3,000,000 Units
(each Unit consisting of one share of Common Stock, par
value $.01 per share, and one redeemable warrant to purchase
one share of Common Stock)
THE MARQUEE GROUP, INC.
UNDERWRITING AGREEMENT
Royce Investment Group, Inc. , 1996
As Representative of the Several Underwriters
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
The Marquee Group, Inc., a Delaware corporation ( "Marquee" or the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") of this Underwriting Agreement (this
"Agreement"), for whom you are acting as repesentative (the "Representative"),
an aggregate of 3,000,000 Units, each unit being hereinafter referred to as a
"Unit" and consisting of one share of Common Stock, par value $.01 per share
("Shares"), and one redeemable warrant ("Warrants") to purchase one share of
the Company's Common Stock at a price of $7.50 from the Separation Date (as
defined in the Warrant Agreement) to , 200 . The Warrants are subject to
redemption, in certain instances commencing one year from the date of this
Agreement. In addition, Marquee proposes to grant to the Underwriters (or, at
its option, the Representative, individually) the option referred to in Section
2(b) to purchase all or any part of an aggregate of 450,000 additional Units.
Unless the context otherwise indicates, the term "Units" shall include the
450,000 additional Units referred to above.
The aggregate of 3,000,000 Units to be sold by Marquee, together with
all or any part of the 450,000 Units which the Underwriters have the option to
purchase, and the Shares and the Warrants comprising such Units, are herein
called the "Units." The Common Stock of Marquee to be outstanding after giving
effect to the sale of the Shares is herein called the "Common Stock." The
Shares and Warrants included in the Units (including the Units which the
Underwriters have the option to purchase) are herein collectively called the
"Securities."
You have advised Marquee that you and the other Underwriters desire to
purchase, severally, the Units, and that you have been authorized by the
Underwriters to execute this Agreement on their behalf. Marquee confirms the
agreements made by it with respect to the purchase of the Units by the several
Underwriters on whose behalf you are signing this Agreement, as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) A registration statement (File No. 333-11287) on Form SB-2
relating to the public offering of the Units, including a form of prospectus
subject to completion, copies of which have heretofore been delivered to you,
has been prepared by Marquee in conformity with the applicable requirements of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission under the Act and one or more amendments to such registration
statement may have been so filed. After the execution of this Agreement,
Marquee will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission to
be effective under the Act, either (A) if Marquee relies on Rule 434 under the
Act, a Term Sheet (as hereinafter defined) relating to the Units that shall
identify the Preliminary Prospectus (as hereinafter defined) that it
supplements containing such information as is required or permitted by Rules
434, 430A and 424(b) under the Act or (B) if Marquee does not rely on Rule 434
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 under the Act or permitted by Rule 424(b) under the Act
and in the case of either clause (i)(A) or (i)(B) of this sentence, as have
been provided to and approved by the Representative prior to the execution of
this Agreement, or (ii) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the Act,
an amendment to such registration statement, including a form of prospectus, a
copy of which amendment has been furnished to and approved by the
Representative prior to the execution of this Agreement.
As used in this Agreement, the term "Registration Statement" means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
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 filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means (A) if Marquee relies on Rule 434 under the Act, the Term
Sheet relating to the Units that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the Preliminary Prospectus identified therein that
such Term Sheet supplements; (B) if Marquee does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act or (C) if Marquee does not rely on Rule 434 under the Act and if
no prospectus is required to be filed pursuant to said Rule 424(b), such term
means the prospectus included in the Registration Statement; except that if
such registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement and prior
to the Option Closing Date (as hereinafter defined), the terms "Registration
Statement" and "Prospectus" shall include such registration statement and
prospectus as so amended, and the term "Prospectus" shall include the
prospectus as so supplemented, or both, as the case may be; and the term "Term
Sheet" means any term sheet that satisfies the requirements
-2-
of Rule 434 under the Act. Any reference to the "date" of a Prospectus that
includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time the Registration
Statement becomes effective and at all times subsequent thereto up to and on
the Closing Date (as hereinafter defined) or the Option Closing Date, as the
case may be, (i) the Registration Statement and Prospectus will in all material
respects conform to the requirements of the Act and the Rules and Regulations;
and (ii) neither the Registration Statement nor the Prospectus will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make statements therein not misleading;
provided, however, that Marquee makes no representations, warranties or
agreements as to information contained in or omitted from the Registration
Statement or Prospectus in reliance upon, and in conformity with, written
information furnished to Marquee by or on behalf of the Underwriters
specifically for use in the preparation thereof. It is understood that the
statements set forth in the Prospectus on page 2 with respect to stabilization
under "Risk Factors-Possible Restrictions on Market-Making Activities in
Company's Securities," under the heading "Underwriting" and the identity of
counsel to the Underwriters under the heading "Legal Matters" constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Registration Statement and Prospectus, as the
case may be.
(c) Each of Marquee and the Merger Subsidiaries (as herein
defined) has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, with
full power and authority (corporate and other) to own its properties and
conduct its respective business as described in the Prospectus and is duly
qualified to do business as a foreign corporation and is in good standing in
all other jurisdictions in which the nature of its respective business or the
character or location of its properties requires such qualification, except
where failure to so qualify would not materially affect Marquee's or any of the
Merger Subsidiaries' business, properties or financial condition.
(d) The authorized, issued and outstanding capital stock of
Marquee as of June 30, 1996 is as set forth in the Prospectus under
"Capitalization;" the shares of issued and outstanding capital stock of Marquee
set forth thereunder have been duly authorized, validly issued and are fully
paid and non-assessable; except as set forth in the Prospectus, no options,
warrants, or other rights to purchase, agreements or other obligations to
issue, or agreements or other rights to convert any obligation into, any shares
of capital stock of Marquee have been granted or entered into by Marquee; and
the capital stock conforms to all statements relating thereto contained in the
Registration Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when
issued and delivered pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights of
any security holder of Marquee. Neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated in this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or
-3-
relating to the registration of any shares of Common Stock, except as described
in the Registration Statement and Prospectus.
The Warrants have been duly authorized and, when issued and delivered
pursuant to this Agreement, will have been duly executed, issued and delivered
and will constitute valid and legally binding obligations of Marquee
enforceable in accordance with their terms and entitled to the benefits
provided by the warrant agreement pursuant to which such Warrants are to be
issued (the "Warrant Agreement"), which will be substantially in the form filed
as an exhibit to the Registration Statement. The shares of Common Stock
issuable upon exercise of the Warrants have been reserved for issuance upon the
exercise of the Warrants and when issued in accordance with the terms of the
Warrants and Warrant Agreement, will be duly and validly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights and no
personal liability will attach to the ownership thereof. The Warrant Agreement
has been duly authorized and, when executed and delivered pursuant to this
Agreement, will have been duly executed and delivered and will constitute the
valid and legally binding obligation of Marquee enforceable in accordance with
its terms. The Warrants and the Warrant Agreement conform to the respective
descriptions thereof in the Registration Statement and Prospectus.
The Shares and the Warrants underlying the Unit Purchase Option have
been duly authorized and, when duly issued and delivered, such Warrants will
constitute valid and legally binding obligations of Marquee enforceable in
accordance with their terms and entitled to the benefits provided by the Unit
Purchase Option and the Warrant Agreement. The Shares included in the Unit
Purchase Option (and the shares of Common Stock issuable upon exercise of such
Warrants) when issued and sold in accordance with the terms of the Unit
Purchase Option, will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights and no personal liability will
attach to the ownership thereof.
(f) This Agreement, the Unit Purchase Option and the Warrant
Agreement have been duly and validly authorized, executed and delivered by
Marquee. Marquee has full power and lawful authority to authorize, issue and
sell the Units to be sold by it hereunder on the terms and conditions set forth
herein, and no consent, approval, authorization or other order of any
governmental authority is required in connection with such authorization,
execution and delivery or with the authorization, issue and sale of the Units
or the Unit Purchase Option, except such as may be required for the
registration of the Units under the Act or by the National Association of
Securities Dealers, Inc. (the "NASD") or state securities laws.
(g) Marquee does not own, directly or indirectly, any capital
stock or other equity ownership or proprietary interests in any other
corporation, association, trust, partnership, joint venture or other entity
other than the subsidiaries (the "Merger Subsidiaries") into which each of
Athletes and Artists, Inc., a New York corporation ("A&A") and Sports
Management & Television International, Inc., a Connecticut corporation ("SMTI")
will merge simultaneously on the First Closing Date (as hereinafter defined).
Each of the Merger Subsidiaries is a corporation duly organized and validly
existing under the laws of the State of Delaware. Marquee owns all of
-4-
the capital stock of each of the Merger Subsidiaries free and clear of all
liens, security interests and encumbrances. Marquee has entered into amended
and restated acquisition agreements (the "Acquisition Agreements") with each of
A&A and SMTI, among other parties, pursuant to which, upon completion of
financings aggregating at least $13,800,000 in gross proceeds to Marquee, A&A
and SMTI have each agreed to merge with one of the Merger Subsidiaries. Each of
the Acquisition Agreements is in full force and effect and neither the Company
nor the other parties thereto are in breach of or default under either of such
agreements.
(h) Except as described in the Prospectus, neither the Company
nor any of the Merger Subsidiaries is in violation, breach or default of or
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of the Merger Subsidiaries
may be bound or to which any of the property or assets of the Company or any of
the Merger Subsidiaries is subject, including the Acquisition Agreements, which
violation, breach or default would have a material adverse effect on either the
Company or the Merger Subsidiaries; and consummation of the transactions herein
contemplated and the fulfillment of the terms of this Agreement will not
conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or
assets of the Company or any of the Merger Subsidiaries pursuant to the terms
of any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any Merger Subsidiary is a party or by which
the assets of the Company or any of the Merger Subsidiaries is subject, nor
will such action result in any violation of the provisions of the certificate
of incorporation or the by-laws of the Company or any of the Merger
Subsidiaries, as amended, or any statute or any order, rule or regulation
applicable to the Company or any of the Merger Subsidiaries of any court or of
any regulatory authority or other governmental body having jurisdiction over
the Company or any of the Merger Subsidiaries.
(i) Subject to the qualifications stated in the Prospectus, each
of Marquee and the Merger Subsidiaries has good and marketable title to all
properties and assets described in the Prospectus as owned by it, free and
clear of all liens, charges, encumbrances or restrictions, except such as are
not materially significant or important in relation to its business; all of the
material leases and subleases under which Marquee or any of the Merger
Subsidiaries is the lessor or sublessor of properties or assets or under which
Marquee or any of the Merger Subsidiaries hold properties or assets as lessee
or sublessee as described in the Prospectus are in full force and effect, and,
except as described in the Prospectus, neither Marquee nor any of the Merger
Subsidiaries is in default in any material respect with respect to any of the
terms or provisions of any of such leases or subleases, and no claim has been
asserted by anyone adverse to rights of Marquee or any of the Merger
Subsidiaries as lessor, sublessor, lessee or sublessee under any of the leases
or subleases mentioned above, or affecting or questioning the right of Marquee
or any of the Merger Subsidiaries to continued possession of the leased or
subleased premises or assets under any such lease or sublease except as
described or referred to in the Prospectus; and each of Marquee and the Merger
Subsidiaries owns or leases all such properties described in the
-5-
Prospectus as are necessary to their respective operations as now conducted
and, except as otherwise stated in the Prospectus, as proposed to be conducted
as set forth in the Prospectus.
(j) Ernst & Young LLP, who has given its reports on certain
financial statements filed and to be filed with the Commission as a part of the
Registration Statement, which are incorporated in the Prospectus, are with
respect to the Company, independent public accountants as required by the Act
and the Rules and Regulations.
(k) The financial statements, together with related notes, set
forth in the Prospectus (or if the Prospectus is not in existence, the most
recent Preliminary Prospectus) present fairly the financial position and
results of operations and changes in cash flow of Marquee and A&A and SMTI on
the basis stated in the Registration Statement, at the respective dates and for
the respective periods to which they apply (subject in the case of financial
statements for interim periods, to normal and recurring year end adjustments).
Said statements and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved. No other financial statements or schedules are
required to be included in the Registration Statement. The information set
forth under the captions "Dilution," "Capitalization," and "Selected Financial
Data" in the Prospectus fairly present, on the basis stated in the Prospectus,
the information included therein. The pro forma financial information included
in the Prospectus (or the Preliminary Prospectus) has been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements, and, in the opinion of the Company, includes all
adjustments necessary to present fairly the pro forma financial condition and
results of operations at the respective dates and for the respective periods
indicated and, in the opinion of the Company, all assumptions used in preparing
such pro forma financial statements are reasonable.
(l) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), neither Marquee nor
any of the Merger Subsidiaries has incurred any liabilities or obligations,
direct or contingent, not in the ordinary course of business, or entered into
any transaction not in the ordinary course of business, in either case which
are material to the business of Marquee or any of the Merger Subsidiaries, and
there has not been any change in the capital stock of, or any incurrence of
short-term or long-term debt by, the Company or any issuance of options,
warrants or other rights to purchase the capital stock of the Company or any
adverse change or any development involving, so far as the Company can now
reasonably foresee, a prospective adverse change in the condition (financial or
other), net worth, results of operations, business, key personnel or properties
of it which would be material to the business or financial condition of Marquee
or any of the Merger Subsidiaries and neither Marquee nor any of the Merger
Subsidiaries has become a party to, and neither the business nor the property
of Marquee or any of the Merger Subsidiaries has become the subject of, any
material litigation whether or not in the ordinary course of business.
-6-
(m) Except as set forth in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which Marquee or any of the Merger Subsidiaries is a party before
or by any court or governmental agency or body, nor are there any actions,
suits or proceedings related to environmental matters or related to
discrimination on the basis of age, sex, religion or race, in either case which
might result in any material adverse change in the condition (financial or
other), business prospects, net worth, or properties of Marquee or any the
Merger Subsidiaries, and no labor disputes involving the employees of Marquee
or any of the Merger Subsidiaries exist or are imminent which might be expected
to materially adversely affect the conduct of the business, property or
operations or the financial condition or results of operations of Marquee or
any of the Merger Subsidiaries.
(n) Except as disclosed in the Prospectus, Marquee and each of
the Merger Subsidiaries have filed, or have duly obtained extension for the
time for filing of, all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown as due thereon; and there is
no tax deficiency which has been or to the knowledge of the Company might be
asserted against Marquee or any of the Merger Subsidiaries.
(o) Marquee and each of the Merger Subsidiaries have sufficient
licenses, permits and other governmental authorizations currently required for
the conduct of their business or the ownership of their properties as described
in the Prospectus and are in all material respects complying therewith and own
or possess adequate rights to use all material trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights
and licenses necessary for the conduct of such business and have not received
any notice of conflict with the asserted rights of others in respect thereof.
To the best knowledge of the Company, none of the activities or business of
Marquee or any of the Merger Subsidiaries are in violation of, or cause Marquee
or any of the Merger Subsidiaries to violate, any law, rule, regulation or
order of the United States, any state, county or locality, or of any agency or
body of the United States or of any state, county or locality, the violation of
which would have a material adverse impact upon the condition (financial or
otherwise), business, property, prospective results of operations, or net worth
of Marquee and the Merger Subsidiaries, taken as a whole.
(p) Neither Marquee nor any of the Merger Subsidiaries has,
directly or indirectly, at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contribution in
violation of law or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments or contributions required or
allowed by applicable law. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
(q) On the Closing Dates (hereinafter defined), all transfer or
other taxes, (including franchise, capital stock or other tax, other than
income taxes, imposed by any jurisdiction) if any, which are required to be
paid in connection with the sale and transfer of the
-7-
Units to the several Underwriters hereunder will have been fully paid or
provided for by Marquee and all laws imposing such taxes will have been fully
complied with.
(r) All contracts and other documents of Marquee or any of the
Merger Subsidiaries which are, under the Rules and Regulations, required to be
filed as exhibits to the Registration Statement have been so filed.
(s) Neither Marquee nor any of the Merger Subsidiaries has taken
nor will take, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Units hereby.
(t) Neither Marquee nor any of the Merger Subsidiaries has
entered into any agreement pursuant to which any person is entitled either
directly or indirectly to compensation from Marquee for services as a finder in
connection with the proposed public offering.
(u) Except as previously disclosed in writing by Marquee to the
Representative, no officer, director or 5% stockholder of Marquee or any of the
Merger Subsidiaries has any affiliation or association with any member of the
National Association of Securities Dealers Inc. ("NASD").
(v) Neither Marquee nor any of the Merger Subsidiaries is, nor
upon receipt of the proceeds from the sale of the Units will be, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(w) Neither Marquee nor any of the Merger Subsidiaries has
distributed, nor will it distribute prior to the First Closing Date, any
offering material in connection with the offering and sale of the Units other
than the Preliminary Prospectus, the Prospectus, the Registration Statement or
the other materials permitted by the Act, if any.
(x) Marquee and each of the Merger Subsidiaries have complied
with all provisions of Section 517.075 Florida Statutes relating to doing
business with the government of Cuba or with any person or affiliate located in
Cuba.
2. Purchase, Delivery and Sale of the Units.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties, and agreements herein
contained, Marquee agrees to issue and sell to the Underwriters, and each such
Underwriter agrees, severally and not jointly, to buy from Marquee at $ per
Unit, at the place and time hereinafter specified, the respective number of
Units set forth opposite the names of the Underwriters in Schedule A attached
hereto (the "First Units") plus any additional Units which such Underwriters
may become obligated to purchase
-8-
pursuant to the provisions of Section 9 hereof. The First Units shall consist
of 3,000,000 Units to be purchased from Marquee.
Delivery of the First Units against payment therefor shall take
place at the offices of Royce Investment Group, Inc., 000 Xxxxxxxxx Xxxx Xxxxx,
Xxxxxxxx, X.X. 00000 (or at such other place as may be designated by agreement
between you and Marquee) at 10:00 a.m., New York time, on, ______________1996,
or at such later time and date as you may designate, such time and date of
payment and delivery for the First Units being herein called the "First Closing
Date."
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, Marquee hereby grants an option to the several Underwriters
(or, at its option, to the Representative, individually) to purchase all or any
part of an aggregate of an additional 450,000 Units at the same price per Unit
as the Underwriters shall pay for the First Units being sold pursuant to the
provisions of subsection (a) of this Section 2 (such additional Units being
referred to herein as the "Option Units"). This option may be exercised within
45 days after the effective date of the Registration Statement upon notice by
the Representative to Marquee advising as to the amount of Option Units as to
which the option is being exercised, the names and denominations in which the
certificates for such Option Units are to be registered and the time and date
when such certificates are to be delivered. Such time and date shall be
determined by the Representative but shall not be earlier than four nor later
than ten full business days after the exercise of said option, nor in any event
prior to the First Closing Date, and such time and date is referred to herein
as the "Option Closing Date." Delivery of the Option Units against payment
therefor shall take place at the offices of Royce Investment Group, Inc., 000
Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, X.X. 00000 (or at such other place as may be
designated by agreement between you and Marquee). The number of Option Units to
be purchased by each Underwriter, if any, shall bear the same percentage to the
total number of Option Units being purchased by the several Underwriters
pursuant to this subsection (b) as the number of Units such Underwriter is
purchasing bears to the total number of the First Units being purchased
pursuant to subsection (a) of this Section 2, as adjusted, in each case by the
Representative in such manner as the Representative may deem appropriate. The
option granted hereunder may be exercised only to cover overallotments in the
sale by the Underwriters of First Units referred to in subsection (a) above. In
the event Marquee declares or pays a dividend or distribution on its Common
Stock, whether in the form of cash, shares of Common Stock or any other
consideration, prior to the Option Closing Date, such dividend or distribution
shall also be paid on the Option Units on the Option Closing Date.
(c) Marquee will make the certificates for the securities
comprising the Units to be purchased by the Underwriters hereunder available to
you for checking at least two full business days prior to the First Closing
Date or the Option Closing Date (which are collectively referred to herein as
the "Closing Dates"). The certificates shall be in such names and denominations
as you may request, at least two full business days prior to the Closing Dates.
-9-
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of each Underwriter.
Definitive certificates in negotiable form for the Units to be
purchased by the Underwriters hereunder will be delivered by Marquee to you for
the accounts of the several Underwriters against payment of the respective
purchase prices by the several Underwriters, by certified or bank cashier's
checks in New York Clearing House funds, payable to the order of Marquee.
In addition, in the event the Underwriters (or the
Representative, individually) exercise the option to purchase from Marquee all
or any portion of the Option Units pursuant to the provisions of subsection (b)
above, payment for such Units shall be made to or upon the order of Marquee by
certified or bank cashier's checks payable in New York Clearing House funds at
the offices of Royce Investment Group, Inc., 000 Xxxxxxxxx Xxxx Xxxxx,
Xxxxxxxx, X.X. 00000 (or at such other place as may be designated by agreement
between you and Marquee) at the time and date of delivery of such Units as
required by the provisions of subsection (b) above, against receipt of the
certificates for such Units by the Representative for the respective accounts
of the several Underwriters registered in such names and in such denominations
as the Representative may request.
It is understood that you, individually and not as Representative
of the several Underwriters, may (but shall not be obligated to) make any and
all payments required pursuant to this Section 2 on behalf of any Underwriters
whose check or checks shall not have been received by the Representative at the
time of delivery of the Units to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter or
underwriters of any of its or their obligations hereunder. It is also
understood that you individually, rather than all of the Underwriters, may (but
shall not be obligated to) purchase the Option Units referred to in subsection
(b) of this Section 2, but only to cover overallotments.
It is understood that the several Underwriters propose to offer
the Units to be purchased hereunder to the public upon the terms and conditions
set forth in the Registration Statement, after the Registration Statement
becomes effective.
3. Covenants of the Company. The Company covenants and agrees with
the several Underwriters that:
(a) Marquee will use its best efforts to cause the Registration
Statement to become effective as promptly as possible. If required, Marquee
will file the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto with the Commission in the manner and
within the time period required by Rules 434 and 424(b) under the Act. Upon
notification from the Commission that the Registration Statement has become
effective, Marquee will so advise you and will not at any time, whether before
or after the effective date, file the Prospectus, Term Sheet or any amendment
to the Registration Statement or
-10-
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you or your counsel shall have
objected in writing or which is not in compliance with the Act and the Rules
and Regulations. At any time prior to the later of (A) the completion by all of
the Underwriters of the distribution of the Units contemplated hereby (but in
no event more than nine months after the date on which the Registration
Statement shall have become or been declared effective) and (B) 25 days after
the date on which the Registration Statement shall have become or been declared
effective, Marquee will prepare and file with the Commission, promptly upon
your request, any amendments or supplements to the Registration Statement or
Prospectus which, in your opinion, may be necessary or advisable in connection
with the distribution of the Units.
As soon as Marquee is advised thereof, Marquee will advise you,
and confirm the advice in writing, of the receipt of any comments of the
Commission, of the effectiveness of any post-effective amendment to the
Registration Statement, of the filing of any supplement to the Prospectus or
any amended Prospectus, of any request made by the Commission for amendment of
the Registration Statement or for supplementing of the Prospectus or for
additional information with respect thereto, of the issuance by the Commission
or any state or regulatory body of any stop order or other order or threat
thereof suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Units for offering in any jurisdiction,
or of the institution of any proceedings for any of such purposes, and will use
its best efforts to prevent the issuance of any such order, and, if issued, to
obtain as soon as possible the lifting thereof.
Marquee has caused to be delivered to you copies of each
Preliminary Prospectus, and Marquee has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. Marquee authorizes
the Underwriters and dealers to use the Prospectus in connection with the sale
of the Units for such period as in the opinion of counsel to the several
Underwriters the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer of any event of
which Marquee has knowledge and which materially affects the Company or the
securities of Marquee, or which in the opinion of counsel for the Company or
counsel for the Underwriters should be set forth in an amendment to the
Registration Statement or a supplement to the Prospectus in order to make the
statements therein not then misleading, in light of the circumstances existing
at the time the Prospectus is required to be delivered to a purchaser of the
Units or in case it shall be necessary to amend or supplement the Prospectus to
comply with law or with the Rules and Regulations, the Company will notify you
promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or
-11-
amended Prospectus or supplement to be attached to the Prospectus shall be
without expense to the Underwriters, except that in case any Underwriter is
required, in connection with the sale of the Units to deliver a Prospectus nine
months or more after the effective date of the Registration Statement, Marquee
will upon request of and at the expense of the Underwriter, amend or supplement
the Registration Statement and Prospectus and furnish the Underwriter with
reasonable quantities of prospectuses complying with Section 10(a)(3) of the
Act.
The Company will comply with the Act, the Rules and Regulations
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder in connection with the offering and
issuance of the Units.
(b) Marquee will use its best efforts to qualify to register the
Units for sale under the securities or "blue sky" laws of such jurisdictions as
the Representative may designate and will make such applications and furnish
such information as may be required for that purpose and to comply with such
laws, provided Marquee shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent of
service of process in any jurisdiction in any action other than one arising out
of the offering or sale of the Units. Marquee will, from time to time, prepare
and file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as the Underwriters may reasonably
request.
(c) If the sale of the Units provided for herein is not
consummated for any reason caused by the Company, Marquee shall pay all costs
and expenses incident to the performance of Marquee's obligations hereunder,
including but not limited to, all of the expenses itemized in Section 8,
including the accountable out-of-pocket expenses of the Representative.
(d) Marquee will use its best efforts to (i) cause a
registration statement under the Exchange Act to be declared effective
concurrently with the completion of this offering and will notify the
Representative in writing immediately upon the effectiveness of such
registration statement, and (ii) if requested by the Representative, to obtain
a listing on the Pacific Stock Exchange and to obtain and keep current a
listing in the Standard & Poors or Xxxxx'x Industrial OTC Manual.
(e) For so long as Marquee is a reporting company under either
Section 12(g) or 15(d) of the Exchange Act, Marquee, at its expense, will
furnish to its stockholders an annual report (including financial statements
audited by independent public accountants), in reasonable detail and at its
expense, will furnish to you during the period ending five (5) years from the
date hereof, (i) as soon as practicable after the end of each fiscal year, a
balance sheet of Marquee and any of its subsidiaries as at the end of such
fiscal year, together with statements of income, surplus and cash flow of
Marquee and any subsidiaries for such fiscal year, all in reasonable detail and
accompanied by a copy of the certificate or report thereon of independent
accountants; (ii) as soon as practicable after the end of each of the first
three fiscal quarters of each fiscal year, consolidated summary financial
information of Marquee for such quarter in reasonable detail; (iii)
-12-
as soon as they are available, a copy of all reports (financial or other)
mailed to security holders; (iv) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with
the Commission or any securities exchange or automated quotation system on
which any class of securities of Marquee is listed; and (v) such other
information as you may from time to time reasonably request.
(f) In the event Marquee has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above
will be on a consolidated basis to the extent the accounts of Marquee and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) Marquee will deliver to you at or before the First Closing
Date two signed copies of the Registration Statement including all financial
statements and exhibits filed therewith, and of all amendments thereto, and
will deliver to the several Underwriters such number of conformed copies of the
Registration Statement, including such financial statements but without
exhibits, and of all amendments thereto, as the several Underwriters may
reasonably request. Marquee will deliver to or upon the order of the several
Underwriters, from time to time until the effective date of the Registration
Statement, as many copies of any Preliminary Prospectus filed with the
Commission prior to the effective date of the Registration Statement as the
Underwriters may reasonably request. Marquee will deliver to the Underwriters
on the effective date of the Registration Statement and thereafter for so long
as a Prospectus is required to be delivered under the Act, from time to time,
as many copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as the Underwriters may from time to time reasonably request.
Marquee, not later than (i) 5:00 p.m., New York City time, on the date of
determination of the public offering price, if such determination occurred at
or prior to 12:00 noon, New York City time, on such date or (ii) 6:00 p.m., New
York City time, on the business day following the date of determination of the
public offering price, if such determination occurred after 12:00 noon, New
York City time, on such date, will deliver to the Underwriters, without charge,
as many copies of the Prospectus and any amendment or supplement thereto as the
Underwriters may reasonably request for purposes of confirming orders that are
expected to settle on the First Closing Date.
(h) Marquee will make generally available to its security holders
and to the registered holders of its Warrants and deliver to you as soon as it
is practicable to do so but in no event later than 90 days after the end of
twelve months after its current fiscal quarter, an earnings statement (which
need not be audited) covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which shall
satisfy the requirements of Section 11(a) of the Act.
(i) Marquee will apply the net proceeds from the sale of the
Units for the purposes set forth under "Use of Proceeds" in the Prospectus, and
will file such reports with the Commission with respect to the sale of the
Units and the application of the proceeds therefrom as may be required pursuant
to Rule 463 under the Act.
-13-
(j) Marquee will, promptly upon your request, prepare and file
with the Commission any amendments or supplements to the Registration
Statement, Preliminary Prospectus or Prospectus and take any other action,
which in the reasonable opinion of Bachner, Tally, Xxxxxxx & Xxxxxx LLP,
counsel to the several Underwriters, may be reasonably necessary or advisable
in connection with the distribution of the Units, and will use its best efforts
to cause the same to become effective as promptly as possible.
(k) Marquee will reserve and keep available that maximum number
of its authorized but unissued securities which are issuable upon exercise of
the Warrants and the Unit Purchase Option outstanding from time to time.
(l) For a period of 24 months from the First Closing Date, no
officer, director or stockholder of Marquee (other than "Outside Stockholders"
(as herein defined)) (such officers, directors and stockholders being herein
referred to as the "Principal Stockholders"), will directly or indirectly,
offer, sell (including any short sale), grant any option for the sale of,
acquire any option to dispose of, or otherwise dispose of any securities of
Marquee, except to affiliates of such individuals after receipt of the written
consent of the Representative. In order to enforce this covenant, Marquee shall
impose stop-transfer instructions with respect to the securities owned by the
Principal Stockholders until the end of such period. For a period of 90 days
from the First Closing Date, (or such longer period of time as may have been
agreed by such stockholder) stockholders of Marquee who were not designees of
Marquee in the private placement in which the Representative acted as placement
agent (the "Outside Stockholders") will not directly or indirectly, offer, sell
(including any short sale), grant any option for the sale of, acquire any
option to dispose of, or otherwise dispose of any securities of Marquee. In
order to enforce this covenant, Marquee shall impose stop-transfer instructions
with respect to the securities owned by the Outside Stockholders until the end
of such period.
(m) Prior to completion of this offering, Marquee will make all
filings required, including registration under the Exchange Act, to obtain the
listing of the Units, Common Stock, and Warrants on the Nasdaq Small Cap Market
(or a listing on such other market or exchange as the Underwriters consent to),
and will effect and maintain such listing for at least five years from the date
of this Agreement.
(n) Each of Marquee and the Principal Stockholders represents
that it or he has not taken and agrees that it or he will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Units, Shares or the Warrants or to facilitate the sale or
resale of the Securities.
(o) On the Closing Date and simultaneously with the delivery of
the Units, Marquee shall execute and deliver to you, individually and not as
Representative of the Underwriters, the Unit Purchase Option. The Unit Purchase
Option will be substantially in the
-14-
form of the Representative's Unit Purchase Option filed as an Exhibit to the
Registration Statement.
(p) During the 18 month period commencing on the date of this
Agreement, Marquee will not, without the prior written consent of the
Representative, grant options to purchase shares of Common Stock at an exercise
price less than the greater of (i) the initial public offering price of the
Units (without allocating any value to the Warrants) or (ii) the fair market
value of the Common Stock on the date of grant. During the six month period
commencing on the date of this Agreement, Marquee will not, without the prior
written consent of the Representative, grant options to any current officer of
Marquee, or to any individual who will become an officer of Marquee upon the
First Closing Date. During the three year period from the First Closing Date,
Marquee will not, without the prior written consent of the Representative,
offer or sell any of its securities pursuant to Regulation S under the Act.
(q) Marquee will not, without the prior written consent of the
Representative, grant registration rights to any person which are exercisable
sooner than 13 months from the First Closing Date.
(r) Xxxxxx Xxxxxxxxx shall be President of Marquee on the Closing
Dates. Marquee has obtained key person life insurance in an amount of not less
than $2 million on the life of Xxxxxx X. Xxxxxxxxx, and will use its best
efforts to maintain such insurance during the three year period commencing with
the First Closing Date. In the event that Xxxxxx Xxxxxxxxx'x employment with
Marquee is terminated prior to three years following the First Closing Date,
Marquee will use its best efforts to obtain a comparable policy on the life of
his successor for the balance of the three year period. For a period of
thirteen months from the First Closing Date, the compensation of the executive
officers of Marquee shall not be increased from the compensation levels
disclosed in the Prospectus.
(s) So long as any Warrants are outstanding, Marquee shall use
its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the Act and without any lapse
of time between the effectiveness of any such post-effective amendments and
cause a copy of each Prospectus, as then amended, to be delivered to each
holder of record of a Warrant and to furnish to each Underwriter and dealer as
many copies of each such Prospectus as such Underwriter or dealer may
reasonably request. Marquee shall not call for redemption any of the Warrants
unless a registration statement covering the securities underlying the Warrants
has been declared effective by the Commission and remains current at least
until the date fixed for redemption. In addition, for so long as any Warrant is
outstanding, Marquee will promptly notify the Representative of any material
change in the business, financial condition or prospects of Marquee or any of
the Merger Subsidiaries.
(t) Upon the exercise of any Warrant or Warrants after , 19 ,
Marquee will pay to Royce Investment Group, Inc., in its individual capacity
and not as Representative of the Underwriters, a fee (the "Solicitation Fee")
of 5% of the aggregate exercise price of the
-15-
Warrants, of which % may be reallowed to the dealer who solicited the
exercise (which may also be Royce Investment Group, Inc.) if (i) the market
price of Marquee's Common Stock is greater than the exercise price of the
Warrants on the date of exercise; (ii) the exercise of the Warrant was
solicited by a member ("Member") of the NASD, (iii) the Warrant is not held in
a discretionary account; (iv) the disclosure of compensation arrangements has
been made in documents provided to customers, both as part of the original
offering and at the time of exercise, and (v) the solicitation of the Warrant
was not in violation of Rule 10b-6 promulgated under the Exchange Act. Marquee
agrees not to solicit the exercise of any Warrants other than through Royce
Investment Group, Inc., without the prior written consent of Royce, and will
not authorize any other dealer to engage in such solicitation, without the
prior written consent of Royce Investment Group, Inc. The Solicitation Fee
shall only be payable to the extent that the Representative (or Member) who
solicited the exercise of any warrant is designated in writing by the holder of
the warrant as having solicited the exercise of such warrant.
(u) For a period of five (5) years from the Effective Date
Marquee (i) at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) Marquee's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of Marquee's 10-Q
quarterly report and the mailing of quarterly financial information to
stockholders and (ii) shall not change its accounting firm without the prior
written consent of the Chairman or the President of the Representative, which
consent shall not be unreasonably withheld.
(v) As promptly as practicable after the Closing Date, Marquee
will prepare, at its own expense, hard cover "bound volumes" relating to the
offering, and will distribute at least four of such volumes to the individuals
designated by the Representative or counsel to the Underwriters.
(w) For a period of five years from the First Closing Date (i)
the Representative shall have the right, but not the obligation, to designate
an advisor to the Board of Directors of Marquee and (ii) Marquee shall engage a
public relations firm acceptable to the Representative.
(x) Marquee shall, for a period of six years after the date of
this Agreement, submit such reports to the Secretary of the Treasury and to
stockholders, as the Secretary may require, pursuant to Section 1202 of the
Internal Revenue Code, as amended, or regulations promulgated thereunder, in
order for Marquee to qualify as a "small business" so that stockholders may
realize special tax treatment with respect to their investment in Marquee.
(y) On the Closing Date, Marquee shall cause and take no action
to prevent each of the merger of A&A and a Merger Subsidiary of Marquee and the
merger of SMTI and a Merger Subsidiary of Marquee, substantially on the terms
and conditions set forth in the Acquisition Agreements and the Prospectus,
subject to such changes therein as are not material and are agreed to by the
Representative.
-16-
4. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Units which they have
respectively agreed to purchase hereunder, are subject to the accuracy (as of
the date hereof, and as of the Closing Dates) of and compliance with the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 A.M., New York
time, on the date on which the amendment to the registration statement
originally filed with respect to the Units or to the Registration Statement, as
the case may be, containing information regarding the initial public offering
price of the Units has been filed with the Commission, or at such later time
and date as shall have been agreed to by the Representative; if required, the
Prospectus or any Term Sheet that constitutes a part thereof and any amendment
or supplement thereto shall have been filed with the Commission in the manner
and within the time period required by Rule 434 and 424(b) under the Act; on or
prior to the Closing Dates no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that or a
similar purpose shall have been instituted or shall be pending or, to your
knowledge or to the knowledge of Marquee, shall be contemplated by the
Commission; any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel to the several Underwriters;
(b) At the First Closing Date, you shall have received the
opinion, addressed to the Underwriters, dated as of the First Closing Date, of
Xxxxx & XxXxxxxx, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, to the effect that:
(i) Each of Marquee and the Merger Subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full corporate power and
authority to own its respective properties and conduct its respective business
as described in the Registration Statement and Prospectus and is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its respective
properties or conduct of its respective requires such qualification except
where the failure to so qualify, or be so licensed would not have a material
adverse affect on the business, properties or financial condition of the
Company and each of the Merger Subsidiaries;
(ii) to the best knowledge of such counsel, (a) Marquee and
each of the Merger Subsidiaries have obtained, or are in the process of
obtaining, all licenses, permits and other governmental authorizations
necessary to the conduct of their respective businesses as described in the
Prospectus, (b) such licenses, permits and other governmental authorizations
obtained are in full force and effect, and (c) Marquee and each of the Merger
Subsidiaries are in all material respects complying therewith;
-17-
(iii) the authorized capitalization of Marquee as of June
30,1996 is as set forth under "Capitalization" in the Prospectus; all shares of
Marquee's outstanding stock requiring authorization for issuance by Marquee's
board of directors have been duly authorized and non-assessable and conform to
the description thereof contained in the Prospectus and, to the best of such
counsel's knowledge, after due inquiry, such shares were validly issued and are
fully paid; the outstanding shares of Common Stock of Marquee have not been
issued in violation of the preemptive rights of any shareholder and the
shareholders of Marquee do not have any preemptive rights or other rights to
subscribe for or to purchase, nor are there any restrictions upon the voting or
transfer of any of the Common Stock (except as described in the Registration
Statement and Prospectus), the Warrants, the Unit Purchase Option and the
Warrant Agreement conform to the respective descriptions thereof contained in
the Prospectus; the Shares have been, and the shares of Common Stock to be
issued upon exercise of the Warrants and the Unit Purchase Option, upon
issuance in accordance with the terms of such Warrants, the Warrant Agreement
and Unit Purchase Option have been duly authorized and, when issued and
delivered, will be duly and validly issued, fully paid, non-assessable, free of
preemptive rights and no personal liability will attach to the ownership
thereof; to the best of such counsel's knowledge, after due inquiry, all prior
sales by Marquee of Marquee's securities have been made in compliance with or
under an exemption from registration under the Act and applicable state
securities laws and no shareholders of Marquee have any rescission rights with
respect to the Company's securities; a sufficient number of shares of Common
Stock has been reserved for issuance upon exercise of the Warrants and Unit
Purchase Option; and to the best of such counsel's knowledge, neither the
filing of the Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement gives rise to any registration rights or other
rights, other than those which have been waived or satisfied for or relating to
the registration of any shares of Common Stock;
(iv) this Agreement, the Unit Purchase Option and the
Warrant Agreement have been duly and validly authorized, executed and delivered
by Marquee and, assuming due execution by each other party hereto or thereto,
each constitutes a legal, valid and binding obligation of Marquee enforceable
against Marquee in accordance with its respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law);
(v) the certificates evidencing the shares of Common Stock
are in valid and proper legal form; the Warrants will be exercisable for shares
of Common Stock of Marquee in accordance with the terms of the Warrants and at
the prices therein provided for; as of the date hereof the shares of Common
Stock of Marquee issuable upon exercise of the Warrants have been duly
authorized and reserved for issuance upon such exercise and such shares, when
issued upon such exercise in accordance with the terms of the Warrants and at
the price provided for, will be duly and validly issued, fully paid and
non-assessable;
-18-
(vi) such counsel knows of no pending or threatened legal
or governmental proceedings to which either Marquee or any of the Merger
Subsidiaries is a party which could materially adversely affect the business,
property, financial condition or operations of Marquee and the Merger
Subsidiaries taken as a whole; or which question the validity of the
Securities, this Agreement, the Warrant Agreement, the Unit Purchase Option or
the Acquisition Agreements, or of any action taken or to be taken by either
Marquee or any of the Merger Subsidiaries pursuant to this Agreement, the
Warrant Agreement, the Unit Purchase Option or the Acquisition Agreements; and
no such proceedings are known to such counsel to be contemplated against either
Marquee or any of the Merger Subsidiaries; there are no governmental
proceedings or regulations required to be described or referred to in the
Registration Statement which are not so described or referred to;
(vii) neither the Company nor any of the Merger
Subsidiaries is in violation of or default under any indenture, mortgage, deed
of trust, loan agreement or other agreement (including the Acquisition
Agreements) or instrument to which the Company or any of the Merger
Subsidiaries is a party or by which the Company or any of the Merger
Subsidiaries may be bound or to which any of the property or assets of the
Company or any of the Merger Subsidiaries is subject, which violation, breach
or default would have a material adverse effect on either the Company or the
Merger Subsidiaries; nor will the execution and delivery of this Agreement, the
Unit Purchase Option, the Warrant Agreement, the Escrow Agreement or the
Acquisition Agreements, and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions herein or therein
contemplated, with or without the giving of notice or the lapse of time, or
both, result in a breach or violation of, or constitute a default under the
certificate of incorporation or by-laws, in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
bond, debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, loan agreement, lease joint venture or other agreement or
instrument to which the Company or any of the Merger Subsidiaries is a party or
by which it or any of their respective properties may be bound or in violation
of any material order, rule, regulation, writ, injunction, or decree or any
government, governmental instrumentality or court, domestic or foreign, in each
case which breach, violation or default would have a material adverse effect on
either the Company or the Merger Subsidiaries;
(viii) the Registration Statement has become effective under
the Act, and to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement is in effect, and no
proceedings for that purpose have been instituted or are pending before, or
threatened by, the Commission; the Registration Statement and the Prospectus
(except for the financial statements, notes thereto and other financial,
numerical, statistical and accounting data contained therein, or omitted
therefrom, as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Act and the
Rules and Regulations;
(ix) such counsel has participate in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the
-19-
Company, the representatives of the Underwriters and counsel to the
Underwriters at which the contents of the Registration Statement and Prospectus
and related matters were discussed and, although counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectus (except as otherwise expressly set forth in its opinion), on the
basis of the foregoing no facts have come to the attention of such counsel that
caused it to believe that the Registration Statement (other than the financial
statements and notes thereto and other financial, numerical, statistical and
accounting data included therein, or omitted therefrom, as to which it
expresses no opinion), as amended or supplemented, at the time such
Registration Statement became effective and as of the Closing Dates, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus (other than the financial statements and
notes thereto and other financial, numerical, statistical and accounting data
included therein, or omitted therefrom as to which it expresses no opinion), as
amended or supplemented, as of its date and the Closing Dates, contained an
untrue statement of a material fact or omitted 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;
(x) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown, and such counsel is familiar with all
contracts and other documents referred to in the Registration Statement and the
Prospectus and any such amendment or supplement or filed as exhibits to the
Registration Statement, and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein or to
be filed as exhibits thereto which are not so summarized, described or filed;
(xi) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in connection with
the authorization, issuance, transfer, sale or delivery of the Units by
Marquee, in connection with the execution, delivery and performance of this
Agreement by Marquee or in connection with the taking of any action
contemplated herein, or the issuance of the Unit Purchase Option or the
Securities underlying the Unit Purchase Option, other than registrations or
qualifications of the Units under applicable state or foreign securities or
Blue Sky laws and registration under the Act; and
(xii) based upon a letter received by the Company from the
Nasdaq Stock Market, the Units, the Common Stock and the Warrants have been
duly authorized for quotation on the Nasdaq SmallCap Market.
Such opinions shall also cover such matters incident to the
transactions contemplated hereby as the Representative or counsel for the
Underwriters shall reasonably request. In rendering such opinion, such counsel
may rely upon certificates of any officer of the Company or
-20-
public officials as to matters of fact; and may rely as to all matters of law
other than the law of the United States or of the State of New York upon
opinions of counsel satisfactory to you, in which case the opinion shall state
that they have no reason to believe that you and they are not entitled to so
rely.
(b) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus and other related
matters shall be reasonably satisfactory to or approved by Bachner, Tally,
Xxxxxxx & Xxxxxx LLP, counsel to the several Underwriters, and you shall have
received from such counsel a signed opinion, dated as of the First Closing
Date, together with copies thereof for each of the other Underwriters, with
respect to the validity of the issuance of the Units, the form of the
Registration Statement and Prospectus (other than the financial statements and
other financial data contained therein), the execution of this Agreement and
other related matters as you may reasonably require. Marquee and each of the
Merger Subsidiaries shall have furnished to counsel for the several
Underwriters such documents as it may reasonably request for the purpose of
enabling it to render such opinion.
(c) You shall have received a letter prior to the effective date
of the Registration Statement and again on and as of the First Closing Date
from Ernst & Young LLP, independent public accountants for the Company,
substantially in the form approved by you, and including estimates of the
Company's revenues and results of operations for the period ending at the end
of the month immediately preceding the effective date and results of the
comparable period during the prior fiscal year.
(d) At the Closing Dates, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct with the
same effect as if made on and as of the Closing Dates and Marquee shall have
performed all of its obligations hereunder and satisfied all the conditions on
its part to be satisfied at or prior to such Closing Date; (ii) the
Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all
material respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; (iii) there shall have been, since the
respective dates as of which information is given, no material adverse change,
or any development involving a prospective material adverse change, in the
business, properties, condition (financial or otherwise), results of
operations, capital stock, long-term or short-term debt or general affairs of
Marquee and the Merger Subsidiaries taken as a whole from that set forth in the
Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the effective
date of the Registration Statement, and Marquee and each of the Merger
Subsidiaries shall not have incurred any material liabilities or entered into
any agreement not in the ordinary course of business other than as referred to
in the Registration Statement and Prospectus; and (iv) except as set forth in
the Prospectus, no action, suit or proceeding at law or in equity shall be
pending or threatened against
-21-
Marquee or any of the Merger Subsidiaries which would be required to be set
forth in the Registration Statement, and no proceedings shall be pending or
threatened against Marquee or any of the Merger Subsidiaries before or by any
commission, board or administrative agency in the United States or elsewhere,
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business, property, condition (financial or otherwise),
results of operations or general affairs of Marquee and the Merger Subsidiaries
taken as a whole, and (v) you shall have received, at the First Closing Date, a
certificate signed by each of the Chairman of the Board or the President and
the principal financial or accounting officer of Marquee, dated as of the First
Closing Date, evidencing compliance with the provisions of this subsection (e).
(e) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the several Underwriters (or, at its option, the
Representative, individually) to purchase and pay for the Option Units referred
to therein will be subject (as of the date hereof and as of the Option Closing
Date) to the following additional conditions: (i) the Registration Statement
shall remain effective at the Option Closing Date, and no stop order suspending
the effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending, or, to your knowledge
or the knowledge of Marquee, shall be contemplated by the Commission, and any
reasonable request on the part of the Commission for additional information
shall have been complied with to the satisfaction of Bachner, Tally, Xxxxxxx &
Xxxxxx LLP, counsel to the several Underwriters.
(i) At the Option Closing Date there shall have been
delivered to you as Representative the signed opinion of Xxxxx & XxXxxxxx,
counsel for the Company, dated as of the Option Closing Date, in form and
substance satisfactory to Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel to the
several Underwriters, together with copies of such opinion for each of the
other several Underwriters, which opinion shall be substantially the same in
scope and substance as the opinion furnished to you at the First Closing Date
pursuant to Section 4(b) hereof, except that such opinion, where appropriate,
shall cover the Option Units.
(ii) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to you from Ernst
& Young LLP, dated the Option Closing Date and addressed to the Underwriters
confirming the information in their letter referred to in Section 4(d) hereof
and stating that nothing has come to their attention during the period from the
ending date of their review referred to in said letter to a date not more than
five business days prior to the Option Closing Date, which would require any
change in said letter if it were required to be dated the Option Closing Date.
(iii) At the Option Closing Date there shall have been
delivered to you a certificate of the Chairman of the Board or the President
and the principal financial or accounting officer of Marquee, dated the Option
Closing Date, in form and substance satisfactory to Bachner, Tally, Xxxxxxx &
Xxxxxx LLP, counsel to the several Underwriters, substantially the same in
scope and substance as the certificate furnished to you at the First Closing
Date pursuant to Section 4(e) hereof.
-22-
(iv) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option Units shall
be satisfactory in form and substance to you, and you and Bachner, Tally,
Xxxxxxx & Xxxxxx LLP, counsel to the several Underwriters, shall have been
furnished with all such documents, certificates, and opinions as you may
reasonably request in connection with this transaction in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of Marquee or its compliance with any of the covenants or conditions
contained herein.
(f) No action shall have been taken by the Commission or the
NASD, the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Units, Common Stock or the Warrants and no proceedings for the
taking of such action shall have been instituted or shall be pending, or, to
the knowledge of the Representative or Marquee, shall be contemplated by the
Commission or the NASD. Marquee represents that at the date hereof it has no
knowledge that any such action is in fact contemplated by the Commission or the
NASD.
(g) Marquee shall have caused and taken no action to prevent
each of the merger of A&A and a Merger Subsidiary of Marquee and the merger of
SMTI and a Merger Subsidiary of Marquee, substantially on the terms and
conditions set forth in the Acquisition Agreements and the Prospectus, subject
to such changes therein as are not material and are agreed to by the
Representative.
(h) If any of the conditions herein provided for in this Section
shall not have been fulfilled as of the date indicated, this Agreement and all
obligations of the several Underwriters under this Agreement may be cancelled
at, or at any time prior to, each Closing Date by the Representative notifying
the Company of such cancellation in writing or by telegram at or prior to the
applicable Closing Date. Any such cancellation shall be without liability of
the Underwriters to the Company.
5. Conditions of the Obligations of Marquee. The obligation of
Marquee to sell and deliver the Units is subject to the following conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 A.M. New York time, on the day following the date of this
Agreement, or on such later date as the Company and the Representative may
agree in writing; and
(b) At the Closing Dates, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the
Act or any proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of Marquee provided for in this
Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the
-23-
Option Closing Date, then only the obligation of Marquee to sell and deliver
the Units on exercise of the option provided for in Section 2(b) hereof shall
be affected.
6. Indemnification.
(a) Marquee agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all
attorneys' fees), to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, and will reimburse, as incurred,
such Underwriters and such controlling persons for any legal or other expenses
reasonably incurred in connection with investigating, defending against or
appearing as a third party witness in connection with any losses, claims,
damages or liabilities, 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 (A) the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, (B) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction
in order to qualify any or all of the Units under the securities laws thereof
(any such application, document or information being hereinafter called a "Blue
Sky Application"), or arise out of or are based upon the omission or alleged
omission to state in the Registration Statement, any Preliminary Prospectus,
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that Marquee will not
be liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriters specifically for use in the
preparation of the Registration Statement or any such amendment or supplement
thereof or any such Blue Sky Application or any such Preliminary Prospectus or
the Prospectus or any such amendment or supplement thereto. This indemnity will
be in addition to any liability which Marquee may otherwise have.
(b) Each Underwriter severally, but not jointly, will indemnify
and hold harmless Marquee, each of its directors, each nominee (if any) for
director named in the Prospectus, each of its officers who have signed the
Registration Statement, and each person, if any, who controls Marquee within
the meaning of the Act, against any losses, claims, damages or liabilities
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees) to which
Marquee or any such director, nominee, officer or controlling person 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, any Preliminary Prospectus, the Prospectus, or any
amendment or
-24-
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in 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 the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to Marquee by you or by any Underwriter through you specifically for
use in the preparation thereof.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify in writing the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided
that if the indemnified party is an Underwriter or a person who controls such
Underwriter within the meaning of the Act, the fees and expenses of such
counsel shall be at the expense of the indemnifying party if (i) the employment
of such counsel has been specifically authorized in writing by the indemnifying
party or (ii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
indemnifying party and in the judgment of the Representative, it is advisable
for the Representative or such Underwriters or controlling persons to be
represented by separate counsel (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for
all such Underwriters and controlling persons, which firm shall be designated
in writing by you). No settlement of any action against an indemnified party
shall be made without the consent of the indemnifying party, which shall not be
unreasonably withheld in light of all factors of importance to such
indemnifying party.
-25-
7. Contribution.
In order to provide for just and equitable contribution under the Act
in any case in which (i) any Underwriter makes claim for indemnification
pursuant to Section 6 hereof but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 6 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then Marquee and each person who controls Marquee, in the
aggregate, and any such Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in
either such case (after contribution from others) in such proportions that all
such Underwriters are responsible in the aggregate for that portion of such
losses, claims, damages or liabilities represented by the percentage that the
underwriting discount per Unit appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon, and Marquee shall be
responsible for the remaining portion, provided, however, that (a) if such
allocation is not permitted by applicable law then the relative fault of
Marquee and the Underwriters and controlling persons, in the aggregate, in
connection with the statements or omissions which resulted in such damages and
other relevant equitable considerations shall also be considered. The relative
fault shall be determined by reference to, among other things, whether in the
case of an untrue statement of a material fact or the omission to state a
material fact, such statement or omission relates to information supplied by
the Company or any of the Merger Subsidiaries, or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Marquee and the
Underwriters agree that it would not be just and equitable if the respective
obligations of Marquee and the Underwriters to contribute pursuant to this
Section 7 were to be determined by pro rata or per capita allocation of the
aggregate damages (even if the Underwriters in the aggregate were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in the first sentence
of this Section 7 and (b) that the contribution of each contributing
Underwriter shall not be in excess of its proportionate share (based on the
ratio of the number of Units purchased by such Underwriter to the number of
Units purchased by all contributing Underwriters) of the portion of such
losses, claims, damages or liabilities for which the Underwriters are
responsible. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. As used in this
paragraph, the word "Company" includes any officer, director, or person who
controls Marquee within the meaning of Section 15 of the Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then any Underwriter and each person who controls any Underwriter shall be
entitled to contribution from Marquee, its officers, directors and controlling
persons to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other than Marquee and the
Underwriters. No contribution shall be requested with regard to the
-26-
settlement of any matter from any party who did not consent to the settlement;
provided, however, that such consent shall not be unreasonably withheld in
light of all factors of importance to such party.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the sale
of the Units to the Underwriters is consummated, Marquee will pay all costs and
expenses incident to the performance of this Agreement by the Company
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), Preliminary Prospectus and the Prospectus, as
amended or supplemented, or the Term Sheet, the fee of the NASD in connection
with the filing required by the NASD relating to the offering of the Units
contemplated hereby; all expenses, including reasonable fees and disbursements
of counsel to the Underwriters, in connection with the qualification of the
Units under the state securities or blue sky laws which the Representative
shall designate; the cost of printing and furnishing to the several
Underwriters copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, this Agreement, the Agreement Among Underwriters, Selling
Agreement, Underwriters' Questionnaire, Underwriters' Power of Attorney and the
Blue Sky Memorandum, any fees relating to the listing of the Units, Common
Stock and Warrants on the Nasdaq SmallCap Market or any other securities
exchange, the cost of printing the certificates representing the securities
comprising the Units, the fees of the transfer agent and warrant agent the cost
of publication of at least three "tombstones" of the offering (at least one of
which shall be in national business newspaper and one of which shall be in a
major New York newspaper) and the cost of preparing at least four hard cover
"bound volumes" relating to the offering, in accordance with the Underwriters'
request; provided that the Company shall only be required to pay for the
tombstones and bound volumes in the event that the Offering is consummated.
Marquee shall pay any and all taxes (including any transfer, franchise, capital
stock or other tax imposed by any jurisdiction) on sales to the Underwriters
hereunder. Marquee will also pay all costs and expenses incident to the
furnishing of any amended Prospectus or of any supplement to be attached to the
Prospectus as called for in Section 3(a) of this Agreement except as otherwise
set forth in said Section.
(b) In addition to the foregoing expenses Marquee shall at the
First Closing Date pay to Royce Investment Group, Inc., in its individual
rather than representative capacity, a non-accountable expense allowance of
$450,000 of which $50,000 has been paid. In the event the overallotment option
is exercised, Marquee shall pay to Royce Investment Group, Inc. at the Option
Closing Date an additional amount equal to 3% of the gross proceeds received
upon exercise of the overallotment option. In the event the transactions
contemplated hereby are not consummated by reason of any action by the
Representative (except if such prevention is based upon a breach by the Company
of any covenant, representation or warranty contained herein or because any
other condition to the Underwriters' obligations hereunder required to be
fulfilled by
-27-
the Company or any of the Merger Subsidiaries is not fulfilled) Marquee shall
be liable for the accountable out-of-pocket expenses of the Representative,
including legal fees up to a maximum of $50,000. In the event the transactions
contemplated hereby are not consummated by reason of any action of the Company
or because of a breach by the Company of any covenant, representation or
warranty herein, Marquee shall be liable for the accountable expenses of the
Representative, including legal fees, up to a maximum of $150,000.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Representative or from any other person
for services as a finder in connection with the proposed offering, and Marquee
agrees to indemnify and hold harmless the Representative and the other
Underwriters, against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Representative or such other Underwriter or person may become subject
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the claim of any person (other than an
employee of the party claiming indemnity) or entity that he or it is entitled
to a finder's fee in connection with the proposed offering by reason of such
person's or entity's influence or prior contact with the indemnifying party.
9. Substitution of Underwriters.
If any Underwriter or Underwriters shall for any reason not permitted
hereunder cancel their obligations to purchase the First Units hereunder, or
shall fail to take up and pay for the number of First Units set forth opposite
their respective names in Schedule A hereto upon tender of such First Units in
accordance with the terms hereof, then:
(a) If the aggregate number of First Units which such
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total number of First Units, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the First Units which such defaulting Underwriter or Underwriters agreed but
failed to purchase. In the event the Offering is not consummated for any
reason, any portion of the non-accountable expense allowance previously paid to
the Underwriter which is not accounted for shall be returned to the Company.
(b) If any Underwriter or Underwriters so default and the agreed
number of First Units with respect to which such default or defaults occurs is
more than 10% of the total number of First Units, the remaining Underwriters
shall have the right to take up and pay for (in such proportion as may be
agreed upon among them) the First Units which the defaulting Underwriter or
Underwriters agreed but failed to purchase. If such remaining Underwriters do
not, at the First Closing Date, take up and pay for the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the time
for delivery of the First Units shall be extended to the next business day to
allow such remaining Underwriters the privilege of substituting within
twenty-four hours (including nonbusiness hours) another underwriter or
-28-
underwriters satisfactory to Marquee. If no such underwriter or underwriters
shall have been substituted as aforesaid, within such twenty-four hour period,
the time of delivery of the First Units may, at the option of Marquee, be again
extended to the next following business day, if necessary, to allow Marquee the
privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the First Units of the defaulting Underwriter or Underwriters as
provided in this Section, (i) Marquee or the Representative shall have the
right to postpone the time of delivery for a period of not more than seven
business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and Marquee agrees promptly to file any amendments
to the Registration Statement or supplements to the Prospectus which may
thereby be made necessary, and (ii) the respective numbers of First Units to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken at the basis of the underwriting obligation for all purposes of this
Agreement.
If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the First Units agreed
to be purchased by the defaulting Underwriters or substitute another
underwriter or underwriters as aforesaid, Marquee shall not find or shall not
elect to seek another underwriter or underwriters for such First Units as
aforesaid, then this Agreement shall terminate.
If, following exercise of the option provided in Section 2(b) hereof,
any Underwriter or Underwriters shall for any reason not permitted hereunder
cancel their obligations to purchase Option Units at the Option Closing Date,
or shall fail to take up and pay for the number of Option Units, which they
become obligated to purchase at the Option Closing Date upon tender of such
Option Units in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Units of the defaulting Underwriter or Underwriters in the manner provided in
Section 9(b) hereof. If the remaining Underwriters or substituted Underwriters
shall not take up and pay for all such Option Units, the Underwriters shall be
entitled to purchase the number of Option Units for which there is no default
or, at their election, the option shall terminate, and the exercise thereof
shall be of no effect.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. In the event of termination,
there shall be no liability on the part of any nondefaulting Underwriter to
Marquee, provided that the provisions of this Section 9 shall not in any event
affect the liability of any defaulting Underwriter to Marquee arising out of
such default.
10. Effective Date.
The Agreement shall become effective upon its execution except that
you may, at your option, delay its effectiveness until 11:00 A.M., New York
time on the first full business day
-29-
following the effective date of the Registration Statement, or at such earlier
time after the effective date of the Registration Statement as you in your
discretion shall first commence the initial public offering by the Underwriters
of any of the Units. The time of the initial public offering shall mean the
time of release by you of the first newspaper advertisement with respect to the
Units, or the time when the Units are first generally offered by you to dealers
by letter or telegram, whichever shall first occur. This Agreement may be
terminated by you at any time before it becomes effective as provided above,
except that Sections 3(c), 6, 7, 8, 13, 14, 15 and 16 shall remain in effect
notwithstanding such termination.
11. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 13, 14,
15 and 16 hereof, may be terminated at any time prior to the First Closing
Date, and the option referred to in Section 2(b) hereof, if exercised, may be
cancelled at any time prior to the Option Closing Date, by you if in your
judgment it is impracticable to offer for sale or to enforce contracts made by
the Underwriters for the resale of the Units agreed to be purchased hereunder
by reason of (i) the Company having sustained a material loss, whether or not
insured, by reason of fire, earthquake, flood, accident or other calamity, or
from any labor dispute or court or government action, order or decree; (ii)
trading in securities on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq SmallCap Market or the Nasdaq National Market having been
suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally (not in force and effect on the date
hereof); (iv) a banking moratorium having been declared by federal or New York
state authorities; (v) an outbreak of international hostilities or other
national or international calamity or crisis or change in economic or political
conditions having occurred; (vi) a pending or threatened legal or governmental
proceeding or action relating generally to Marquee's or any of the Merger
Subsidiaries' business, or a notification having been received by either
Marquee or any of the Merger Subsidiaries of the threat of any such proceeding
or action, which could materially adversely affect Marquee and the Merger
Subsidiaries taken as a whole; (vii) except as contemplated by the Prospectus,
Marquee is merged or consolidated into or acquired by another company or group
or there exists a binding legal commitment for the foregoing or any other
material change of ownership or control occurs; (viii) the passage by the
Congress of the United States or by any state legislative body or federal or
state agency or other authority of any act, rule or regulation, measure, or the
adoption of any orders, rules or regulations by any governmental body or any
authoritative accounting institute or board, or any governmental executive,
which is reasonably believed likely by the Representative to have a material
impact on the business, financial condition or financial statements of the
Company or the market for the securities offered pursuant to the Prospectus;
(ix) any adverse change in the financial or securities markets beyond normal
market fluctuations having occurred since the date of this Agreement, or (x)
any material adverse change having occurred, since the respective dates of
which information is given in the Registration Statement and Prospectus, in the
earnings, business prospects or general condition of Marquee and the Merger
Subsidiaries taken as a whole, financial or otherwise, whether or not arising
in the ordinary course of business.
-30-
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11 or in
Section 10, Marquee shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
12. Unit Purchase Option.
At or before the First Closing Date, Marquee will sell to Royce
Investment Group, Inc. (for its own account and not as Representative of the
several Underwriters), or its designees, as permitted by the NASD, for a
consideration of $300, and upon the terms and conditions set forth in the form
of Unit Purchase Option annexed as an exhibit to the Registration Statement, a
Unit Purchase Option to purchase an aggregate of 300,000 Units. In the event of
conflict in the terms of this Agreement and the Unit Purchase Option, the
language of the Unit Purchase Option shall control.
13. Representations, Warranties and Agreements to Survive Delivery.
The respective indemnities, agreements, representations, warranties
and other statements of the Company or its Principal Stockholders, where
appropriate, and the undertakings set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Underwriters, the Company or any of its officers or
directors or any controlling person and will survive delivery of and payment of
the Units and the termination of this Agreement.
14. Notice.
Any communications specifically required hereunder to be in writing,
if sent to the Underwriters, will be mailed, delivered and confirmed to them at
Royce Investment Group, Inc., 000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000, with a copy sent to Bachner, Tally, Xxxxxxx & Xxxxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Xxxx X. Xxxxx, Esq., or if sent to
Marquee, will be mailed, delivered and confirmed to it at 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, with a copy sent to Xxxxx & XxXxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Xxxx X. Xxxxxxxx, Esq.
15. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of the
several Underwriters, the Company and, to the extent expressed, the Principal
Stockholders, any person controlling the Company or any of the several
Underwriters, and directors of Marquee, nominees for directors (if any) named
in the Prospectus, its officers who have signed the Registration Statement, and
their respective executors, administrators, successors, assigns and no other
person shall acquire or have any right under or by virtue of this Agreement.
The term "successors and assigns" shall not include any purchaser, as such
purchaser, from any of the several Underwriters of the Units. All of the
obligations of the Underwriters hereunder are several and not joint.
-31-
16. Applicable Law.
This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
entirely performed within New York.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between Marquee and the several Underwriters in accordance
with its terms.
Very truly yours,
THE MARQUEE GROUP, INC.
By:
---------------------------------------
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
ROYCE INVESTMENT GROUP, INC.
By:
---------------------------------------
For itself and as Representative of the
several Underwriters
-32-
We hereby agree to be bound by the provisions of Sections 3(l), (m),
and (o) and 13 hereof.
------------------------------ ------------------------------
The Sillerman Companies, Inc. Xxxxx X. Xxxxxxxxx
------------------------------ ------------------------------
Xxxxxx X. Xxxxxxxxx Xxxxx X. Xxxxx
------------------------------ ------------------------------
Xxxxxx X. Xxxxxxxx Xxxxxx Xxxxxxx
------------------------------ ------------------------------
Xxxxxxx Xxxxxx Xxxxxx X. Xxxxx
------------------------------ ------------------------------
Xxxxxxx Xxxxx Xxxxx X. Xxx
-33-
SCHEDULE A
Underwriter Number of Units to be Purchased
------------------------ --------------------
Royce Investment Group, Inc.
Continental Broker-Dealer Corporation
Total Units:
-------------------
-34-
