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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 6)
Goody's Family Clothing, Inc.
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(Name of Issuer)
Common Stock, no par value per share
------------------------------------
(Title of Class of Securities)
382588 10 1
--------------
(CUSIP Number)
Martin Nussbaum, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)
September 9, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with this statement: [ ]
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SCHEDULE 13D
CUSIP NO. 382588 10 1
1. NAME OF REPORTING PERSON
S.S. OR I.R.S IDENTIFICATION NO. OF ABOVE PERSON
Robert M. Goodfriend
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS 00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
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NUMBER OF 7. SOLE VOTING POWER 7,058,355
SHARES ------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER 11,250
OWNED BY ------------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER 7,058,355
REPORTING ------------------------------------------------------
PERSON WITH 10. SHARED DISPOSITIVE POWER 11,250
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 7,069,605
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 41.9%
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14. TYPE OF REPORTING PERSON IN
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AMENDMENT NO. 6 TO SCHEDULE 13D
This Amendment No. 6 to the Schedule 13D originally filed by Robert M.
Goodfriend with the Securities and Exchange Commission (the "SEC") on November
25, 1994, as previously amended by Amendment No. 1 filed with the SEC on
January 9, 1995, Amendment No. 2 filed with the SEC on October 17, 1996,
Amendment No. 3 filed with the SEC on December 9, 1996, Amendment No. 4 filed
with the SEC on December 16, 1996 and Amendment No. 5 filed with the SEC on
March 13, 1997 (collectively, the "Schedule 13D"), relates to Mr. Goodfriend's
beneficial ownership of shares of the common stock, no par value per share, of
Goody's Family Clothing, Inc. This Amendment No. 6 amends and supplements the
Schedule 13D. Unless otherwise indicated, all capitalized terms used herein but
not otherwise defined shall have the respective meanings set forth in the
Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is hereby amended to include the following
information:
On September 9, 1997, the Reporting Person sold an
aggregate of 2,000,000 shares of Common Stock pursuant to an
underwritten public offering (the "PO") for a purchase price
of $32.25 per share (net of underwriting commissions). On
September 15, 1997, the Reporting Person sold an additional
300,000 shares of Common Stock pursuant to the PO for a
purchase price of $32.25 per share (net of underwriting
commissions) upon the exercise of the over-allotment option
granted to the underwriters.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Schedule 13D is hereby amended to include the
following information:
As of the date hereof, the Reporting Person
beneficially owns 7,069,605 shares of Common Stock, which
represents approximately 41.9% of the outstanding shares of
Common Stock. (According to the Company and its transfer
agent, as of November 6, 1997 there were 16,545,508 shares of
Common Stock outstanding. Accordingly, in computing the
percentage of Common Stock beneficially owned by the
Reporting Person, such number, as adjusted for exercisable
options held by the Reporting Person, was used.) Such
7,069,605 shares include 11,250 shares of Common Stock owned
by the Reporting Person's spouse ("Mrs. Goodfriend"). Such
7,069,605 shares also include 320,000 shares of Common Stock
issuable upon exercise of stock options granted under the
Company's 1993 Stock Option Plan which are currently
exercisable. Such 7,069,605 shares do not include 417,270
shares of Common Stock held in trust for the benefit of the
Reporting Person's children. The Reporting Person has no
voting or investment power with respect to these 417,270
shares of Common Stock and disclaims beneficial ownership of
them. The Reporting Person has sole voting and dispositive
power with respect to the 7,058,355 shares of Common Stock
owned directly by him and shares voting and dispositive power
with Mrs. Goodfriend with respect to the 11,250 shares of
Common Stock she owns directly.
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Other than as set forth herein, the Reporting Person
has not made any purchases or sales of securities of the
Company during the sixty (60) days preceding the date of this
Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 of the Schedule 13D is hereby amended to include the
following information:
In connection with the PO, on September 3, 1997, the
Reporting Person entered into an Underwriting Agreement with
The Robinson-Humphrey Company, Inc. and J.C. Bradford & Co.,
as representatives of the several underwriters named in
Schedule I thereto. The Company and the other selling
shareholders were also a party to this agreement. A copy of
such Underwriting Agreement is attached hereto as an exhibit
and is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
9. Underwriting Agreement, dated September 3, 1997, among The
Robinson-Humphrey Company, Inc. and J.C. Bradford & Co., as
representatives of the several underwriters named in
Schedule I thereto, Goody's Family Clothing, Inc. and the
selling shareholders named in Schedule II thereto.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 28, 1997 /s/ Robert M. Goodfriend
------------------------
Robert M. Goodfriend
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EXHIBIT INDEX
EXHIBIT PAGE
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9 Underwriting Agreement, dated September 3, 1997, among The
Robinson-Humphrey Company, Inc. and J.C. Bradford & Co., as
representatives of the several underwriters named in
Schedule I thereto, Goody's Family Clothing, Inc. and the
selling shareholders named in Schedule II thereto
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Exhibit 9
GOODY'S FAMILY CLOTHING, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
September 3, 1997
THE ROBINSON-HUMPHREY COMPANY, INC.
J.C. BRADFORD & CO.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o The Robinson-Humphrey Company, Inc.
3333 Peachtree Road, NE
Atlanta, Georgia 30326
Dear Sirs:
Certain shareholders of Goody's Family Clothing, Inc., a Tennessee
corporation (the "Company"), named in Schedule II hereto (the "Selling
Shareholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters (the "Underwriters") named in Schedule I hereto an
aggregate of 2,027,000 shares of common stock of the Company, no par value
("Common Stock"), in the respective amounts set forth opposite their names in
Schedule II hereto (the "Firm Shares"), and, at the election of the
Underwriters, subject to the terms and conditions stated herein, one of the
Selling Shareholders proposes to sell to the Underwriters up to 300,000
additional shares of Common Stock (the "Optional Shares") (the Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
2 hereof are collectively called the "Shares"). In your capacity as
representatives of the several Underwriters, you are referred to herein as the
"Representatives."
1. REPRESENTATIONS AND WARRANTIES
(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-3 (File No.
333-32409) with respect to the Shares, including a prospectus
subject to completion, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and one or more
amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will
file with the Commission either (A) if such registration
statement, as it may have been amended, has become effective
under the Act and information has been omitted therefrom in
accordance with Rule 430A under the Act, a prospectus in the
form most recently included in an amendment to such registration
statement (or, if no such amendment shall have been filed, in
such registration statement) with such changes or insertions as
are required by Rule 430A or permitted by Rule 424(b) under the
Act and as have been provided to and approved by the
Representatives, or (B) if such registration statement, as it
may have been amended, has not become effective under the Act,
an amendment to such registration statement, including a form of
prospectus, a copy of which amendment has been provided to and
approved by the Representatives prior to the execution of this
Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, as hereafter
amended, including a registration statement filed pursuant to
Rule 462(b) and also including (i) all
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financial statement schedules and exhibits thereto, (ii) all
documents incorporated by reference therein filed under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and (iii) any information omitted therefrom pursuant to
Rule 430A under the Act and included in the Prospectus (as
hereinafter defined); the term "Preliminary Prospectus" means
each prospectus subject to completion included in such
registration statement or any amendment (or post-effective
amendment) thereto (including the prospectus subject to
completion, if any, included in the Registration Statement at
the time it was or is declared effective), including all
documents incorporated by reference therein filed under the
Exchange Act; and the term "Prospectus" means the prospectus
first filed with the Commission pursuant to Rule 424(b) under
the Act or, if no prospectus is required to be so filed, such
term means the prospectus included in the Registration Statement
in either case, including all documents incorporated by
reference therein filed under the Exchange Act. Any reference in
this Agreement to an "amendment or supplement" to any
Preliminary Prospectus or the Prospectus or an "amendment" to
any registration statement (including the Registration
Statement) shall be deemed to include any document incorporated
by reference therein and filed with the Commission under the
Exchange Act after the date of such Preliminary Prospectus,
Prospectus or Registration Statement, as the case may be. For
purposes of the preceding sentence, any reference to the
"effective date" of an amendment to a registration statement
shall, if such amendment is effected by means of the filing with
the Commission under the Exchange Act of a document incorporated
by reference in such registration statement, be deemed to refer
to the date on which such document was so filed with the
Commission. As used herein, any reference to any statement or
information as being "made", "included", "contained",
"disclosed", or "set forth" in any Preliminary Prospectus, a
Prospectus or any amendment or supplement thereto, or the
Registration Statement or any amendment thereto (or other
similar references) shall refer both to information and
statements actually appearing in such document as well as
information and statements incorporated by reference therein.
For purposes of the following representations and warranties, to
the extent reference is made to the Prospectus and at the
relevant time the Prospectus is not yet in existence, such
reference shall be deemed to be to the most recent Preliminary
Prospectus.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued and no proceeding for
that purpose has been instituted or overtly threatened by the
Commission or the securities authority of any state or other
jurisdiction. If the Registration Statement has become effective
under the Act, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and
no proceeding for that purpose has been instituted or overtly
threatened or, to the knowledge of the Company, contemplated by
the Commission or the securities authority of any state or other
jurisdiction.
(iii) When any Preliminary Prospectus and any
amendment or supplement thereto was filed with the Commission it
(A) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not include 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,
except for any statements which have been revised or added and
included in the Prospectus. When the Registration Statement or
any amendment thereto was or is declared effective, and at each
Time of Delivery (as hereinafter defined), it (A) contained or
will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (B) did not or will
not include any untrue statement of a material fact or omit to
state any material fact necessary to make the
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statements therein not misleading. When the Prospectus or any
amendment or supplement thereto is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or such amendment
or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared
effective) and at each Time of Delivery, the Prospectus, as
amended or supplemented at any such time, (A) contained or will
contain all statements required to be stated therein in
accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (B) did not or will
not include 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. The foregoing provisions
of this paragraph (iii) do not apply to statements or omissions
made in any Preliminary Prospectus and any amendment or
supplement thereto, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(iv) The descriptions in the Registration Statement
and the Prospectus of statutes, legal and governmental
proceedings or contracts and other documents are accurate in all
material respects and fairly present in all material respects
the information required to be shown; and there are no statutes
or legal or governmental proceedings required to be described in
the Registration Statement or the Prospectus that are not
described as required and there are no contracts or documents of
a character that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required.
(v) Each of the Company and its subsidiaries has
been duly incorporated or organized, is validly existing as a
corporation or limited partnership in good standing under the
laws of its jurisdiction of incorporation or organization and
has all requisite power and authority (corporate and other) to
own or lease its properties and conduct its business as
described in the Prospectus. The Company has full power and
authority (corporate and other) to enter into this Agreement and
to perform its obligations hereunder. Each of the Company and
its subsidiaries is duly qualified to transact business as a
foreign corporation or limited partnership and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, except where the failure to so
qualify would not have a material adverse effect on the
financial position, results of operations, or business of the
Company and its subsidiaries taken as a whole ("Material Adverse
Effect").
(vi) The Company's authorized, issued and outstanding
Common Stock is as disclosed in the Prospectus. All of the
issued shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and conform to
the description of the Common Stock incorporated by reference
into the Prospectus. None of the issued shares of Common Stock,
or the issued shares of common stock or limited partnership
interests of any of its subsidiaries, has been issued or is
owned or held in violation of any preemptive rights of
shareholders or partners, and no person or entity (including any
holder of outstanding shares of common stock or limited
partnership interests of the Company or its subsidiaries) has
any statutory preemptive or, to the Company's knowledge, other
rights to subscribe for any of the Shares.
(vii) The issued shares of common stock or limited
partnership interests of each of the Company's subsidiaries have
been duly authorized and validly issued, are fully paid
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and nonassessable and, except for directors qualifying shares,
except for liens or encumbrances contained in the Company's
currently existing $120,000,000 revolving line of credit (the
"Credit Facility"), and except as otherwise disclosed in the
Prospectus, are directly or indirectly owned beneficially by the
Company free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders'
agreements, voting trusts, equities or claims of any nature
whatsoever. Other than the subsidiaries listed on Exhibit 21 to
the Company's Annual Report on Form 10-K for the year ended
February 1, 1997 (which are herein referred to as the
"subsidiaries") and except for short-term working capital cash
investments, the Company does not own, directly or indirectly,
any capital stock or other equity securities of any other
corporation or any partnership interest in any partnership,
joint venture or other association other than as disclosed in
the Prospectus.
(viii) Except as disclosed in the Prospectus and except
for forfeitures, grants and exercises of stock options pursuant
to existing stock option plans of the Company in the ordinary
course of business after the date of the Preliminary Prospectus,
there are no outstanding (A) securities or obligations of the
Company or any of its subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such
subsidiary, (B) warrants, rights or options to subscribe for or
purchase from the Company or any such subsidiary any such
capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(ix) Since the date of the most recent audited
financial statements included in the Prospectus, neither the
Company nor any of its subsidiaries has sustained any material
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or
decree, otherwise than as disclosed in or contemplated by the
Prospectus.
(x) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (A) neither the Company nor any of its subsidiaries
has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the
ordinary course of business, that are material to the Company
and its subsidiaries taken as a whole, (B) the Company has not
purchased any of its outstanding capital stock or declared, paid
or otherwise made any dividend or distribution of any kind on
its capital stock, (C) there has not been any change in the
capital stock (except as a result of shares issued upon exercise
of stock options pursuant to existing stock option plans of the
Company), or, otherwise than in the ordinary course of business
consistent with past practice, long-term debt or short-term debt
of the Company or any of its subsidiaries, and (D) there has not
been any material adverse change, or any development involving a
prospective material adverse change, in or affecting the
financial position, results of operations or business of the
Company and its subsidiaries taken as a whole, in each case
other than as disclosed in or contemplated by the Prospectus.
(xi) Except as disclosed in the Prospectus, there are
no contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities
in the securities registered pursuant to the Registration
Statement (or any such right has been effectively waived) or any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
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(xii) All offers and sales of the Company's capital
stock by the Company prior to the date hereof were at all
relevant times duly registered under the Act or exempt from the
registration requirements of the Act by reason of Sections 3(b),
4(2) or 4(6) thereof and were duly registered or the subject of
an available exemption from the registration requirements of the
applicable state securities or blue sky laws.
(xiii) Neither the Company nor any of its subsidiaries
is, or with the giving of notice or passage of time or both
would be, in violation of its Articles of Incorporation or
Bylaws or in default under any indenture, mortgage, deed of
trust, loan agreement, or other material agreement or instrument
to which the Company or any of its subsidiaries is a party or to
which any of their respective properties or assets are subject,
except where such default (other than in respect of its Articles
of Incorporation and Bylaws) would not have a Material Adverse
Effect.
(xiv) The sale of the Shares and the performance of
this Agreement and the consummation of the transactions herein
contemplated will not conflict with, or (with or without 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 indenture, mortgage, deed of
trust, loan agreement, or other material agreement or instrument
to which the Company or any of its subsidiaries is a party or to
which any of their respective properties or assets is subject,
nor will such action conflict with or violate any provision of
the Articles of Incorporation or Bylaws of the Company or any of
its subsidiaries or any statute, rule or regulation or any
order, judgment or decree of any court or governmental agency or
body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets,
except, in any such case, where such breach, violation, default,
or conflict (other than in respect of its Articles of
Incorporation or Bylaws) would not have a Material Adverse
Effect.
(xv) The Company and its subsidiaries have good and
marketable title in fee simple to all real property, if any, and
good title to all personal property owned by them and material
to the Company and its subsidiaries as a whole, in each case
free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages and defects, except such as are
contained in the Credit Facility or otherwise disclosed in the
Prospectus or such as do not materially and adversely affect the
value of such property and do not interfere with the use made or
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under
lease by the Company or any of its subsidiaries and material to
the Company and its subsidiares as a whole are held under valid,
subsisting and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and do not
interfere with the use made or proposed to be made of such
property and buildings by the Company or such subsidiaries.
(xvi) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing
with, any court or governmental agency or body is required for
the sale of the Shares or the consummation of the transactions
contemplated by this Agreement, except the registration of the
Shares under the Act (which, if the Registration Statement is
not effective as of the time of execution hereof, shall be
obtained as provided in this Agreement) and such as may be
required under state securities or blue sky laws or the bylaws
and rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the offer,
sale and distribution of the Shares by the Underwriters.
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(xvii) Other than as disclosed in the Prospectus, there
is no litigation, arbitration, claim, proceeding (formal or
informal) or investigation pending or, to the Company's
knowledge, threatened, in which the Company or any of its
subsidiaries is a party or of which any of their respective
properties or assets are the subject which, if determined
adversely to the Company or any such subsidiary, would
individually or in the aggregate have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries is in violation
of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except as described in
the Prospectus or such as do not and will not individually or in
the aggregate have a Material Adverse Effect, and neither the
Company nor any of its subsidiaries is required to take any
action in order to avoid any such violation or default.
(xviii) Deloitte & Touche LLP, who have rendered a
report with respect to certain financial statements of the
Company and its consolidated subsidiaries, is and was during the
periods covered by its report included in the Registration
Statement and the Prospectus, independent public accountants as
required by the Act and the Exchange Act and the respective
rules and regulations of the Commission thereunder.
(xix) The consolidated financial statements and
schedules (including the related notes) of the Company and its
consolidated subsidiaries included in the Registration
Statement, the Prospectus or any Preliminary Prospectus were
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved
(except as may be otherwise indicated in the notes thereto) and
fairly present (subject, in the case of unaudited statements, to
normal and recurring audit adjustments) the financial position
and results of operations of the Company and its subsidiaries,
on a consolidated basis, at the dates and for the periods
presented. The other financial and statistical information and
data included in the Registration Statement, the Prospectus or
any Preliminary Prospectus, set forth under the captions
"Prospectus Summary," "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Business" in the Prospectus are, in
all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books
and records of the Company.
(xx) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the valid
and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to
general equitable principles, and except as the enforceability
of rights to indemnity and contribution under this Agreement may
be limited under applicable securities laws or the public policy
underlying such laws.
(xxi) Except in connection with the administration of
the Company's Employee Payroll Investment Plan in the ordinary
course of business, neither the Company nor, to the Company's
knowledge, any of its officers, directors or affiliates has (A)
taken, directly or indirectly, any action designed to cause or
result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Shares or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of, the Shares or (2) paid
or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(xxii) The Company has obtained for the benefit of the
Company and the Underwriters from each of its directors and
executive and certain other officers a written
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agreement which generally provides that for a period of 120 days
from the date of the Prospectus such director or officer will
not, without the prior written consent of The Robinson-Humphrey
Company, Inc., offer, pledge, sell, contract to sell, grant any
option for the sale of, or otherwise dispose (or announce any
offer, pledge, sale, grant of an option to purchase or other
disposition) of, directly or indirectly, any shares of Common
Stock or securities convertible into, or exercisable or
exchangeable for, shares of Common Stock except under certain
prescribed circumstances.
(xxiii) Neither the Company, any of its subsidiaries,
nor, to the Company's knowledge, any director, officer, agent,
employee or other person associated with and acting on behalf of
the Company or any such subsidiary has, directly or indirectly:
used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(xxiv) To the Company's knowledge, the operations of
the Company and its subsidiaries with respect to any real
property currently leased or owned or by any means controlled by
the Company or any subsidiary (the "Real Property") are in
compliance with all federal, state, and local laws, ordinances,
rules, and regulations relating to occupational health and
safety and the environment (collectively, "Laws"), except where
such noncompliance would not have a Material Adverse Effect; and
the Company and its subsidiaries have all material licenses,
permits and authorizations necessary to operate its business
under all Laws and are in compliance in all material respects
with all terms and conditions of such licenses, permits and
authorizations; neither the Company nor any subsidiary has
authorized, conducted or has knowledge of the generation,
transportation, storage, use, treatment, disposal or release of
any hazardous substance, hazardous waste, hazardous material,
hazardous constituent, toxic substance, pollutant, contaminant,
petroleum product, natural gas, liquefied gas or synthetic gas
defined or regulated under any environmental law on, in or under
any Real Property in violation of any Laws except which
individually or in the aggregate would not have a Material
Adverse Effect, and there is no pending or threatened claim,
litigation or any administrative agency proceeding, nor has the
Company or any subsidiary received any written or oral notice
from any governmental entity or third party, that: (A) alleges a
violation of any Laws by the Company or any subsidiary; (B)
alleges the Company or any subsidiary is a liable party under
the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601 et seq. or any state superfund
law; (C) alleges possible contamination of the environment by
the Company or any subsidiary; or (D) alleges possible
contamination of the Real Property, except those, in any such
case, which would not have a Material Adverse Effect.
(xxv) Other than as disclosed in the Prospectus, the
Company and its subsidiaries own or have the right to use all
patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights,
franchises, trade secrets, proprietary or other confidential
information and intangible properties and assets (collectively,
"Intangibles") necessary to their respective businesses as
presently conducted or as the Prospectus indicates the Company
or such subsidiary proposes to conduct; to the knowledge of the
Company, except as otherwise disclosed in the Prospectus,
neither the Company nor any subsidiary has infringed or is
infringing, and neither the Company nor any subsidiary has
received notice of infringement with respect to, asserted
Intangibles of others; and, to the knowledge of the Company,
there is no infringement by others of Intangibles of the
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Company or any of its subsidiaries except those, in any case,
which individually or in the aggregate would not have a Material
Adverse Effect.
(xxvi) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent
in the businesses in which they are engaged; and neither the
Company nor any such subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its
business at a comparable cost which, if not so renewed or
obtained, would have a Material Adverse Effect.
(xxvii) The Company is taking steps to replace and/or
modify its software systems to include the requisite design,
performance and functionality so that the Company does not
reasonably expect to experience invalid or incorrect results or
abnormal software operation related to calendar year 2000.
(xxviii) Each of the Company and its subsidiaries makes
and keeps accurate books, records and accounts, which, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of its assets and maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorization,
(B) transactions are recorded as necessary to permit preparation
of the Company's consolidated financial statements in accordance
with generally accepted accounting principles and to maintain
accountability for the assets of the Company, (C) access to the
assets of the Company and each of its subsidiaries is permitted
only in accordance with management's general or specific
authorization, and (D) the recorded accountability for assets of
the Company and each of its subsidiaries is compared with
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxix) No subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to
the Company, from making any other distributions on such
subsidiary's capital stock to the Company, from repaying to the
Company any loans or advances to such subsidiary or from
transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as
disclosed in the Prospectus.
(xxx) The Company and its subsidiaries have filed all
foreign, federal, state and local tax returns that are required
to be filed by them or have requested extensions thereof and
have paid all taxes shown as due on such returns as well as all
other taxes, assessments and governmental charges that are due
and payable except for any such assessment or charge currently
being contested in good faith and of which, to the extent
material, the Company has advised the Representatives.
(xxxi) The Company is not, will not become as a result
of the transactions contemplated hereby, and does not intend to
conduct its business in a manner that would cause it to become,
an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment
Company Act of 1940.
(xxxii) The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is qualified as a Nasdaq
National Market security of The Nasdaq Stock Market, Inc. The
Company has taken no action designed to terminate, or likely to
have the effect of terminating, the registration of the Common
Stock under the Exchange Act or qualification
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<PAGE>
of the Common Stock on the Nasdaq National Market, nor has the
Company received any notification that the Commission or the
NASD is contemplating terminating such registration or
qualification.
(xxxiii) The conditions for use of a Registration
Statement on Form S-3 set forth in the General Instructions to
Form S-3 have been satisfied with respect to the Company and the
transactions contemplated by this Agreement and the Registration
Statement.
(B) REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder, severally and not jointly, represents and warrants
to, and agrees with, each of the several Underwriters and the Company that:
(i) Such Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement (as hereinafter defined) and
to sell, assign, transfer and deliver to the Underwriters the
Shares to be sold by such Selling Shareholder hereunder; and the
execution and delivery of this Agreement, the Power of Attorney
and the Custody Agreement have been duly authorized by all
necessary action of such Selling Shareholder.
(ii) Such Selling Shareholder has duly executed and
delivered this Agreement, the Power of Attorney and the Custody
Agreement, and each constitutes the valid and binding agreement
of such Selling Shareholder enforceable against such Selling
Shareholder in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to
general equitable principles and, with respect to this
Agreement, except as the enforceability of rights to indemnity
and contribution under this Agreement may be limited under
applicable securities laws or the public policy underlying such
laws.
(iii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing
with, any court or governmental agency or body is required for
the sale of the Shares to be sold by such Selling Shareholder or
the consummation of the transactions contemplated by this
Agreement, the Power of Attorney or the Custody Agreement,
except the registration of such Shares under the Act (which, if
the Registration Statement is not effective as of the time of
execution hereof, shall be obtained as provided in this
Agreement) and such as may be required under state securities or
blue sky laws or the bylaws and rules and regulations of the
NASD in connection with the offer, sale and distribution of such
Shares by the Underwriters.
(iv) The sale of the Shares to be sold by such
Selling Shareholder and the performance of this Agreement, the
Power of Attorney and the Custody Agreement and the consummation
of the transactions herein and therein contemplated will not
conflict with, or (with or without 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 indenture, mortgage, deed of trust, loan agreement, or other
material agreement or instrument to which such Selling
Shareholder is a party or to which any of his respective
properties or assets is subject, nor will such action conflict
with or violate any provisions of any statute, rule or
regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over such
Selling Shareholder or any of such Selling Shareholder's
properties or assets, except those, in each such case, which
would not have a material adverse effect on the ability of such
Selling Shareholder to consummate the transactions contemplated
by this Agreement.
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<PAGE>
(v) Such Selling Shareholder has, or immediately
prior to the First Time of Delivery (as hereinafter defined),
such Selling Shareholder will have, good and valid title to the
Shares to be sold by such Selling Shareholder hereunder, without
notice of any adverse claim, free and clear of all liens,
security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of
any nature whatsoever; and, upon delivery of such Shares against
payment therefor as provided herein (assuming that such Shares
are purchased in good faith without notice of adverse claim)
good and valid title to such Shares, free and clear of all
liens, security interests, pledges, charges, encumbrances,
defects, shareholders' agreements, voting trusts, equities or
claims of any nature whatsoever, will pass to the several
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 might 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 Shares or (B) since the filing of the Registration Statement
(1) sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares or (2) paid or agreed to pay
to any person any compensation for soliciting another to
purchase any other securities of the Company.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to the Representatives prior to or at the First
Time of Delivery a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
Each of the Selling Shareholders represents and warrants that
certificates in negotiable form representing all of the Shares to be sold by
such Selling Shareholder hereunder have been placed in custody (or, in the case
of the contemplated exercise of stock options, a duly executed notice of
exercise of stock options to purchase the Shares to be sold by the Selling
Shareholders hereunder has been placed in custody) under a custody agreement,
in the form heretofore furnished to and approved by you (the "Custody
Agreement"), duly executed and delivered by such Selling Shareholder to
Wachovia Bank, N.A., as custodian (the "Custodian"), and that such Selling
Shareholder has duly executed and delivered a Power of Attorney, in the form
heretofore furnished to and approved by you, appointing the persons indicated
in Schedule II hereto as such Selling Shareholder's attorney-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Shareholder, to determine the purchase price to be paid
by the Underwriters to the Selling Shareholders as provided in Section 2
hereof, to authorize the delivery of the Shares to be sold by such Selling
Shareholder hereunder and otherwise to act on behalf of such Selling
Shareholder in connection with the transactions contemplated by this Agreement
and the Custody Agreement.
Each of the Selling Shareholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Shareholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Shareholder for such
custody, and the appointment by such Selling Shareholder of the
Attorneys-in-Fact by the Power of Attorney, are irrevocable. Each of the
Selling Shareholders specifically agrees that the obligations of the Selling
Shareholders hereunder shall not be terminated by operation of law, whether by
the death or incapacity of any Selling Shareholder, or by the occurrence of any
other event.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
herein set forth, (a) each Selling Shareholder agrees, severally and not
jointly, to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Selling Shareholders,
at a purchase price of $32.25 per share, the number of Firm Shares (to be
adjusted by the Representatives so as to
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<PAGE>
eliminate fractional shares) determined by multiplying the aggregate number of
Shares to be sold by the Selling Shareholders as set forth opposite their
respective names in Schedule II hereto by a fraction, the numerator of which is
the aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto, and the
denominator of which is the aggregate number of Firm Shares to be purchased by
all of the Underwriters from the Selling Shareholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, Robert M. Goodfriend agrees to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from Robert M. Goodfriend, at the purchase price per
share set forth in clause (a) of this Section 2, that portion of the number of
Optional Shares as to which such election shall have been exercised (to be
adjusted by the Representatives so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares that such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of the Optional Shares that all of the Underwriters are entitled to
purchase hereunder.
Robert M. Goodfriend hereby grants to the Underwriters the right
to purchase at their election in whole or in part from time to time up to
300,000 Optional Shares, at the purchase price per share set forth in clause
(a) in the paragraph above plus, if the purchase and sale of any Optional
Shares take place after the First Time of Delivery and after the Firm Shares
are traded "ex-dividend," an amount equal to the dividend payable on such
Optional Shares, for the sole purpose of covering over-allotments in the sale
of Firm Shares. Any such election to purchase Optional Shares may be exercised
by written notice from the Representatives to Robert M. Goodfriend, given not
more than twice within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by the Representatives but in no event earlier than the First Time
of Delivery or, unless the Representatives and Robert M. Goodfriend otherwise
agree in writing, earlier than two or later than ten business days after the
date of such notice. In the event the Representatives elect to purchase all or
a portion of the Optional Shares, the Company and Robert M. Goodfriend agree to
furnish or cause to be furnished to the Representatives the certificates,
letters and opinions, and to satisfy all conditions, set forth in Section 7
hereof at each Subsequent Time of Delivery (as hereinafter defined).
3. OFFERING BY THE UNDERWRITERS. Upon the authorization by the
Underwriters of the release of the Shares, the several Underwriters propose to
offer the Shares for sale upon the terms and conditions disclosed in the
Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form for
the Shares to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as The Robinson- Humphrey Company,
Inc. may request upon at least 48 hours' prior notice to the Company shall be
delivered by or on behalf of the Selling Shareholders to the Representatives
for the account of such Underwriter, against payment by such Underwriter on its
behalf of the purchase price therefor by wire transfer to the accounts
designated by the Selling Shareholders in immediately available funds. The
closing of the sale and purchase of the Shares shall be held at the offices of
Smith, Gambrell & Russell, LLP, Suite 1800, East Tower, Atlanta Financial
Center, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326, except that physical
delivery of such certificates shall be made at the office of The Depository
Trust Company, 55 Water Street, New York, New York 10041. The time and date of
such delivery and payment shall be, with respect to the Firm Shares, at 10:00
a.m., Atlanta time, on the fourth full business day after this Agreement is
executed or at such other time and date as the Representatives, the Company and
the Attorneys-in-Fact on behalf of the Selling Shareholders may agree upon in
writing, and, with respect to the Optional Shares, at 10:00 a.m., Atlanta time,
on the date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase all or part of such
Optional Shares, or at such other time and date as the Representatives and the
Company may agree
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upon in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of any
Optional Shares, if not the First Time of Delivery, is herein called a
"Subsequent Time of Delivery," and each such time and date for delivery is
herein called a "Time of Delivery." The Company will make such certificates
available for checking and packaging at least 24 hours prior to each Time of
Delivery at the office of The Depository Trust Company, 55 Water Street, New
York, New York 10041 or at such other location in New York, New York specified
by the Underwriters in writing at least 48 hours prior to such Time of
Delivery.
5. COVENANTS.
(A) COVENANTS OF THE COMPANY. The Company covenants and
agrees with each of the Underwriters:
(i) If the Registration Statement has been declared
effective prior to the execution and delivery of this Agreement,
the Company will file the Prospectus with the Commission
pursuant to and in accordance with Rule 424(b)(1) (or, if
applicable and if consented to by the Representatives, Rule
424(b)(4)) not later than the earlier of (A) the second business
day following the execution and delivery of this Agreement or
(B) the fifth business day after the date on which the
Registration Statement is declared effective. The Company will
advise the Representatives promptly of any such filing pursuant
to Rule 424(b). The Company will file promptly all reports and
any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and for so long as the delivery of a
prospectus is required in connection with the offering, sale and
distribution of the Shares.
(ii) The Company will not file with the Commission
the Prospectus or the amendment referred to in the second
sentence of Section l(a)(i) hereof, any amendment or supplement
to the Prospectus or any amendment to the Registration Statement
unless the Representatives have received a reasonable period of
time to review any such proposed amendment or supplement and
consented to the filing thereof and will use its best efforts to
cause any such amendment to the Registration Statement to be
declared effective as promptly as possible. Upon the request of
the Representatives or counsel for the Underwriters, the Company
will promptly prepare and file with the Commission, in
accordance with the rules and regulations of the Commission, any
amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Shares by the several
Underwriters and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective
as promptly as possible. If required, the Company will file any
amendment or supplement to the Prospectus with the Commission in
the manner and within the time period required by Rule 424(b)
under the Act. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed
or declared effective or the Prospectus or any amendment or
supplement thereto has been filed and will provide evidence to
the Representatives of each such filing or effectiveness.
(iii) The Company will advise the Representatives
promptly after receiving notice or obtaining knowledge of (A)
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any part thereof
or any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement
thereto, (B) the suspension of the qualification of the Shares
for offer or sale in any jurisdiction or of the initiation or
threatening of any proceeding for any such purpose,
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<PAGE>
or (C) any request made by the Commission or any securities
authority of any other jurisdiction for amending the
Registration Statement, for amending or supplementing the
Prospectus or for additional information. The Company will use
its best efforts to prevent the issuance of any such stop order
and, if any such stop order is issued, to obtain the withdrawal
thereof as promptly as possible.
(iv) If the delivery of a prospectus relating to the
Shares is required under the Act at any time prior to the
expiration of nine months after the date of the Prospectus and
if at such time any events have occurred as a result of which
the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading, or if for any reason it is necessary during such
same period to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference in
the Prospectus to comply with the Act or the Exchange Act or the
respective rules and regulations thereunder, the Company will
promptly notify the Representatives and upon the request of the
Representatives (but at the Company's expense) prepare and file
with the Commission an amendment or supplement to the Prospectus
or any such document incorporated by reference that corrects
such statement or omission or effects such compliance and will
furnish without charge to each Underwriter and to any dealer in
securities as many copies of such amended or supplemented
Prospectus as the Representatives may from time to time
reasonably request. If the delivery of a prospectus relating to
the Shares is required under the Act at any time nine months or
more after the date of the Prospectus, upon the request of the
Representatives but at the expense of such Underwriter, the
Company will prepare and deliver to such Underwriter as many
copies as the Representatives may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the
Act. Neither the Representatives' consent to, nor the
Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in
Section 7.
(v) The Company promptly from time to time will take
such action as the Representatives may reasonably request to
qualify the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions as the Representatives may
request and will continue such qualifications in effect for as
long as may be necessary to complete the distribution of the
Shares, provided that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction.
(vi) The Company will promptly provide the
Representatives, without charge, (A) two manually executed
copies of the Registration Statement as originally filed with
the Commission and of each amendment thereto, including all
documents or information incorporated by reference therein, (B)
for each other Underwriter a conformed copy of the Registration
Statement as originally filed and of each amendment thereto,
without exhibits but including all documents or information
incorporated by reference therein, and (C) so long as a
prospectus relating to the Shares is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request.
(vii) As soon as practicable, the Company will make
generally available to its security holders and the
Representatives an earnings statement of the Company and its
subsidiaries, if any, covering a period of at least 12 months
beginning after the effective date of the Registration Statement
(which need not be audited) complying with Section 11(a) of the
Act and the rules and regulations thereunder.
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(viii) During the period beginning from the date hereof
and continuing to and including the date 120 days after the date
of the Prospectus, the Company will not, without the prior
written consent of The Robinson-Humphrey Company, Inc., offer,
pledge, issue, sell, contract to sell, grant any option for the
sale of, or otherwise dispose (or announce any offer, pledge,
sale, grant of an option to purchase or other disposition) of,
directly or indirectly, any shares of Common Stock or securities
convertible into, exercisable or exchangeable for, shares of
Common Stock, except as provided in Section 2 and except for the
issuance of Common Stock upon the exercise of stock options
outstanding on the date of this Agreement to the extent that
such stock options are disclosed in the Prospectus and except
for the grant of stock options under the Company's existing
stock option plans.
(ix) During a period of three years from the
effective date of the Registration Statement, the Company will
furnish to the Representatives and, upon request, to each of the
other Underwriters, without charge, (A) copies of all reports or
other communications (financial or other) furnished to
shareholders, (B) 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, and (C) such
additional information concerning the business and financial
condition of the Company and its subsidiaries, if any, as the
Representatives may reasonably request.
(x) Except in connection with the administration of
the Company's Employee Payroll Investment Plan in the ordinary
course of business, neither the Company nor, to the Company's
knowledge, any of its officers, directors or affiliates will
prior to the termination of the underwriting syndicate
contemplated by this Agreement, (A) take, directly or
indirectly, any action designed to cause or to result in, or
that might 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 any of the
Shares, (B) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of, the Shares, or (C) pay
or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(xi) At each Time of Delivery, the Company will use
its best efforts to cause the Shares to continue to be listed on
the Nasdaq National Market.
(xii) If at any time during the period beginning on
the date the Registration Statement becomes effective and ending
on the later of (A) the date 30 days after such effective date
and (B) the date on which the Company next files with the
Commission a Quarterly Report on Form 10-Q after such effective
date, any rumor, publication or event relating to or affecting
the Company shall occur as a result of which in the opinion of
the Company's counsel the Company is obligated to publicly
respond to such rumor, publication, or event (regardless of
whether such rumor, publication or event necessitates an
amendment of or supplement to the Prospectus), the Company will
provide to the Representatives, in advance of its dissemination,
a copy of any press release or other public statement responding
to or commenting on such rumor, publication or event.
(B) COVENANTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder, severally and not jointly, covenants and agrees with each of the
Underwriters:
(i) A duly executed lock-up agreement has been
delivered by such Selling Shareholder to the Representatives
generally providing that during the period beginning from the
date hereof and continuing to and including the date 120 days
after the date of the Prospectus, such Selling Shareholder will
not, without the prior written consent of The
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<PAGE>
Robinson-Humphrey Company, Inc., offer, pledge, issue, sell,
contract to sell, grant any option for the sale of, or otherwise
dispose (or announce any offer, pledge, sale, grant of an option
to purchase or other disposition) of, directly or indirectly,
any shares of Common Stock or securities convertible into,
exercisable or exchangeable for, shares of Common Stock, except
as provided in Section 2 hereof and except under certain
prescribed circumstances.
(ii) Such Selling Shareholder, prior to the
termination of the underwriting syndicate contemplated by this
Agreement, will not (A) take, directly or indirectly, any action
designed to cause or to result in, or that might 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 any of the Shares, (B) sell, bid for, purchase or pay
anyone any compensation for soliciting purchases of, the Shares
or (C) pay to or agree to pay any person any compensation for
soliciting another to purchase any other securities of the
Company.
6. EXPENSES. The Company and the Selling Shareholders will pay all
costs and expenses incident to the performance of their obligations under this
Agreement, in such proportions as they may agree among themselves, whether or
not the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including, without limitation, all
costs and expenses incident to (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and, if applicable, filing of the Registration Statement (including
all amendments thereto), any Preliminary Prospectus, the Prospectus and any
amendments and supplements thereto, this Agreement and any blue sky memoranda;
(ii) the delivery of copies of the foregoing documents to the Underwriters;
(iii) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Shares; (iv) the preparation, issuance
and delivery to the Underwriters of any certificates evidencing the Shares,
including transfer agent's and registrar's fees; (v) the qualification of the
Shares for offering and sale under state securities and blue sky laws,
including filing fees and reasonable fees and disbursements of counsel for the
Underwriters relating thereto; (vi) any listing of the Shares on the Nasdaq
National Market and (vii) any expenses for travel, lodging and meals incurred
by the Company and any of its officers, directors and employees in connection
with any meetings with prospective investors in the Shares. In addition, each
Selling Shareholder will pay all costs and expenses incident to (i) the fees,
disbursements and expenses of separate counsel for such Selling Shareholder,
(ii) such Selling Shareholder's pro rata share of the fees and expenses of the
Attorneys-In-Fact and the Custodian, and (iii) the sale and delivery of the
Shares to be sold by such Selling Shareholder to the Underwriters hereunder. It
is understood, however, that, except as provided in this Section, Section 8 and
Section 10 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale
of any of the Shares by them, and any advertising expenses relating to the
offer and sale of the Shares.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company and the Selling Shareholders
contained herein as of the date hereof and as of such Time of Delivery, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company and the Selling Shareholders of their
respective covenants and agreements hereunder, and to the following additional
conditions precedent:
(a) If the Registration Statement as amended to date has not
become effective prior to the execution of this Agreement, such Registration
Statement shall have been declared effective not later than 11:00 a.m., Atlanta
time, on the date of this Agreement or such later date and/or time as shall
have been consented to by the Representatives in writing. The Prospectus and
any amendment or supplement thereto
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shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing and in accordance with
Section 5(a) of this Agreement; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceedings for that purpose shall have been instituted, threatened or, to the
knowledge of the Company and the Representatives, contemplated by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the Representatives' reasonable
satisfaction.
(b) Smith, Gambrell & Russell, LLP, counsel for the
Underwriters, shall have furnished to the Representatives such opinion or
opinions, dated such Time of Delivery, with respect to the incorporation of the
Company, the validity of the Shares being delivered at such Time of Delivery,
the Registration Statement, the Prospectus, and other related matters as the
Representatives may reasonably request, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, such counsel may rely as to
all matters of Tennessee law upon the opinion of Company counsel referred to in
paragraphs (c) and (d) below.
(c) The Representatives shall have received an opinion, dated
such Time of Delivery, of Shereff, Friedman, Hoffman & Goodman, LLP, counsel
for the Company, in form and substance satisfactory to the Representatives and
its counsel, to the effect that:
(i) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement
and the Prospectus and to enter into this Agreement and perform
its obligations hereunder. The Company is duly qualified to
transact business as a foreign corporation and is in good
standing under the laws of each other jurisdiction in which it
owns or leases property, or conducts any business, so as to
require such qualification, except where the failure to so
qualify would not have a Material Adverse Effect.
(ii) Each of the subsidiaries of the Company has been
duly incorporated or organized, is validly existing as a
corporation or limited partnership in good standing under the
laws of its jurisdiction of incorporation or organization, and
has all requisite corporate power and authority to own or lease
its properties and conduct its business as described in the
Registration Statement and the Prospectus. Each such subsidiary
is duly qualified to transact business as a foreign corporation
or limited partnership and is in good standing under the laws of
each other jurisdiction in which its owns or leases property, or
conducts any business, so as to require such qualification,
except where the failure to so qualify would not have a Material
Adverse Effect.
(iii) The Company's authorized Common Stock is as
disclosed in the Prospectus. The Common Stock conforms in all
material respects to the description of the Common Stock
incorporated by reference into the Prospectus. None of the
issued shares of common stock of the Company or its predecessors
or any of its subsidiaries has been issued or is owned or held
in violation of any statutory preemptive rights of shareholders,
and no person or entity (including any holder of outstanding
shares of common stock or limited partnership interests of the
Company or its subsidiaries) has any statutory preemptive or, to
the knowledge of such counsel, other rights to subscribe for any
of the Shares.
(iv) To such counsel's knowledge, all of the issued
shares of capital stock or, in the case of limited partnerships,
limited partnership interests, of each of the Company's
subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable,
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and are owned, directly or indirectly, beneficially by the
Company free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, equities or claims of
any nature whatsoever, except as are contained in the Credit
Facility or as otherwise disclosed in the Prospectus.
(v) To such counsel's knowledge, except as disclosed
in the Prospectus and except for forfeitures, grants and
exercises of stock options pursuant to the Company's existing
stock option plans in the ordinary course of business after the
date of the Preliminary Prospectus, there are no outstanding (A)
securities or obligations of the Company or any of its
subsidiaries convertible into or exercisable or exchangeable for
any capital stock of the Company or any such subsidiary, (B)
warrants, rights or options to subscribe for or purchase from
the Company or any such subsidiary any such capital stock or any
such convertible or exchangeable securities or obligations, or
(C) obligations of the Company or any such subsidiary to issue
any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants,
rights or options.
(vi) Except as disclosed in the Prospectus, there are
no contracts, agreements or understandings known to such counsel
between the Company and any person granting such person the
right to require the Company to file a registration statement
under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to
the Registration Statement (or any such right has been
effectively waived) or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Act.
(vii) All sales of the Company's capital stock by the
Company during the three years preceding the date of the
Prospectus were at the time of each sale duly registered under
the Act or exempt from the registration requirements of the Act.
(viii) Neither the Company nor any of its subsidiaries
is in violation of its Articles of Incorporation or Certificate
of Limited Partnership, as applicable.
(ix) The sale of the Shares being sold at such Time
of Delivery and the performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with, or (with or without 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 indenture, mortgage, deed of trust, loan agreement, or other
material agreement or instrument known to such counsel to which
the Company or any such subsidiary is a party or to which any of
their respective properties or assets is subject, except where
such conflict, breach, violation, or default would not have a
Material Adverse Effect, nor will such action conflict with or
violate any provision of the Articles of Incorporation or
Certificate of Limited Partnership, as applicable, or Bylaws of
the Company or any of its subsidiaries or any statute, rule or
regulation known to such counsel or to such counsel's knowledge
any order, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or
assets, except where such conflict or violation would not have a
Material Adverse Effect.
(x) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing
with, any court or governmental agency or body is required for
the sale of the Shares or the consummation of the transactions
contemplated by this Agreement, except the registration of the
Shares under the Act and such as may be
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required under state securities or blue sky laws or the bylaws
and rules and regulations of the NASD in connection with the
offer, sale and distribution of the Shares by the Underwriters.
(xi) To such counsel's knowledge and other than as
disclosed in or contemplated by the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal)
or investigation pending or overtly threatened in which the
Company or any of its subsidiaries is a party or of which any of
their respective properties or assets is the subject which, if
determined adversely to the Company or any such subsidiary,
would individually or in the aggregate have a Material Adverse
Effect;
(xii) This Agreement has been duly authorized,
executed and delivered by the Company.
(xiii) The Registration Statement and the Prospectus
and each amendment or supplement thereto (other than the
financial statements and related schedules therein, as to which
such counsel need express no opinion), as of their respective
effective or issue dates, complied as to form in all material
respects with the requirements of the Act and the Exchange Act
and the respective rules and regulations thereunder. The
descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings or contracts and
other documents (pertaining to legal matters) are accurate in
all material respects and fairly present in all material
respects the information required to be shown;
(xiv) The Registration Statement is effective under
the Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and, to such
counsel's knowledge, no proceedings for that purpose have been
instituted or threatened or are contemplated by the Commission.
(xv) 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.
Such counsel shall also state that no facts have come to their
attention that have caused such counsel to believe that the
Registration Statement, or any further amendment thereto made prior to
such Time of Delivery, on its effective date and as of such Time of
Delivery, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, or any amendment or supplement
thereto made prior to such Time of Delivery, as of its issue date and
as of such Time of Delivery, contained or contains any untrue
statement of a material fact or omitted or omits 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
that such counsel need express no belief regarding the financial
statements and related schedules and other financial data contained in
the Registration Statement, any amendment thereto, or the Prospectus,
or any amendment or supplement thereto).
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and certificates,
telegrams and other statements of public officials and, as to matters
involving the application of laws of any jurisdiction other than the
State of New York or the United States and as to real estate
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and trademark matters, to the extent reasonably satisfactory in form
and scope to counsel for the Underwriters, upon the opinions of local,
in-house and other counsel, provided that copies of such opinions are
delivered to the Representatives and counsel for the Underwriters.
(d) The Representatives shall have received an opinion, dated
such Time of Delivery, of Regis Hebbeler, Vice President, General Counsel of
the Company, in form and substance satisfactory to the Representatives and
their counsel, to the effect that:
(i) The Company's authorized, issued and outstanding
capital stock is as disclosed in the Prospectus. All of the
issued shares of the Common Stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable
and conform to the description incorporated by reference into
the Prospectus.
(ii) To such counsel's knowledge, other than the
subsidiaries listed on Exhibit 21 to the Company's Annual Report
on Form 10-K for the year ended February 1, 1997 and except for
short-term working capital cash investments, the Company does
not own, directly or indirectly, any capital stock or other
equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association.
(iii) Neither the Company nor any of its subsidiaries
is in violation of its Articles of Incorporation or Certificate
of Limited Partnership, as applicable, or Bylaws or in default
under any indenture, mortgage, deed of trust, loan agreement, or
other material agreement or instrument known to such counsel to
which the Company or any such subsidiary is a party or to which
any of their respective properties or assets is subject.
(iv) Any real property and buildings held under lease
by the Company or any of its subsidiaries are held by the
Company or such subsidiary under valid, subsisting and
enforceable leases with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the use
made and proposed to be made of such property and buildings by
the Company or such subsidiary.
(v) To such counsel's knowledge, neither the Company
nor any of its subsidiaries is in violation of, or in default
with respect to, any statute, rule, regulation, order, judgment
or decree, except as described in the Prospectus, nor is the
Company or any subsidiary required to take any action in order
to avoid any such violation or default.
(vi) Such counsel does not know of any statutes or
legal or governmental proceedings required to be described in
the Registration Statement or Prospectus that are not described
as required or of any contract 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 which are not described or filed as required.
Such counsel shall also state that no facts have come to his
attention that have caused such counsel to believe that the
Registration Statement, or any further amendment thereto made prior to
such Time of Delivery, on its effective date and as of such Time of
Delivery, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, or any amendment or supplement
thereto made prior to such Time of Delivery, as of its issue date and
as of such Time of Delivery, contained or contains any untrue
statement of a material fact or omitted or omits 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
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(provided that such counsel need express no belief regarding the
financial statements and related schedules and other financial data
contained in the Registration Statement, any amendment thereto, or the
Prospectus, or any amendment or supplement thereto).
(e) The Representatives shall have received an opinion, dated
such Time of Delivery, of Shereff, Friedman, Hoffman & Goodman, LLP, counsel
for the Selling Shareholders, in form and substance satisfactory to the
Representatives and their counsel, to the effect that:
(i) Each of the Selling Shareholders has all
requisite power and authority to enter into this Agreement, the
Power of Attorney and the Custody Agreement and to sell, assign,
transfer and deliver to the Underwriters the Shares to be sold
by such Selling Shareholder hereunder and the execution and
delivery of this Agreement, the Power of Attorney and the
Custody Agreement have been duly authorized by all necessary
action of such Selling Shareholder.
(ii) This Agreement, the Power of Attorney and the
Custody Agreement have been duly executed and delivered by such
Selling Shareholder, each of which is enforceable against such
Selling Shareholder in accordance with its terms subject, as to
enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to
general equitable principles and except as the enforceability of
rights to indemnity under this Agreement may be limited under
applicable securities laws or the public policy underlying such
laws (provided that such counsel need express no opinion
regarding the irrevocability of the Power of Attorney and the
Custody Agreement).
(iii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing
with, any court or governmental agency or body is required for
the sale of the Shares being sold by such Selling Shareholder or
the consummation of the transactions contemplated by this
Agreement, the Power of Attorney or the Custody Agreement,
except the registration of such Shares under the Act and such as
may be required under state securities or blue sky laws in
connection with the offer, sale and distribution of such Shares
by the Underwriters.
(iv) Based solely upon such counsel's review of the
stock certificates representing the Shares and certain
certificates of the Selling Shareholders, upon delivery of such
Shares against payment therefor as provided herein, good and
valid title to such Shares, free and clear of all liens,
security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of
any nature whatsoever, will pass to the several Underwriters;
provided that the Underwriters purchase such Shares in good
faith and without notice of any adverse claim within the meaning
of the Uniform Commercial Code as in effect in the State of
Georgia.
In rendering any such opinion, such counsel may
rely, as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Company,
the Selling Shareholders and public officials, and, as to
matters involving the application of laws of any jurisdiction
other than the State of New York or the United States, to the
extent reasonably satisfactory in form and scope to counsel for
the Underwriters, upon the opinion of local counsel, provided
that copies of such opinion are delivered to the Representatives
and counsel for the Underwriters.
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(f) The Representatives shall have received from Deloitte &
Touche LLP letters dated, respectively, the date hereof (or, if the
Registration Statement has been declared effective prior to the execution and
delivery of this Agreement, dated such effective date and the date of this
Agreement) and each Time of Delivery, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto. In the event that the letters
referred to in this Section 7(f) set forth any changes, decreases or increases
in the items specified in paragraph (iv) of Annex I, it shall be a further
condition to the obligations of the Underwriters that (i) such letters shall be
accompanied by a written explanation by the Company as to the significance
thereof, unless the Representatives deem such explanation unnecessary, and (ii)
such changes, decreases or increases do not, in the sole judgment of the
Representatives, make it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares being delivered at such Time of
Delivery as contemplated by the Registration Statement, as amended as of the
date of such letter.
(g) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor any of its subsidiaries
shall have sustained (i) any loss or interference with their respective
businesses from fire, explosion, flood, hurricane or other calamity, whether or
not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as disclosed in or contemplated by the
Prospectus, or (ii) any change, or any development involving a prospective
change (including without limitation a change in management or control of the
Company), in or affecting the position (financial or otherwise), results of
operations, net worth or business prospects of the Company and its
subsidiaries, otherwise than as disclosed in or contemplated by the Prospectus,
the effect of which, in either such case, is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the purchase, sale and delivery of the Shares being
delivered at such Time of Delivery as contemplated by the Registration
Statement, as amended as of the date hereof.
(h) Subsequent to the date hereof there shall not have occurred
any of the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or in the Common Stock by the Commission or the
Nasdaq National Market; (ii) a moratorium on commercial banking activities in
New York declared by either federal or state authorities; or (iii) any outbreak
or escalation of hostilities involving the United States, declaration by the
United States of a national emergency or war or any other national or
international calamity or emergency if the effect of any such event specified
in this clause (iii) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the purchase, sale and delivery of
the Shares being delivered at such Time of Delivery as contemplated by the
Registration Statement, as amended as of the date hereof.
(i) The Company and the Selling Shareholders shall have
furnished to the Representatives at such Time of Delivery certificates of
officers of the Company and certificates of the Selling Shareholders,
satisfactory to the Representatives, as to the accuracy of the representations
and warranties of the Company and such Selling Shareholders herein at and as of
such Time of Delivery, as to the performance by the Company and such Selling
Shareholders of all of their respective obligations hereunder to be performed
at or prior to such Time of Delivery, and the Company shall have furnished or
caused to be furnished certificates as to the matters set forth in subsections
(a) and (g) of this Section 7, and as to such other matters as the
Representatives may reasonably request.
(j) The Shares shall be listed on the Nasdaq National Market.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect
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thereof) arise out of or are based upon: (i) any untrue statement or alleged
untrue statement made by the Company in Section 1(a) of this Agreement; (ii)
any untrue statement or alleged untrue statement of any material fact contained
in (A) the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or (B) any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each an "Application"); or (iii)
the omission or alleged omission to state in the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or any Application a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives expressly for use
therein; provided, further, however, that the Company shall not be liable to
any Underwriter in respect of any untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus to the
extent that (i) the Prospectus did not contain such untrue statement or alleged
untrue statement or omission or alleged omission giving rise to such loss,
claim, damage, liability or action, (ii) the Prospectus was not sent or given
to the purchaser of the Shares in question at or prior to the time at which the
written confirmation of the sale of such Shares was sent or given to such
person, and (iii) the failure to deliver such Prospectus was not the result of
the Company's noncompliance with its obligations under Sections 5(a)(ii) and
5(a)(vi) hereof. The Company will not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding (or related
cause of action or portion thereof) in respect of which indemnification may be
sought hereunder (whether or not such Underwriter is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of such Underwriter from all liability
arising out of such claim, action, suit or proceeding (or related cause of
action or portion thereof).
(b) Each of the Selling Shareholders, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement made by any
such Selling Shareholder in Section 1(b) of this Agreement; or (ii) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, or any Application or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that no such Selling Shareholder shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives expressly for use therein; provided, further, however, that no
Selling
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Shareholder shall be liable to any Underwriter in respect of any Preliminary
Prospectus to the extent that (i) the Prospectus did not contain the untrue
statement or alleged untrue statement or omission or alleged omission giving
rise to such loss, claim, damage, liability or action, (ii) the Prospectus was
not sent or given to the purchaser of the Shares in question at or prior to the
time at which the written confirmation of sale of such Shares was sent or given
to such person, and (iii) the failure to deliver such Prospectus was not the
result of the Company's noncompliance with its obligations under Sections
5(a)(ii) and 5(a)(vi) hereof. No Selling Shareholder will, without the prior
written consent of each Underwriter, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding (or related cause of action or portion thereof) in respect of which
indemnification may be sought hereunder (whether or not such Underwriter is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter
from all liability arising out of such claim, action, suit or proceeding (or
related cause of action or portion thereof).
(c) Each Underwriter, severally but not jointly, agrees to
indemnify and hold harmless the Company and each Selling Shareholder against
any losses, claims, damages or liabilities to which the Company or any Selling
Shareholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or any Application or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through the Representatives expressly for use therein; and
will reimburse the Company and each Selling Shareholder for any legal or other
expenses reasonably incurred by the Company or such Selling Shareholder in
connection with investigating or defending any such loss, claim, damage,
liability or action. No Underwriter will, without the prior written consent of
the Company or any affected Selling Shareholder, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit, or proceeding (or related cause of action or portion thereof) in
respect of which indemnification may be sought hereunder (whether or not the
Company or such Selling Shareholder is a party to such claim, action, suit, or
proceeding), unless such settlement, compromise, or consent includes an
unconditional release of the Company or such affected Selling Shareholder from
all liability arising out of such claim, action, suit, or proceeding (or
related cause of action or portion thereof).
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection or unless the
indemnifying party is materially prejudiced by such omission. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party); provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded based upon the advice of
counsel that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available
to the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party and such
indemnified party shall
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have the right to select separate counsel to defend such action on behalf of
such indemnified party. After such notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, which separate counsel shall be
designated by the Representatives in the case of indemnity arising under
paragraphs (a) or (b) of this Section 8), or (ii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party or (iii) the indemnifying party shall have failed to
assume the defense thereof. Nothing in this Section 8(d) shall preclude an
indemnified party from participating at its own expense in the defense of any
such action so assumed by the indemnifying party. An indemnified party shall
not effect the settlement of any proceeding with respect to which
indemnification is sought hereunder without the consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed; provided,
however, notwithstanding the foregoing provisions of this Section 8(d), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, the
indemnifying party shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than thirty (30) days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding any exceptions to the obligation to indemnify
contained in the provisos of the first sentence of paragraphs (a), (b) and (c)
of this section, and unless and until it is finally judicially determined by a
court of competent jurisdiction that the indemnified party is not entitled to
indemnification by virtue thereof or otherwise, the obligation of the
indemnifying party to make reimbursement payments for the costs and expenses of
an indemnifiable claim shall arise, and such payment shall be made promptly
against proper documentation thereof, to the indemnified party. In the event
that such payments are made and it is subsequently finally judicially
determined by a court of competent jurisdiction that the indemnified party is
not entitled to indemnification by virtue of the provisions as aforesaid or
otherwise, the indemnified party who received such indemnity payments shall
reimburse the same, with interest from the date of disbursement by the
indemnifying party, to the indemnifying party to the extent such indemnified
party was not entitled to the same in the first instance.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) 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 Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities (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. The
24
<PAGE>
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company and the Selling Shareholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Shareholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (e) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders
under this Section 8 shall be in addition to any liability which the Company or
such Selling Shareholders may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and any Selling
Shareholder and to each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Act. Notwithstanding the foregoing, the
liability of the Selling Shareholders to the Underwriters arising on account of
the offering, whether such liability arises under this Agreement or otherwise,
shall not exceed the amounts set forth in Section 8(g) of this Agreement.
(g) Notwithstanding anything to the contrary in this Section 8,
the Selling Shareholders shall be liable for indemnification and/or
reimbursement and/or contribution under Sections 8(b) and 8(e) only if and to
the extent that the Company shall have failed to indemnify or reimburse or make
contribution to the Underwriters pursuant to Sections 8(a), 8(d) and 8(e)
within 90 days after demand therefor made to the Company by the Underwriters.
The liability of each Selling Shareholder other than Robert M. Goodfriend for
indemnification and contribution under this Section 8 shall be limited to an
amount equal to the total or aggregate public offering price of the Shares sold
by such Selling Shareholder to the Underwriters minus (i) the amount of the
underwriting discount paid thereon to the Underwriters by such Selling
Shareholder, (ii) the pro rata expenses of the offering paid by such Selling
Shareholder, and (iii) the amount of income tax paid by such Selling
Shareholder with respect to the sale of the Shares. The liability of Robert M.
Goodfriend for indemnification and contribution under this Section 8 shall be
limited to an amount equal to the total or aggregate public offering price of
the Shares sold by Mr. Goodfriend to the Underwriters minus the amount of the
underwriting discount paid thereon to the Underwriters by Mr. Goodfriend. The
Company and the Selling Shareholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
25
<PAGE>
9. DEFAULT OF UNDERWRITERS.
(a) If any Underwriter defaults in its obligation to purchase
Shares at a Time of Delivery, the Representatives may in their discretion
arrange for the Representatives or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six (36) hours
after such default by any Underwriter the Representatives do not arrange for
the purchase of such Shares, the Company and the Selling Shareholders shall be
entitled to a further period of thirty-six (36) hours within which to procure
another party or other parties satisfactory to the Representatives to purchase
such Shares on such terms. In the event that, within the respective prescribed
periods, the Underwriters notify the Company and the Selling Shareholders that
the Representatives have so arranged for the purchase of such Shares, or the
Company and the Selling Shareholders notify the Representatives that they have
so arranged for the purchase of such Shares, the Representatives or the Company
and the Selling Shareholders, as the case may be, shall have the right to
postpone a Time of Delivery for a period of not more than seven days in order
to 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 to file promptly any amendments to the Registration Statement or
the Prospectus that in the opinion of the Representatives may thereby be made
necessary. The cost of preparing, printing and filing any such amendments shall
be paid for by the Underwriters. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares. The thirty-six (36) hour periods referred to in this
subsection (a) shall not include the hours between (i) 5:00 p.m., Atlanta time,
on any Friday through 9:00 a.m., Atlanta time, the following Monday or (ii)
5:00 p.m., Atlanta time, on the day preceding a day on which the New York Stock
Exchange is closed for trading (a "holiday") through 9:00 a.m., Atlanta time,
on the day following that holiday.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by the
Representatives and the Company and the Selling Shareholders as provided in
subsection (a) above, the aggregate number of such Shares which remains
unpurchased does not exceed 10% of the aggregate number of Shares to be
purchased at such Time of Delivery, then the Company and the Selling
Shareholders shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have
not been made, but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. TERMINATION.
(a) This Agreement may be terminated with respect to the Firm
Shares or any Optional Shares in the sole discretion of the Representatives by
notice to the Company given prior to the First Time of Delivery or any
Subsequent Time of Delivery, respectively, in the event that (i) any condition
to the obligations of the Underwriters set forth in Section 7 hereof has not
been satisfied, or (ii) the Company or the Selling Shareholders shall have
failed, refused or been unable to deliver the Shares or to perform all
obligations and satisfy all conditions on their parts to be performed or
satisfied hereunder at or prior to such Time of Delivery, in either case other
than by reason of a default by any of the Underwriters. If this Agreement is
terminated pursuant to this Section 10(a) (other than pursuant to Section
7(h)), the Company and the Selling Shareholders will reimburse the Underwriters
severally upon demand for all reasonable out-of-pocket expenses (including
counsel fees and disbursements) that shall have been incurred by them in
connection with the proposed purchase and sale of the Shares. Neither the
Company nor any Selling Shareholder shall in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
26
<PAGE>
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by the
Representatives and the Company and the Selling Shareholders as provided in
Section 9(a), the aggregate number of such Shares which remains unpurchased
exceeds 10% of the aggregate number of Shares to be purchased at such Time of
Delivery, or if the Company and the Selling Shareholders shall not exercise the
right described in Section 9(b) to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to a Subsequent Time of Delivery, the obligations
of the Underwriters to purchase and of Robert M. Goodfriend to sell the
Optional Shares) shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter, the Company or the Selling Shareholders, except
for the expenses to be borne by the Company, the Selling Shareholders and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
11. SURVIVAL. The respective indemnities, agreements, representations,
warranties and other statements of the Company, its officers, the Selling
Shareholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
any controlling person referred to in Section 8(e) or the Company, any Selling
Shareholder, or any officer or director or controlling person of the Company or
any Selling Shareholder referred to in Section 8(e), and shall survive delivery
of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
12. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed (certified, return receipt
requested), delivered or telegraphed and confirmed in writing to the
Representatives in care of The Robinson-Humphrey Company, Inc., 3333 Peachtree
Road, N.E., Atlanta, Georgia 30326, Attention: Corporate Finance Department,
with a copy to Smith, Gambrell & Russell, LLP, Suite 1800, East Tower Atlanta
Financial Center, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326; if to any
Selling Shareholder it shall be sufficient in all respects if delivered or sent
by mail (certified, return receipt requested) to counsel for such Selling
Shareholder at its address set forth in Schedule II hereto; and if sent to the
Company, shall be mailed (certified, return receipt requested), delivered or
telegraphed and confirmed in writing to the Company at 400 Goody's Lane,
Knoxville, Tennessee 37922, Attention: President, with a copy to counsel for
the Company.
13. BINDING EFFECT. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Shareholders and to the extent provided in Sections 8 and 10 hereof, the
officers and directors and controlling persons referred to therein and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia without giving effect to
any provisions regarding conflicts of laws.
15. COUNTERPARTS. This Agreement may be executed by any one or more of
the 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.
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<PAGE>
If the foregoing is in accordance with the Representatives'
understanding of our agreement, please sign and return to us one of the
counterparts hereof, and upon the acceptance hereof by The Robinson- Humphrey
Company, Inc., on behalf of each of the Underwriters, this letter will
constitute a binding agreement among the Underwriters, the Company and the
Selling Shareholders. It is understood that the Representatives' acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in the Master Agreement among Underwriters, a copy of which shall be
submitted to the Company and the Selling Shareholders for examination, upon
request.
Very truly yours,
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Robert M. Goodfriend
--------------------------------
Robert M. Goodfriend
Chairman of the Board
and Chief Executive Officer
SELLING SHAREHOLDERS
By: /s/ Harry M. Call
-------------------------------------------------
Harry M. Call, as Attorney-in-Fact acting on
behalf of Robert M. Goodfriend, Harry M. Call
and Edward R. Carlin
The foregoing Agreement is hereby
confirmed and accepted as of
the date first written above
at Atlanta, Georgia.
THE ROBINSON-HUMPHREY COMPANY, INC.
J.C. BRADFORD & CO.
By: The Robinson-Humphrey Company, Inc.
By: /s/ Reynolds C. Faulkner
---------------------------
(Authorized Representative)
On behalf of each of the Underwriters
28
<PAGE>
SCHEDULE I
NUMBER OF
OPTIONAL
TOTAL SHARES TO BE
NUMBER OF FIRM PURCHASED IF
SHARES TO BE MAXIMUM OPTION
UNDERWRITER PURCHASED EXERCISED
- ----------- -------------- --------------
The Robinson-Humphrey Company, Inc.......... 638,500 94,501
J.C. Bradford & Co.......................... 638,500 94,499
William Blair & Company, L.L.C.............. 50,000 7,400
Furman Selz LLC............................. 50,000 7,400
Gerard Klauer Mattison & Co., Inc........... 50,000 7,400
Hilliard Lyons Inc.......................... 50,000 7,400
Interstate/Johnson Lane Corporation......... 50,000 7,400
Legg Mason Wood Walker, Incorporated 50,000 7,400
McDonald & Company Securities, Inc.......... 50,000 7,400
Morgan Keegan & Company, Inc................ 50,000 7,400
Needham & Company, Inc...................... 50,000 7,400
Rauscher Pierce Refsnes, Inc................ 50,000 7,400
Raymond James & Associates, Inc............. 50,000 7,400
Rodman & Renshaw, Inc....................... 50,000 7,400
Scott & Stringfellow Inc.................... 50,000 7,400
Southwest Securities........................ 50,000 7,400
Stephens Inc................................ 50,000 7,400
-------- -------
Total....................................... 2,027,000 300,000
========= =======
<PAGE>
SCHEDULE II
Total Number of
Firm Shares to be
SELLING SHAREHOLDERS(1) Sold
- ----------------------- -----------------
Robert M. Goodfriend 2,000,000
Harry M. Call 20,000
Edward R. Carlin 7,000
-----------
2,027,000
- -------------
(1) Each of the Selling Shareholders has executed and delivered a Power of
Attorney appointing Harry M. Call and Edward R. Carlin such Selling
Shareholder's Attorneys-in-Fact. Each of the Selling Shareholders is
represented by Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third
Avenue, New York, New York 10022, Attention: Richard A. Goldberg, Esq.
<PAGE>
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, Deloitte &
Touche LLP shall furnish letters to the Underwriters to the effect that:
(i) they are independent public accountants with respect to
the Company and its consolidated subsidiaries within the meaning the
Act and the Exchange Act and the applicable published rules and
regulations thereunder;
(ii) in their opinion, the consolidated financial statements
audited by them and included in the Prospectus and the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations thereunder;
(iii) the financial statements of the Company as of and for
the thirteen weeks ended May 3, 1997 and May 4, 1996 were reviewed by
them in accordance with the standards established by the American
Institute of Certified Public Accountants and based upon their review
they are not aware of any material modifications that should be made
to such financial statements for them to be in conformity with
generally accepted accounting principles, and such financial
statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable rules
and regulations thereunder;
(iv) on the basis of limited procedures, not constituting an
audit 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 in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial 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 consolidated condensed financial
statements of the Company and its consolidated subsidiaries
included in the Registration Statement and the Prospectus do
not comply in 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 principles applied on the
basis substantially consistent with that of the audited
consolidated financial statements included in the
Registration Statement and the Prospectus;
(B) as of a specified date not more than 5 days prior
to the date of such letter, there were any changes in the
capital stock (other than the issuance of capital stock upon
exercise of options which were outstanding on the date of the
latest balance sheet included in the Prospectus) or any
increase in the long-term debt or short-term debt of the
Company and its subsidiaries, or any decreases in net current
assets or net assets or other items specified by the
Representatives, or any increases in any 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
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<PAGE>
(C) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (C) there were any
decreases in net sales or the total or per share amounts of
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 which are described in
such letter; and
(v) In addition to the audit 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 paragraph
(iii) above, they have carried out certain specified procedures, not
constituting an audit 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,
included in the Registration Statement and the Prospectus, or which
appear 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.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
2
