shareholder bear
to the total number of shares of Stock sold hereunder, and in no event shall
such contribution exceed the net proceeds received by such Selling Shareholder
from the sale of Stock hereunder. 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 to contribute are several in
proportion to their respective underwriting obligations and not joint.
7. Survival of Indemnities, Representations, Warranties, etc. The
----------------------------------------------------------
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, Selling Shareholders,
the Company or any of its officers or directors or any controlling person, and
shall survive delivery of and payment for the Stock.
8. Conditions of Underwriters' Obligations. The respective obligations
----------------------------------------
of the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof, the Representation
Date and the Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties made herein by the Company and the Selling
Shareholders, to the accuracy of the statements of the Company's officers or
directors in any certificate furnished pursuant to the provisions hereof, to
compliance at and as of such Closing Date by the Company and the Selling
Shareholders with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to such Closing Date, and to the
following additional conditions:
(a) The Registration Statement shall become effective not later than
3:00 P.M., New York City time, on the date hereof or, with the consent of the
Representatives, at a later time and date, not later, however, than 5:30 P.M.,
New York City time on the first business day following the date hereof, or at
such later date as may be approved by a majority in interest of the
Underwriters, and at such Closing Date (i) no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that purpose
shall have been initiated or, to the knowledge of the Company or the
Representatives, threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives, and (ii) there shall not have
come to the attention of the Representatives any facts that would cause them to
believe that the Prospectus, at the time it was required to be delivered to a
purchaser of the Stock, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If the Company has elected to rely upon Rule 430A of the Rules and
Regulations, the price of the Stock and any price related information previously
omitted from the effective Registration Statement pursuant to Rule 430A shall
have been transmitted to the Commission for filing pursuant to Rule 424(b) of
the Rules and Regulations within the prescribed time period, and before the
Closing Date the Company shall have provided evidence satisfactory to the
Representatives of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) At the time of execution of this Agreement, the Representatives
shall have received from Arthur Andersen LLP, a letter, dated the date of such
execution, in form and substance previously approved by the Representatives, and
to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the Act and
the Rules and Regulations.
(ii) In their opinion, the financial statements and supporting
schedule(s) examined by them and included in the Registration Statement comply
as to form in all material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations thereunder and, if
applicable, they have made a review in accordance with standards established by
the American Institute of Certified Public
15
Accountants of the unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished to the
Representatives;
(iii) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for the five such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries , inspection of the minute books
of the Company and its subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus,
inquiries of officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that caused them to
believe that:
(A) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder, or are
not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with the basis for the
audited consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus ;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than three days prior to
the date of such letter, there has been any change in the consolidated
capital stock of the Company (other than issuances of capital stock
upon exercise of options, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included in the
Prospectus) or any increase in the consolidated long-term debt of the
Company and consolidated
16
subsidiaries, any decrease in the consolidated net current assets, net
assets or other items specified by the Representatives, or any change
in any other items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there was any decrease in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for increases or decreases which
the Prospectus discloses have occurred or may occur or which are
described in such letter.
(v) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain specified procedures, not constituting
an examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives which are derived from the general accounting records of the
Company and its subsidiaries , which appear in the Prospectus or in Part II of,
or in exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
(vi) On the basis of a reading of the unaudited consolidated
condensed pro forma financial statements included in the Registration Statement
and the Prospectus, carrying out certain specified procedures and inquiries of
certain officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters, and proving the arithmetic
accuracy of the application of the pro forma adjustments to the historical
amounts in the unaudited consolidated condensed pro forma financial statements,
nothing came to their attention that caused them to believe that the unaudited
consolidated condensed pro forma financial statements do not comply as to form
in all material respects with the applicable accounting requirements of Rule 11-
02 of Regulation S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such statements.
(c) The Representatives shall have received from Arthur Andersen LLP
a letter, dated the Closing Date that such accountants reaffirm, as of such
Closing Date, and as through made on such Closing Date, the statements made in
the letter furnished by such accountants pursuant to paragraph (b) of this
Section 8, except that the specified date will be a date not more than three
business days prior to the Closing Date.
(d) The Representatives shall have received from Hutchins, Wheeler &
Dittmar, a professional corporation, counsel for the Company, an opinion, dated
the Closing Date, to the effect that:
(i) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of Massachusetts and has the
corporate power and authority to own or lease its properties and conduct its
business as described in the Prospectus; and the Company is duly qualified as a
foreign corporation in good standing in all other jurisdictions where its
ownership or leasing of properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect.
17
(ii) The Company and its subsidiaries are in possession of and
operating in compliance with all Licenses and all such Licenses are valid and in
full force and effect except where the failure to possess such Licenses would
not have a Material Adverse Effect. The Company and each of its subsidiaries are
in compliance in all material respects with their respective obligations under
such Licenses and neither the Company nor any or its subsidiaries has received
any notice of proceeding that would allow, and no event has occurred that
allows, or after notice or lapse of time or both would allow, revocation,
modification, suspension or termination of any such License or a material
violation of any such laws or regulations. No such License contains a burdensome
restriction on the Company or any of its subsidiaries that is not adequately
disclosed in the Registration Statement and the Prospectus.
(iii) The Company has an authorized and outstanding capital
stock as set forth under the heading "Capitalization" in the Prospectus; all
outstanding shares of Common Stock (including the Stock) conform to the
description thereof in the Prospectus and have been duly authorized and validly
issued and are fully paid and nonassessable, and the stockholders of the Company
have no preemptive rights with respect to any shares of capital stock of the
Company.
(iv) To the best of such counsel's knowledge, there are no legal
or governmental proceedings pending other than those set forth under
"Business--Legal Matters" in the Prospectus to which the Company is a party or
of which any property of the Company is the subject, which individually or in
the aggregate are material; and to the best of such counsel's knowledge no such
proceedings are threatened by governmental authorities or others, if adversely
determined, would have a Material Adverse Effect.
(v) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company; and the performance of this
Agreement and the Pricing Agreement and the consummation of the transactions
herein and therein contemplated will not result in a breach or violation of any
of the terms or provisions of or constitute a default under any statute,
contract, indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument known to such counsel to which the Company is a
party or by which it is bound, the Company's Articles of Incorporation or By-
laws, or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties (except any state securities or "Blue Sky" laws as to which such
counsel expresses no opinion).
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company of
the transactions contemplated by this Agreement and the Pricing Agreement,
except such as may be required under the Act or as may be required under the
securities or Blue Sky laws of any jurisdiction or by the NASD in connection
with the purchase and distribution of the Stock by the Underwriters.
(vii) The Registration Statement has become effective under the
Act and, to the best of the knowledge of such counsel, no stop order suspending
the effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Act.
(viii) The Common Stock has been approved for listing on the
Nasdaq National Market. The Registration Statement on Form 8-A relating to the
Common Stock has become effective under the Securities Exchange Act of 1934, as
amended.
(ix) The Registration Statement and the Prospectus (other than
the financial statements and supporting schedules included therein, as to which
no opinions need be rendered), and each amendment or supplement thereto, as of
their respective effective or issue dates and as of the Closing Date complied as
to form in all material respects with the requirements of the Act and the Rules
and Regulations.
(x) The descriptions in the Registration Statement and
Prospectus of contracts and other documents are accurate in all material
respects and such descriptions fairly present in all material respects the
information required to be shown; and such counsel does not know of any legal or
governmental proceedings or of
18
any contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement or Prospectus which are not described and filed as
required.
(xi) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(xii) To such counsel's knowledge, the Registration Statement
(other than the financial statements and supporting schedules thereto as to
which no opinion need be rendered), at the time it became effective or at the
Representation Date, did not contain any 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 or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriters by the Company for use in connection with
the offering of the Stock which differs from the prospectus on file at the
Commission at the time the Registration Statement became effective, in which
case at the time it was first provided to the Underwriters for such use) or at
the Closing Date, included any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(xiii) St. Louis Ostomy, Inc. and Patient Care Medical Sales,
subsidiaries of the Company (the "Subsidiaries"), have each been duly
incorporated, are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation and have power and
authority (corporate and other) to own their respective properties and conduct
their respective businesses as described in the Prospectus, and each of such
Subsidiaries is duly qualified as a foreign corporation in good standing and in
all other jurisdictions where its ownership or leasing of properties or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect.
(xiv) All outstanding shares of capital stock of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company free and clear of any liens,
encumbrances, equities and claims.
(e) The Representatives shall have received from Latham & Watkins,
counsel for the Underwriters, their opinion or opinions dated the Closing Date
with respect to the validity of the Stock, the Registration Statement, the
Prospectus and such other related matters as the Representative may require. In
giving such opinion, such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon opinions of counsel satisfactory to the
Representatives. The Company shall have furnished to such counsel such documents
as they may request for the purpose of enabling them to pass upon such matters.
(f) The Representatives shall have received a certificate, dated such
Closing Date, of the Chief Executive Officer or the President and the chief
financial or accounting officer of the Company to the effect that: (i) no stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been instituted or are pending
or contemplated under the Act; (ii) subsequent to the respective dates as of
which information is given in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations, direct or contingent,
nor entered into any transactions, not in the ordinary course of business, which
in either case are material to the Company and its subsidiaries considered as a
whole, whether or not arising in the ordinary course of business, and there has
not been any Material Adverse Effect, or any change in the capital stock or
long-term debt of the Company and its subsidiaries considered as a whole; (iii)
the Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or before the Closing Date; (iv) the
representations and warranties of the Company in this Agreement are true and
correct at and as of the Closing Date; and (v) between the execution of this
Agreement and the Closing Date, the business and operations conducted by the
Company and its subsidiaries have not sustained a loss by strike, fire, flood,
accident or other calamity (whether or not insured) of such a character as to
interfere materially with the
19
conduct of the business and operations of the Company and its subsidiaries
considered as a whole. As used in this Section 8(f), the term "Prospectus" means
the Prospectus in the form first used to confirm sales of Stock.
(g) The Company and the Selling Shareholders shall have furnished to
the Representatives such additional certificates as the Representatives may have
reasonably requested as to the accuracy, at and as of the Closing Date, of the
representations and warranties made herein by it as to compliance at and as of
the Closing Date by it with its covenants and agreements herein contained and
other provisions hereof to be satisfied at or prior to the Closing Date and as
to other conditions to the obligations of the Underwriters hereunder.
(h) The Stock shall have been approved for listing on Nasdaq National
Market.
(i) In the event the Underwriters exercise the option granted in
Section 3(b) hereof to purchase all or any portion of the Optional Shares, the
representations and warranties of the Company and the Selling Shareholders
contained herein and the statements in any certificates furnished by the Company
and the Selling Shareholders hereunder shall be true and correct as of the
Option Closing Date, and you shall have received:
(i) A letter from Arthur Andersen LLP, in form and substance
satisfactory to you and dated the Option Closing Date, substantially the same in
scope and substance as the letter furnished to you pursuant to Section 8(b),
except that the specified date in the letter furnished pursuant to this Section
8(i)(i) shall be a date not more than five days prior to the Option Closing
Date.
(ii) A certificate, dated the Option Closing Date, of the Chief
Executive Officer or President and the chief financial or accounting officer of
the Company confirming that the certificate delivered at the First Closing Date
pursuant to Section 8(f) remains true as of the Option Closing Date.
(iii) The opinion of Hutchins, Wheeler & Dittmar, a Professional
Corporation, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, dated the Option Closing Date, relating to the
Optional Stock and otherwise to the same effect as the opinion required by
Section 8.
(iv) In the event the Selling Shareholders sell any Optional
Stock pursuant to this Agreement, the opinion of Hutchins, Wheeler & Dittmar, a
Professional Corporation counsel for the Selling Shareholders, dated the Option
Closing Date to the effect that:
(1) Each Selling Shareholder has full right, power and
authority to enter into this Agreement.
(2) Each Selling Shareholder has full right, power and
authority to sell, transfer, assign and deliver the Stock being
sold by such Selling Shareholder hereunder. Immediately prior to
the delivery of the shares of Stock being sold by such Selling
Shareholder, such Selling Shareholder was the sole registered
owner of such shares of Stock and, upon registration of such
shares of Stock in the names of the Underwriters or their
nominees, assuming that such purchasers purchased such shares of
Stock in good faith without notice of any adverse claims as
defined in Section 8-302 of the Uniform Commercial Code, such
purchasers will have acquired all the rights of such Selling
Shareholder in such shares of Stock free of any adverse claim, or
to the best of such counsel's knowledge, any lien in favor of the
Company or restrictions on transfer imposed by the Company.
(3) The performance of this Agreement and the consummation
of the transactions herein contemplated will not, with the giving
of notice of passage of time or both, result in a breach or
violation of any of the terms or provisions of or constitute a
default under any statute, rule or regulation applicable to the
Selling Shareholder, or, to the best of such counsel's knowledge,
any indenture, mortgage, deed of trust, note
20
agreement or other material agreement or instrument to which the
Selling Shareholder is a party or by which it is bound, or any
judgment, order or decree known to such counsel after due inquiry
of any court or governmental agency or body having jurisdiction
over the Selling Shareholder or any of their properties (except
any state securities or "Blue Sky" rules or regulations, as to
which we render no opinion) or, (a) if the Selling Shareholder is
a corporation, the certificate or articles of incorporation and
by-laws of the Selling Shareholder or (b) if the Selling
Shareholder is a partnership, the partnership agreement or
certificate of limited partnership of the Selling Shareholder.
(4) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation by any Selling Shareholder of the transactions
contemplated by this Agreement.
(5) Any transfer taxes which are required to be paid in
connection with the sale and delivery of the Stock to the
Underwriters hereunder have been paid and all laws imposing such
taxes have been fully complied with.
(v) In the event the Selling Shareholders sell any Optional
Stock pursuant to this Agreement, a certificate or certificates, dated such
Closing Date, by or on behalf of the Selling Shareholders to the effect that as
of the Option Closing Date its representations and warranties in this Agreement
are true and correct as if made on and as of the Option Closing Date, and that
they have performed all their obligations and satisfied all the conditions on
its part to be performed or satisfied at or prior to such Option Closing Date.
(vi) The opinion of Latham & Watkins, counsel for the
Underwriters, dated the Option Closing Date, relating to the Optional Stock and
otherwise to the same effect as the opinion required by Section 8(e).
If any of the conditions hereinabove provided for in this Section
shall not have been satisfied when and as required by this Agreement, this
Agreement may be terminated by the Representatives by notifying the Company of
such termination in writing or by telegram at or prior to the First Closing
Date, but the Representatives shall be entitled to waive any of such conditions.
9. Termination. This Agreement may be terminated by the Representatives
------------
by notice to the Company if at or prior to the First Closing Date or the Option
Closing Date, as the case may be, (i) trading in securities on the New York or
American Stock Exchanges shall have been suspended or minimum or maximum prices
shall have been established on either such exchange, or a banking moratorium
shall have been declared by New York or United States authorities; (ii) there
shall have been any adverse change in the financial markets in the United
States, Japan or Europe or any outbreak or escalation of hostilities between the
United States and any foreign power, or of any other insurrection or armed
conflict involving the United States that, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer, sell or deliver
the Firm Stock or the Optional Stock as applicable, on the terms contemplated by
the Prospectus or this Agreement; (iii) there shall have been since the
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus any Material Adverse Effect; (iv) there
shall have been any development involving the business or properties or
securities of the Company or any of its subsidiaries or the transactions
contemplated by this Agreement, which, in the judgment of the Representatives,
makes it impracticable or inadvisable to offer, sell or deliver the Firm Stock
or Option Stock, as applicable, on the terms contemplated by the Prospectus or
this Agreement or (v) if there shall be any litigation, pending or threatened,
which, in the judgment of the Representative, makes it impracticable or
inadvisable to offer or deliver the Stock on the terms contemplated by the
Prospectus or this Agreement. As used in this Section 9, the term "Prospectus"
means the Prospectus in the form first used to confirm sales of Stock.
10. Reimbursement of Underwriters. Notwithstanding any other provisions
------------------------------
hereof, if this Agreement shall be terminated by the Representatives under
Section 8, Section 9 or Section 12, the Company will bear and pay
21
the expenses specified in Section 5 hereof and, in addition to its obligations
pursuant to Section 6, hereof, the Company will reimburse the reasonable out-of-
pocket expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
Agreement and the proposed purchase of the Stock, and promptly upon demand the
Company will pay such amounts to you as Representatives. In addition, the
provisions of Section 6 shall survive any such termination.
11. Default By Underwriters. If any Underwriter or Underwriters shall
------------------------
default in its or their obligations to purchase shares of Firm Stock hereunder
on the First Closing Date and the aggregate number of shares of Firm Stock which
such defaulting Underwriter or Underwriters agreed but failed to purchase does
not exceed 10% of the total number of shares which the Underwriters are
obligated to purchase at the First Closing Date, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares of Firm Stock which such defaulting Underwriter or
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
shall so default and the aggregate number of shares of Firm Stock with respect
to which such default or defaults occur is more than 10% of the total number of
shares underwritten and arrangements satisfactory to the Representative and the
Company for the purchase of such shares of Stock by other persons are not made
within 48 hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted underwriters are required
hereby or agree to take up all or part of the shares of Firm Stock of a
defaulting Underwriter or Underwriters as provided in this Section 11, (i) the
Company shall have the right to postpone the Closing Date for a period of not
more than five full business days, in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares of Firm Stock to be purchased by the remaining Underwriters or
substituted underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company or the
Underwriters for damages occasioned by its default hereunder. Any termination of
this Agreement pursuant to this Section 11 shall be without liability on the
part of any non-defaulting Underwriter or the Company, except for expenses to be
paid or reimbursed pursuant to Section 5 and except for the provisions of
Section 6.
12. Default By the Company. If the Company shall fail at the First
-----------------------
Closing Date to sell and deliver the number of shares of Firm Stock which it is
obligated to sell hereunder, then this Agreement shall terminate without any
liability on the part of any non-defaulting party.
No action taken pursuant to this Section shall relieve the Company so
defaulting from liability, if any, in respect of such default.
13. Notices. All communications hereunder shall be in writing and; (i) if
--------
sent to the Underwriters shall be mailed, delivered or telegraphed and confirmed
to you, as their Representatives c/o Dean Witter Reynolds Inc. at Two World
Trade Center, 65th Floor, Corporate Finance, New York, New York 10048, Attn:
Samuel H. Wolcott, III, except that notices given to an Underwriter pursuant to
Section 6 hereof shall be sent to such Underwriter at the address provided to
the Representative; (ii) if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed c/o Herbert P. Gray, Suburban Ostomy Supply Co., Inc.,
75 October Hill Road, Holliston, MA 01746; (iii) if sent to the Selling
Shareholders, shall be mailed, delivered or telegraphed and confirmed c/o Summit
Ventures III, L.P., 600 Atlantic Avenue, Suite 2800, Boston, MA 02210.
14. Successors. This Agreement shall inure to the benefit of and be
-----------
binding upon the several Underwriters, the Company and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
22
shall also be for the benefit of the person or persons, if any, who control any
Underwriter or Underwriters within the meaning of Section 15 of the Act, and the
indemnities of the several Underwriters shall also be for the benefit of each
director of the Company, each of its officers who has signed the Registration
Statement and the person or persons, if any, who control the Company within the
meaning of Section 15 of the Act.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
---------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS. The Company hereby consents to personal jurisdiction in
the State of New York and voluntarily submits to the jurisdiction of the courts
of such state, including the federal district courts located in such state, in
any proceeding with respect to this Agreement.
16. Counterparts. This Agreement may be executed by one or more parties
-------------
hereto in any number of counterparts each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. Authority of the Representatives. In connection with this Agreement,
---------------------------------
Dean Witter Reynolds Inc. will act for and on behalf of the several
Underwriters, and any action taken under this Agreement by Dean Witter Reynolds
Inc., as a representative of the several Underwriters, will be binding on all
the Underwriters.
23
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
SUBURBAN OSTOMY SUPPLY CO., INC.
By:______________________________________
Name:
Title:
SUMMIT VENTURES III, L.P.
By: Summit Partners III, L.P.,
its General Partner
By: Stamps, Woodsum & Co. III
its General Partner
By:______________________________________
Name:
Title:
SUMMIT INVESTORS II, L.P.
By:______________________________________
Name:
Title:
SUMMIT SUBORDINATED DEBT FUND, L.P.
By: Summit Partners SD, L.P.,
its General Partner
By: Stamps, Woodsum & Co. III
its General Partner
By:______________________________________
Name:
Title:
Accepted and delivered,
as of the date first above written:
DEAN WITTER REYNOLDS INC.
BEAR STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY, L.L.C.
WHEAT FIRST BUTCHER SINGER
Acting on their own behalf and as
Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: DEAN WITTER REYNOLDS INC.
By_________________________________
Authorized Signature
24
SCHEDULE A
NUMBER OF SHARES OF STOCK
NAME TO BE PURCHASED
TOTAL...........................................
_______________
EXHIBIT A
3,900,000 SHARES
SUBURBAN OSTOMY SUPPLY CO., INC.
COMMON STOCK
PRICING AGREEMENT
-----------------
September ___, 1996
DEAN WITTER REYNOLDS INC.
BEAR STEARNS & CO., INC.
WILLIAM BLAIR & COMPANY, L.L.C.
WHEAT FIRST BUTCHER & SINGER
As Representatives of the several Underwriters
c/o Dean Witter Reynolds Inc.
2 World Trade Center
65th Floor
New York, New York 10048
Dear Sirs:
Reference is made to the Underwriting Agreement, dated September ____,
1996 (the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom Dean Witter Reynolds Inc. and
other Representatives are acting as representatives (the "Representatives"), of
the above shares of 3,900,000 (the "Common Stock") of Suburban Ostomy Supply
Co., Inc. (the "Company").
Pursuant to Section 3 of the Underwriting Agreement, the Company
agrees with each underwriter as follows:
1. The initial public offering price per share for the Stock,
determined as provided in Section 3, shall be $_______________.
The purchase price per share for the Stock to be paid by the several
Underwriters shall be $_______________.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
SUBURBAN OSTOMY SUPPLY CO., INC.
By: _____________________________________
Name:
Title:
Accepted and delivered,
as of the date first above written:
DEAN WITTER REYNOLDS INC.
BEAR, STEARNS & CO., INC.
WILLIAM BLAIR & COMPANY, L.L.C.
WHEAT FIRST BUTCHER SINGER
Acting on its own behalf and as
Representative of the several Under-
writers referred to in the foregoing
Agreement.
BY: DEAN WITTER REYNOLDS INC.
By:____________________________________
Authorized Signature
A-2