EXHIBIT 10.32
2,484,000 SHARES
BAKERS FOOTWEAR GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
February 4, 2004
Xxxx Xxxx & Co., Inc.
BB&T Capital Markets
as Representatives of the Underwriters
c/o Xxxx Xxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Bakers Footwear Group, Inc., a Missouri corporation (the "Company"),
proposes to issue and sell to the Underwriters named in Schedule A hereto (the
"Underwriters"), for whom Xxxx Xxxx & Co., Inc. ("Xxxx Xxxx") and BB&T Capital
Markets, a Division of Xxxxx & Xxxxxxxxxxxx, Inc. ("BB&T") are acting as
representatives (Xxxx Xxxx and BB&T are, collectively, the "Representatives"),
an aggregate of 2,160,000 shares (the "Firm Shares") of the Common Stock, par
value $.0001 per share (the "Common Stock"), of the Company. In addition, for
the sole purpose of covering over-allotments in connection with the sale of the
Firm Shares, the Company proposes to issue and sell to the Underwriters, at the
Underwriters' option, up to an additional 324,000 shares of Common Stock (the
"Option Shares") as set forth herein. The term "Shares" as used herein, unless
otherwise indicated, shall mean the Firm Shares and the Option Shares.
The Company also proposes to issue and sell to the Representatives
warrants (the "Warrants") pursuant to the Representatives' Warrant Agreement
among the Company and the Representatives (the "Warrant Agreement") for the
purchase of an additional aggregate 216,000 shares of Common Stock. The shares
of Common Stock issuable upon exercise of the Warrants are hereinafter referred
to as the "Representatives' Shares." The Firm Shares, the Option Shares, the
Warrants and the Representatives' Shares (collectively, the "Securities") are
more fully described in the Registration Statement and the Prospectus referred
to below.
SECTION 1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company represents and warrants to, and agrees with, each of the
Underwriters as of the date hereof, and as of the First Closing Date (as defined
in Section 3(a) below) and the Option Closing Date (as defined in Section 3(b)
below), if any, as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form S-1 (File No. 333-86332) including any related
preliminary prospectus (the "Preliminary Prospectus") for the registration of
the Securities under the Securities Act of 1933, as amended (the "Securities
Act"), which registration statement and amendment or amendments thereto have
been prepared by the Company in conformity with the requirements of the
Securities Act and the rules and regulations (the "Rules and Regulations") of
the Commission under the Securities Act. Copies of such registration statement
and each of the amendments thereto have been delivered by the Company to the
Underwriters. As used in this Agreement, "Effective Time" means the date and the
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the Underwriters pursuant
to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including all
information contained in the Prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations and deemed to be a part of the
Registration Statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations; and "Prospectus" means the prospectus in the form first
used to confirm sales of Shares. If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement. Neither the Commission nor any
state regulatory authority has issued any order preventing or suspending the use
of any Preliminary Prospectus or the Registration Statement or any part of any
thereof and no proceedings for a stop order suspending the effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or to the Company's knowledge, threatened.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective date (as
to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
thereto) contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Underwriters
specifically for inclusion therein as set forth in Section 9(f) of this
Agreement.
(c) The Company (i) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, (ii) is duly
2
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or conduct of
business requires such qualification and (iii) has all power and authority
necessary to own, lease or hold its properties and to conduct the business in
which it is engaged.
(d) On the Closing Date, the Company will have a duly authorized,
issued and outstanding capitalization as set forth in the Prospectus, under
"Capitalization" and "Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
Date, if any, based upon the assumptions set forth therein, and the Company is
not a party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Warrant Agreement and as described in
the Prospectus. The Securities and all other securities issued and outstanding
or issuable by the Company conform or, when issued and paid for in accordance
with and pursuant to this Agreement, will conform to all statements with respect
thereto contained in the Registration Statement and the Prospectus. All issued
and outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and the holders thereof have no
rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company. The Securities
are not and will not be subject to any preemptive or other similar rights of any
shareholder, have been duly authorized and, when issued, paid for and delivered
in accordance with the terms hereof (or, with respect to the Warrants and the
Representatives' Shares, the terms of the Warrant Agreement), will be validly
issued, fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus; the holders thereof will not be subject to any
liability solely by reason of being such holders; all corporate action required
to be taken for the authorization, issue and sale of the Securities has been
duly and validly taken; and the certificates representing the Securities, if
any, will be in due and proper form. Upon the issuance and delivery pursuant to
the terms hereof of the Securities hereunder (or, with respect to the Warrants
and the Representatives' Shares, the terms of the Warrant Agreement), the
Underwriters will acquire good and marketable title to such Securities free and
clear of any lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction or equity of any kind whatsoever.
(e) This Agreement and the Warrant Agreement have been duly
authorized, executed and delivered by the Company and constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law), and except insofar as the indemnification and contribution provisions
hereof may be limited by considerations of public policy.
(f) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Warrant Agreement
and the Warrants.
3
(g) The execution, delivery and performance of this Agreement, the
Warrant Agreement and the Warrants by the Company and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject (except as disclosed in or contemplated by the Prospectus), nor will
such actions result in any violation of the provisions of (i) the articles of
incorporation (or other equivalent organizational document) or by-laws (or other
equivalent organizational document) of the Company as in effect on the Closing
Date or (ii) any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets. Except for the registration of the Securities under the
Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and applicable state or foreign securities laws or
by the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the purchase and distribution of the Shares by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Warrant Agreement by the
Company and the consummation of the transactions contemplated hereby and
thereby.
(h) The Company does not have any direct or indirect ownership
interest by stock ownership or otherwise in any other corporation, limited
liability company, partnership, joint venture, firm, association or business
enterprise.
(i) Except as set forth in or as otherwise contemplated by the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person granting such person the right (other than rights which
have been waived or satisfied) to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(j) Except as set forth in the Registration Statement, the Company
has not sold or issued any securities during the six-month period preceding the
date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than securities issued pursuant
to employee benefit plans, stock option plans or other employee compensation
plans or pursuant to outstanding options, rights or warrants.
(k) Except for the persons set forth on Schedule B hereto, the
Company has caused each officer, director and holder of shares of Common Stock
and securities exchangeable or exercisable for or convertible into shares of
Common Stock of the Company, to execute legally binding and enforceable
agreements substantially in the form of Exhibit A hereto (such executed
agreements being referred to as the "Lock-Up Agreements").
4
(l) The Company has not sustained, since the date of the latest
audited financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not been any
material change in the capital stock or long-term debt of the Company or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the management, financial position,
shareholders' equity, results of operations, business or prospects of the
Company, otherwise than as set forth or contemplated in the Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the Company, at the dates and for the periods indicated, and, except as
disclosed in the Prospectus, have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved. The other financial information and data filed as part of the
Registration Statement or included in the Prospectus, including, without
limitation, the financial information and data presented in the sections titled
"Recent Developments," "Summary," and "Selected Historical Financial
Information," is fairly presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(n) Ernst & Young, LLP, who have certified certain financial
statements of the Company, whose report is included in the Prospectus and who
have delivered the initial letter referred to in Section 7(e) hereof, are
independent public accountants as required by the Securities Act and the Rules
and Regulations.
(o) Xxxxx Xxxxxx & Company, LLC, who have delivered the initial
letter referred to in Section 7(e) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(p) The Company has good and marketable title in fee simple to, or
valid and enforceable leasehold estates in, all items of real and personal
property owned or leased by it, in each case free and clear of all liens,
charges, claims, encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever, except such as are described in
or contemplated by the Prospectus.
(q) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties and as is customary for companies engaged in
similar businesses in similar industries.
(r) Except as disclosed in the Prospectus, the Company owns or
possesses adequate rights to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx registrations,
copyrights and licenses necessary for the conduct of its business as presently
conducted (the "Intellectual Property") and has no reason to believe that the
conduct of its business will conflict with, and has not received any notice of
any claim of conflict with, any such rights of others, in each case except as
could not reasonably be expected to have a
5
material adverse effect on the general affairs, management, condition (financial
or otherwise), shareholders' equity, results of operations, business or
prospects of the Company (a "Material Adverse Effect").
(s) The Company has taken reasonable security measures to protect
the secrecy, confidentiality and value of its Intellectual Property and other
proprietary information in all respects.
(t) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of which any
property or assets of the Company is the subject which, if determined adversely
to the Company would reasonably be expected to have a Material Adverse Effect;
and, to the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(u) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement.
(v) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(w) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent.
(x) The Company is in compliance with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would have any
material liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(y) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof, has paid all
taxes due thereon and has established adequate reserves for such taxes which are
not yet due and payable, and does not have any tax deficiency or claims
outstanding, proposed or assessed against it.
(z) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed in
or contemplated by the Prospectus, the
6
Company has not (i) issued or granted any securities, (ii) incurred any material
liability or obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business, (iii)
entered into any transaction not in the ordinary course of business or (iv)
declared or paid any dividend on its capital stock.
(aa) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(bb) The Company (i) is not in violation of its articles of
incorporation (or other equivalent organizational document) or by-laws (or other
equivalent organizational document) as in effect on the Closing Date, (ii) is
not in default in any respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other material agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject (except as disclosed in or contemplated by the
Prospectus) or (iii) is not in violation in any respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject or has not failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business in each case
except as could not reasonably be expected, individually or in the aggregate, to
have a material adverse effect on the general affairs, management, condition
(financial or otherwise), shareholders' equity, results of operations, business
or prospects of the Company.
(cc) The minute books of the Company have been made available to
the Underwriters and contain a complete summary of all meetings and other
actions of the directors and shareholders of the Company in all material
respects since the time of its incorporation, and reflect all transactions
referred to in such minutes accurately in all respects.
(dd) The Company has as of the effective date of the Registration
Statement (i) entered into an employment agreement with each of Xxxxx Xxxxxx,
Xxxxxxx Bergerac, Xxxxxxx X. Xxxxxx, Xxx Xxxxxx Pluym and Xxxx Xxxxx, in the
forms filed as Exhibits 10.15, 10.16, 10.20, 10.21 and 10.22, respectively, to
such Registration Statement, and (ii) purchased key-man insurance on the life of
Xxxxx Xxxxxx in the amount of $5 million, which names the Company as the sole
beneficiary thereof.
(ee) Neither the Company nor any director, officer, agent, employee
or other person associated with or acting on behalf of the Company, has used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
7
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(ff) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company (or, to the
knowledge of the Company, any of its predecessors in interest) at, upon or from
any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit; and there
has been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the environment
surrounding such property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Company or with
respect to which the Company has knowledge. The terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(gg) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as defined in the Investment Company
Act of 1940, as amended.
(hh) The Common Stock has been designated for inclusion in the
Nasdaq National Market.
(ii) None of the Company nor its officers, directors, shareholders,
nor any of their respective affiliates (within the meaning of the Rules and
Regulations) has taken or 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, under the Exchange
Act or otherwise, of the price of the Common Stock to facilitate the sale or the
resale of the Common Stock hereby.
(jj) The Company does not conduct business with the government of
Cuba or with any person or affiliate located in Cuba within the meaning of
Section 517.075 of the Florida Statutes, and all rules and regulations
thereunder, relating to issuers doing business in Cuba and the Company agrees to
comply with such statute if prior to the completion of the distribution of the
Securities, the Company commences doing such business.
(kk) The Company has not distributed, nor will it distribute prior
to the First Closing Date any offering material in connection with the offering
and sale of the Securities other than the Preliminary Prospectus, the
Prospectus, the Registration Statement or any other materials permitted by the
Securities Act, if any.
(ll) Except as described in the Prospectus under "Underwriting,"
there are no claims, payments, issuances, arrangements or understandings,
whether oral or written, for services in the nature of a finder's or origination
fee with respect to the sale of the Securities hereunder or any other
arrangements, agreements, understandings, payments or issuance with respect to
the
8
Company or any of its officers, directors, shareholders, partners, employees or
affiliates that may affect the Underwriters' compensation, as determined by the
NASD.
SECTION 2. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties contained
in, and subject to the terms and conditions of, this Agreement and the Warrant
Agreement, the Company agrees to issue and sell to the several Underwriters and
each such Underwriter agrees, severally and not jointly, to buy from the Company
at $7.2075 per Share, at the place and time hereinafter specified, the
respective number of Firm Shares set forth opposite the names of the
Underwriters in Schedule A attached hereto plus any additional Shares which such
Underwriters may become obligated to purchase pursuant to the provisions of
Section 8 hereof.
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants an option to the several
Underwriters to purchase all or any part of the Option Shares at the same price
per Share as the Underwriters shall pay for the Firm Shares being sold pursuant
to the provisions of subsection (a) of this Section 2. This option may be
exercised within 45 days after the effective date of the Registration Statement
upon notice by the Representatives to the Company advising as to the amount of
Option Shares as to which the option is being exercised, the names and
denominations in which the certificates for such Option Shares are to be
registered and the time and date when such certificates are to be delivered. The
number of Option Shares to be purchased by each Underwriter, if any, shall bear
the same percentage to the total number of Option Shares being purchased by the
several Underwriters pursuant to this subsection (b) as the number of Firm
Shares such Underwriter is purchasing bears to the total number of the Firm
Shares being purchased pursuant to subsection (a) of this Section 2, as
adjusted, in each case, by the Underwriters in such manner as the Underwriters
may deem appropriate. The option granted hereunder may be exercised only to
cover over-allotments in the sale by the Underwriters of Firm Shares referred to
in subsection (a) above. In the event the Company 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, following the First Closing Date and prior to
the Option Closing Date, such dividend or distribution shall also be paid on the
Option Shares on the Option Closing Date.
SECTION 3. DELIVERY AND PAYMENT.
(a) Delivery of the Firm Shares against payment therefor shall
take place at the offices of Xxxx Xxxx (or at such other place as may be
designated by agreement between the Representatives and the Company) at 10:00
a.m. New York time, on the third full business day after the Effective Date, or
at such other time not earlier than three nor more than ten full business days
thereafter as the Representatives and the Company shall determine. Such time and
date of payment and delivery for the Firm Shares being herein called the "First
Closing Date."
(b) In addition, in the event the Underwriters exercise the option
to purchase from the Company all or any portion of the Option Shares pursuant to
the provisions of Section 2(b), then delivery of the Option Shares against
payment therefor shall take place at the offices of
9
Xxxx Xxxx (or at such other place as may be designated by agreement between the
Representatives and the Company) at such time and date as shall be determined by
the Representatives 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. Such time and date is referred to herein as the "Option
Closing Date."
(c) Unless the Representatives elect to take delivery of the
Shares by credit through full FAST transfer to the accounts at The Depository
Trust Company designated by the Representatives, certificates for the Shares
shall be delivered to the Representatives in definitive form registered in such
names and in such denominations as the Representatives shall specify in writing
at least two full business days prior to the applicable Closing Date First
Closing Date or the Option Closing Date, as the case may be (which are
collectively referred to herein as the "Closing Dates"). For the purpose of
expediting the checking of the certificates for the Firm Shares or the Option
Shares, as the case may be, by the Representatives, the Company agrees to make
such certificates available to the Representatives for such purpose at least one
full business day preceding the applicable Closing Date. 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.
(d) Payment for the Shares shall be made to or upon the order of
the Company by certified or bank cashier's checks payable in New York Clearing
House funds at the time and date of delivery of such Shares as required by the
provisions of subsections (a) and (b) above or by wire transfer in immediately
available funds to a bank account designated by the Company at least two
business days prior to the First Closing Date or the Option Closing Date, as the
case may be, against receipt of the definitive certificates in negotiable form
for such Shares by the Representatives for the respective accounts of the
Underwriters registered in such names and in such denominations as the
Representatives may request.
(e) It is understood that either of you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make any and all payments required pursuant to this Section 3 on behalf of any
Underwriter whose check or checks shall not have been received by the
Representatives at the time of delivery of the Shares 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.
(f) On the First Closing Date, the Company shall issue and sell to
the Representatives, one or more Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 216,000 shares of Common Stock. The Warrants shall be exercisable
for a period of four years commencing one year after the First Closing Date at a
price equaling one hundred and sixty-five percent (165%) of the public offering
price of the Firm Shares. The Warrant Agreement and form of Warrant Certificate
shall be substantially in the form filed as Exhibit 4.3 to the Registration
Statement. Payment for the Warrants shall be made by the Representatives to or
upon the order of the Company on the Closing Date.
10
SECTION 4. OFFERING OF SHARES BY THE UNDERWRITERS. It is understood
that the Underwriters propose to make a public offering of the Shares at the
price and upon the other terms set forth in the Prospectus. The Underwriters
may, at their own expense, enter into one or more agreements, in their sole
discretion, as they deem advisable, with one or more broker-dealers who shall
act as dealers in connection with such public offering. The Underwriters may
from time to time change the public offering price after the closing of the
public offering and increase or decrease the concessions and discounts to
dealers as they may determine.
SECTION 5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Underwriters with copies thereof; to advise the
Underwriters, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as each Underwriter shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits) and (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Shares or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Underwriters and, upon their request, to prepare and furnish without
11
charge to the Underwriters and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the Underwriters, be
required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Underwriters and counsel for the Underwriters and obtain the consent of the
Underwriters to the filing, which consent shall not be unreasonably delayed or
withheld;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to the
Underwriters an earnings statement of the Company (which need not be audited)
complying with Section 1l(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) Upon the request of the Underwriters, for a period of five (5)
years following the Effective Date, to furnish to the Underwriters copies of all
materials furnished by the Company to its shareholders generally and all public
reports and all reports and financial statements furnished by the Company to the
principal national securities exchange or market system upon which the Common
Stock may be listed or included pursuant to requirements of or agreements with
such exchange or market system or to the Commission pursuant to the Exchange Act
or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Shares for offering and sale
under the securities laws of such jurisdictions as the Underwriters may request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares; provided that in connection therewith,
the Company shall not be required to qualify as a foreign corporation, to submit
to general taxation or to file a general consent to service of process in any
jurisdiction;
(i) Except for the registration of securities pursuant to the
exercise of registration rights granted to the holders of the Company's
Subordinated Convertible Debentures due 2007, for a period of 365 days from the
date of the Prospectus, not to, directly or indirectly, (1) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than (x) the
Securities, or (y) shares of Common Stock issued pursuant to employee benefit
plans, stock option plans or other employee compensation plans existing on the
date hereof or pursuant to currently outstanding options, warrants or rights or
upon conversion of shares of Common Stock), or substantially similar securities,
or sell or grant options, rights or
12
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or substantially similar securities (other
than the grant of options pursuant to benefit plans existing on the date
hereof), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of Xxxx Xxxx;
(j) To take such steps as shall be necessary to ensure that the
Company shall not become an "investment company" as defined in the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder;
(k) During the period of 365 days from the date of the Prospectus,
to obtain an executed letter substantially in the form of Exhibit A hereto from
each new officer and director who has not previously executed such a letter;
(l) The Company will apply the net proceeds from the sale of the
Shares for the purposes set forth under "Use of Proceeds" in the Prospectus;
(m) Prior to the First Closing Date, the Company will make all
filings required to obtain the designation for inclusion of the Shares in the
Nasdaq National Market and will effect and maintain such inclusion (or a listing
on a national exchange registered under the Exchange Act) for at least five
years from the date of this Agreement, including without limitation, compliance
with all applicable corporate governance requirements thereof; provided,
however, that nothing herein shall affect the Company's ability to sell assets
or stock, merge, consolidate or be acquired by any person, and, if as a result
of any such sale, merger, consolidation, acquisition or similar transaction, the
Company's Common Stock ceases to be publicly traded, this Section 5(m) shall
terminate and cease to have further force or effect;
(n) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of the incorporation of the Company, a registrar (which
may be the same entity as the transfer agent) for its Common Stock;
(o) The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Securities Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Securities Act, the Exchange Act, and the Rules and
Regulations;
(p) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Underwriters at the Underwriters' request and at
the Company's sole expense, (i) daily consolidated transfer sheets relating to
the Common Stock, (ii) the list of holders of all of the Company's securities
and (iii) a Blue Sky "Trading Survey" for secondary sales of the Company's
securities prepared by counsel to the Company; and
13
(q) Until the completion of the distribution of the Shares, and
for 25 days thereafter, the Company shall not without the prior written consent
of the Underwriters and counsel for the Underwriters, issue, directly or
indirectly, any press release or other communication or hold any press
conference with respect to the Company or its activities or the offering
contemplated hereby.
(r) For a period of five (5) years from the effective date of the
Registration Statement, the Company shall nominate one individual selected by
Xxxx Xxxx for election to the Board of Directors of the Company (the "Board"),
if requested by Xxxx Xxxx, and shall solicit proxies in support of such
nomination. If Xxxx Xxxx shall not have designated such an individual at the
time of any meeting of the Board or such person shall not have been elected or
shall be unavailable to serve, the Company shall notify Xxxx Xxxx of each such
meeting. If an individual selected by Xxxx Xxxx is not serving on the Board, an
individual selected by Xxxx Xxxx shall be permitted to attend all meetings of
the Board and to receive all notices and other correspondence and communications
sent by the Company to members of the Board. The Company further agrees to
provide its outside directors with compensation as deemed appropriate by the
Board and as customary for similar companies. The Company shall reimburse the
designee to the Board of Xxxx Xxxx for his or her out-of-pocket expenses
reasonably incurred in connection with his or her attendance at Board meetings.
(s) For a period of three (3) years from the effective date of the
Registration Statement, the Company shall not directly or indirectly offer,
sell, contract to sell, sell any option, grant any option, right or warrant for
shares of the Company's Common Stock or securities exchangeable or exercisable
for or convertible into shares of the Company's Common Stock to any of the
Company's directors, officers or employees at a price less than the price per
Share set forth in Section 2(a) without the prior written consent of Xxxx Xxxx.
(t) For a period of three (3) years from the effective date of the
Registration Statement, the Company shall not effect a change in its accounting
firm without the prior written consent of the Representatives, except that no
consent is required if the new accounting firm is a "big four" accounting firm.
(u) The Company will comply with all applicable securities and
other applicable laws, rules and regulations, including, without limitation, the
Xxxxxxxx-Xxxxx Act of 2002, and will use its best efforts to cause the Company's
trustees and officers, in their capacities as such, to comply with such laws,
rules and regulations, including, without limitation, the provisions of the
Xxxxxxxx-Xxxxx Act of 2002.
SECTION 6. EXPENSES.
(a) The Company has paid approximately $325,000 of the
Underwriters' expenses and fees, including the expenses and fees of counsel to
the Underwriters. The Company agrees to pay: (i) the costs incident to the sale
and delivery of the Securities and any taxes payable in that connection; (ii)
the costs incident to the preparation, printing and filing under the Securities
Act of the Registration Statement and any amendments and exhibits thereto; (iii)
the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any
14
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (iv) the costs of reproducing and
distributing this Agreement, the Warrant Agreement and any other related
documents in connection with the offering, purchase, sale and delivery of the
Securities; (v) the filing fees and expenses incident to securing the review by
the NASD of the terms of sale of the Securities (including related fees and
expenses of counsel to the Underwriters, which obligation shall be in addition
to the obligation referred to in subparagraph (i) above); (vi) any applicable
listing or other fees; (vii) the fees and expenses of qualifying the Shares
under the securities laws of the several jurisdictions as provided in Section
5(h) and of preparing and distributing a Blue Sky Memorandum (including related
fees and expenses of counsel to the Underwriters, which obligation shall be in
addition to the obligation referred to in subparagraph (i) above); (viii) costs
and expenses related to "Tombstone" advertisements; (ix) the costs and expenses
related to the production of five bound volumes of the completed Registration
Statement for each of the Representatives; and (x) the costs and expenses
relating to investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Shares including, without limitation,
expenses associated with the production of road show slides and graphics,
printing and advertising fees and expenses, fees and expenses of any consultants
engaged in connection with the road show presentations, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement and the Warrant Agreement,
including all accounting and counsel fees and expenses incurred by the Company
in connection with the offering of the Shares hereunder. The fees and expenses
referred to in subparagraphs (v) and (vii) above shall not exceed $20,000 in the
aggregate.
In addition, at the Closing Date or the Option Closing Date, as the
case may be, the Representatives will deduct from the payment for the Shares two
and six-tenths percent (2.6%) of the gross proceeds of the offering, in payment
of the Representative's non-accountable expense allowance relating to the
transactions contemplated hereby.
(b) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriters or from any other person
for services as a finder in connection with the proposed offering, and the
Company agrees to indemnify and hold harmless the Underwriters, against any
losses, claims, damages or liabilities, joint or several (which shall, for all
purposes of this Agreement and the Warrant Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Underwriters 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 Company.
SECTION 7. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Shares which they have
respectively agreed to purchase hereunder on the Closing Dates are subject (x)
to the accuracy when made and as of the
15
applicable Closing Date, of the representations and warranties of the Company
contained herein (provided that, in the case of this clause (x), the obligations
of the Underwriters hereunder shall be subject to the accuracy in all material
respects of those representations and warranties that are not qualified as to
materiality), (y) to the performance by the Company of its obligations hereunder
and (z) to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) The Underwriters shall not have discovered and disclosed to
the Company on or prior to either of the Closing Dates that the Registration
Statement or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of Xxxxxxxxx Xxxxxxx, P.A.,
counsel for the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) Xxxxx Xxxx LLP shall have furnished to the Underwriters its
written opinion, as counsel to the Company, addressed to the Underwriters and
dated the First Closing Date, in substantially the form attached hereto as
Exhibit B.
(d) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Warrant Agreement,
the Warrants, the Shares, the Registration Statement, the Prospectus and all
other matters related to this Agreement, the Warrant Agreement, the Warrants,
the Shares, the Registration Statement, the Prospectus and the transactions
contemplated hereby and thereby shall be reasonably satisfactory to or approved
by Xxxxxxxxx Xxxxxxx, P.A., counsel for the Underwriters, and the
Representatives 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, in form and substance satisfactory to the Underwriters. The
Company shall have furnished to counsel for the Underwriters such documents and
information as they may reasonably request for the purpose of enabling it to
render such opinion.
(e) At the time of execution of this Agreement, the Underwriters
shall have received from each of Ernst & Young, LLP and Xxxxx Xxxxxx & Company,
LLC a letter, in form and substance satisfactory to the Underwriters, addressed
to the Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date hereof), the conclusions and findings of
16
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(f) With respect to the letters of each of Ernst & Young LLP and
Xxxxx Xxxxxx & Company, LLC referred to in the preceding paragraph and delivered
to the Underwriters concurrently with the execution of this Agreement (each, an
"initial letter"), the Company shall have furnished to the Underwriters a letter
(the "bring-down letter") of each of such accountants, addressed to the
Underwriters and dated the First Closing Date (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming the conclusions and
findings set forth in the initial letter.
(g) The Company shall have furnished to the Representatives on
behalf of the Underwriters a certificate, dated the First Closing Date, of its
Chief Executive Officer and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the First Closing Date
(provided that such representations, warranties and agreements that are
not qualified as to materiality shall be true in all material
respects); the Company has complied with all its agreements contained
herein; and the conditions set forth in this Section 7 have been
fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the
Effective Date, the Registration Statement and the Prospectus did not
include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the Prospectus
which was not so set forth therein.
(h) The Company shall have not sustained since the date of the
latest audited financial statements included in the Prospectus (i) any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not have been
any change in the capital stock or long-term debt of the Company or any adverse
change, or any development involving a prospective adverse change, in or
affecting the general affairs, management, financial position, shareholders'
equity or results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described
in clause (i) or (ii), is, in the judgment of the Representatives, so material
and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares
17
being delivered on the respective Closing Date on the terms and in the manner
contemplated in the Prospectus.
(i) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities other than existing
hostilities, there shall have been a material escalation in existing hostilities
or acts of terrorism involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
judgment of the Representatives, impracticable or inadvisable to proceed with
the public offering or delivery of the Shares being delivered on the respective
Closing Date on the terms and in the manner contemplated in the Prospectus.
(j) The Shares shall be designated for inclusion in the Nasdaq
National Market.
(k) 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 respective
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Shares and no proceedings for the taking of such action shall have
been instituted or shall be pending, or, to the knowledge of the Underwriters or
the Company, shall be contemplated by the Commission or the NASD. The Company
represents that at the date hereof it has no knowledge that any such action is
in fact contemplated by the Commission or the NASD. The Company shall have
advised the Underwriters of any NASD affiliation of any of its officers,
directors, shareholders or their affiliates.
(l) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the several Underwriters to purchase and pay for the
Option Shares 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 the knowledge of
the Representatives or the Company, 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 counsel to the several Underwriters.
18
(ii) At the Option Closing Date, Xxxxx Xxxx LLP shall have
furnished to the Underwriters its written opinion as counsel to the
Company addressed to the Underwriters, which opinion shall be dated the
Option Closing Date and shall be substantially the same in scope and
substance as the opinion furnished to the Underwriters at the First
Closing Date pursuant to Section 7(c) hereof, except that such opinion,
where appropriate, shall cover the Option Shares.
(iii) At the Option Closing Date, there shall have been
delivered to the Underwriters a letter in form and substance
satisfactory to the Underwriters from each of Ernst & Young, LLP and
Xxxxx Xxxxxx & Company, LLC dated the Option Closing Date and addressed
to the Underwriters confirming the information in their letter referred
to in Section 7(e) hereof and stating that nothing has come to their
attention during the period from the ending date of their review
referred to in said letters 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.
(iv) At the Option Closing Date, the Company shall have
furnished to the Representatives of the Underwriters a certificate,
dated the Option Closing Date, of its Chief Executive Officer and the
Chief Financial Officer, in form and substance satisfactory to counsel
for the Underwriters substantially the same in scope and substance as
the certificates furnished to you at the First Closing Date pursuant to
Section 7(g) hereof.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option
Shares shall be satisfactory in form and substance to the
Representatives and Xxxxxxxxx Xxxxxxx, P.A., counsel to the several
Underwriters, shall have been furnished with all such documents,
certificates, and opinions as the Representatives 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 the Company or its compliance with any of the covenants
or conditions herein.
(m) On or before the First Closing Date, the Company shall have
executed and delivered to the Representatives, (i) the Warrant Agreement
substantially in the form filed as Exhibit 4.3 to the Registration Statement in
final form and substance satisfactory to the Underwriters, and (ii) the Warrants
in such denominations and to such designees as shall have been provided to the
Company.
(n) On or before the First Closing Date, there shall have been
delivered to the Representatives all of the Lock-up Agreements, in form and
substance satisfactory to Xxxxxxxxx Traurig, P.A., counsel to the several
Underwriters.
(o) At the time of execution of this Agreement, the Company shall
have executed and delivered to Xxxx Xxxx the financial advisory agreement,
substantially in the form filed as an exhibit to the Registration Statement (the
"Financial Advisory Agreement").
19
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
for the Underwriters.
SECTION 8. SUBSTITUTION OF UNDERWRITERS. If any of the Underwriters
shall for any reason not permitted hereunder cancel their obligations to
purchase the Firm Shares hereunder, or shall fail to take up and pay for the
number of Firm Shares set forth opposite their respective names in Schedule A
hereto upon tender of such Firm Shares in accordance with the terms hereof,
then:
(a) If the aggregate number of Firm Shares which such Underwriter
or Underwriters agreed but failed to purchase does not exceed 10% of the total
number of Firm Shares, the other Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters so default and the agreed
number of Firm Shares with respect to which such default or defaults occurs is
more than 10% of the total number of Firm Shares, the remaining Underwriters
shall have the right to take up and pay for (in such proportion as may be agreed
upon among them) the Firm Shares 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 Firm Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the time
for delivery of the Firm Shares shall be extended to the next business day to
allow the remaining Underwriters the privilege of substituting within
twenty-four hours (including nonbusiness hours) another underwriter or
underwriters reasonably satisfactory to the Company. If no such underwriter or
underwriters shall have been substituted as aforesaid, within such twenty-four
hour period, the time of delivery of the Firm Shares may, at the option of the
Company, be again extended to the next following business day, if necessary, to
allow the Company the privilege of finding within thirty-six hours (including
nonbusiness hours) another underwriter or underwriters to purchase the Firm
Shares 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 Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section 8, (i) the Company or the other
Underwriters 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 the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of Firm Shares to
be purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of the underwriting obligation for all purposes of this
Agreement.
If a default by one or more Underwriters shall occur and the remaining
Underwriters shall not take up and pay for all the Firm Shares agreed to be
purchased by the defaulting Underwriters or substitute another underwriter or
underwriters as aforesaid, and the Company
20
shall not find or shall not elect to seek another underwriter or underwriters
for such Firm Shares 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 Shares at the Option Closing Date,
or shall fail to take up and pay for the number of Option Shares, which they
become obligated to purchase at the Option Closing Date upon tender of such
Option Shares in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Shares of the defaulting Underwriters in the manner provided in this Section
8(b). If the remaining Underwriters or substituted Underwriters shall not take
up and pay for all such Option Shares, the Underwriters shall be entitled to
purchase the number of Option Shares 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 8. In the event of
termination, there shall be no liability on the part of any nondefaulting
Underwriter to the Company, provided that the provisions of this Section 8 shall
not in any event affect the liability of any defaulting Underwriter to the
Company arising out of such default.
SECTION 9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its officers and employees, each of its directors, its affiliates,
as defined in Rule 405 under the Securities Act, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which such
Underwriter, director, officer, employee, affiliate, or controlling person may
become subject, under the Securities Act or any applicable federal or state law,
or otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, any material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by such Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final, non-appealable judgment by
a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence or willful
misconduct), and shall reimburse such Underwriter and each such director,
officer, employee, affiliate or controlling person promptly upon demand for any
legal or other expenses reasonably
21
incurred by such Underwriter, director, officer, employee, affiliate, or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company by or on behalf of such
Underwriter specifically for inclusion therein, which information consists
solely of the information specified in Section 9(f), and provided further that
as to any Preliminary Prospectus, this indemnity agreement shall not inure to
the benefit of such Underwriter, its directors, officers, affiliates or
employees, or any person controlling the Underwriter, on account of any loss,
claim, damage, liability or action arising from the sale of the Shares to any
person by such Underwriter if such Underwriter failed to send or give a copy of
the Prospectus, as the same may be amended or supplemented, to that person
within the time required by the Securities Act, and the untrue statement or
alleged untrue statement of any material fact or omission or alleged omission to
state a material fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company with
Section 5(c). The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to such Underwriter or to any officer,
director, affiliate, employee or controlling person of such Underwriter.
In the event that an Underwriter is required or requested to appear as
a witness in any action brought by or on behalf of or against the Company in
which such Underwriter is not named as a defendant, the Company agrees to
promptly reimburse such Underwriter on a monthly basis for all expenses incurred
by it in connection with such Underwriter's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel. In addition to any reimbursed fees, expenses
or costs hereunder, such Underwriter shall also receive from the Company cash
compensation of $2,000 per person, per day, plus reasonable out-of-pocket
expenses and costs should the Underwriter be required to provide testimony in
any formal or informal proceeding regarding the Company in which such
Underwriter is not named as a defendant.
(b) Each Underwriter, severally, but not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its
directors, its affiliates, and each person, if any, who controls the Company
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof, to
which the Company or any such director, officer or controlling person may become
subject, under the Securities Act or any applicable federal or state law, or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, or in any amendment or supplement
thereto, any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the
22
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company by or on behalf
of such Underwriter specifically for inclusion therein, which information
consists solely of the information specified in Section 9(f), and shall
reimburse the Company and any such director, officer, affiliate or controlling
person for any legal or other expenses reasonably incurred by the Company or any
such director, officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which such Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any intention or threat to commence an action, suit or
proceeding or notice of the commencement of any action, suit or proceeding, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, promptly notify the indemnifying party
in writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any 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 be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
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 at any time for all such indemnified
parties, which firm shall be designated in writing by the Underwriters, if the
indemnified parties under this Section 9 consist of the Underwriters or
23
the Underwriters' officers, employees or controlling persons, or by the Company,
if the indemnified parties under this Section 9 consist of the Company or any of
the Company's directors, officers, employees or controlling persons. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise, consent or judgment includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
(before deducting expenses) from the offering of the Shares purchased under this
Agreement received by the Company on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
Shares purchased under this Agreement on the other hand bear to the total gross
proceeds from the offering of the Shares under this Agreement, in each case as
described on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 9 were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 9 shall be deemed to include, for purposes of
this Section 9(d), any legal or other
24
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9(d), the Company agrees that no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) If multiple claims are brought with respect to at least one of
which indemnification is permitted under applicable law and provided for under
this Agreement, the indemnifying party agrees that any judgment award shall be
conclusively deemed to be based on claims as to which indemnification is
permitted and provided for, except to the extent the judgment award expressly
states that it, or any portion thereof, is based solely on a claim as to which
indemnification is not available.
(f) The Underwriters confirm and the Company acknowledges that the
statements with respect to the public offering of the Shares by the Underwriters
set forth under the caption "Underwriting" in the Prospectus are correct and
constitute the only information concerning the Underwriters furnished in writing
to the Company by or on behalf of the Underwriters specifically for inclusion in
the Registration Statement and the Prospectus.
SECTION 10. TERMINATION.
(a) The obligations of the Underwriters hereunder may be
terminated by the Underwriters by notice given to and received by the Company
prior to delivery of and payment for the Shares if, prior to the First Closing
Date or the Option Closing Date, any of the events described in Sections 7(h) or
7(i), shall have occurred or if the Underwriters shall decline to purchase the
Shares because any condition to the obligations of the Underwriters set forth
herein is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any provision
hereof.
(b) Termination of this Agreement under this Section 10 or Section
7 after the Shares have been purchased by the Underwriters hereunder shall be
applicable only to the Option Shares. Termination of this Agreement shall be
without liability of any party to any other party other than as provided in
Sections 6, 9 and 12 hereof. Notwithstanding any such termination, the
provisions of Sections 6, 9 and 12 hereof shall remain in effect.
SECTION 11. DEFAULT BY THE COMPANY. If the Company shall fail at the
Closing Date or at any Option Closing Date, as applicable, to sell and deliver
the number of Shares which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
any Option Shares to be purchased on an Option Closing Date, the Underwriters
may at the Underwriters' option, by notice from the Underwriters to the Company,
terminate the Underwriters' obligation to purchase Option Shares from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to
25
Section 6, Section 9 and Section 10 hereof. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
SECTION 12. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Company
shall fail to tender the Shares for delivery to the Underwriters by reason of
any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
incurred by the Underwriters in connection with this Agreement and the proposed
purchase of the Shares (less the amounts paid to the Underwriters through such
date as set forth in Section 6(a)), and upon demand, the Company shall pay the
full amount thereof to the Underwriters. If this Agreement is terminated
pursuant to Section 10 by reason of the default of the Underwriters, the Company
shall not be obligated to reimburse the Underwriters on account of any such
expenses.
SECTION 13. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxx Xxxx & Co., Inc., 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxxxxxx (Fax: 000-000-0000) and
to BB&T Capital Markets, 000 Xxxx Xxxx Xxxxxx, XX Xxx 0000, Xxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxx X. Xxxxx, Xx. (Fax: 000-000-0000), with a copy to Xxxx
Xxxxxxx, Esq., Xxxxxxxxx Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx
00000 (Fax: 000-000-0000) or (b) if to the Company, shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Xxxxx Xxxxxx, with a copy to J. Xxxx
Xxxxxx, Esq., Xxxxx Xxxx LLP, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx,
Xxxxxxxx 00000 (Fax: 000-000-0000). Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
SECTION 14. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company
and their respective representatives and successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of directors, officers and employees of any Underwriter, and the person
or persons, if any, who control any Underwriter within the meaning of Section 15
of the Securities Act and (B) the indemnity agreement of the Underwriters
contained in Section 10(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Company, and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 14 any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
SECTION 15. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on
26
behalf on them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Shares and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any one controlling any of them.
SECTION 16. DEFINITION OF THE TERMS "BUSINESS DAY". For purposes of
this Agreement, "business day" means each Monday, Tuesday, Wednesday, Thursday
or Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
SECTION 17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 19. HEADINGS. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
SECTION 20. ENTIRE AGREEMENT; MODIFICATION. This Agreement (together
with the Warrant Agreement and the Financial Advisory Agreement) contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and replaces any prior written agreement between the parties
hereto with respect to the subject matter hereof. This Agreement may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
27
If the foregoing correctly sets forth the agreement among the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
BAKERS FOOTWEAR GROUP, INC.
By: /s/ XXXXX X. XXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
Accepted as Representatives of the Several
Underwriters:
XXXX XXXX & CO., INC.
By: /s/ XXXXXXX X. XXXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
BB&T Capital Markets,
a Division of Xxxxx & Xxxxxxxxxxxx, Inc.
By: /s/ XXXXX X. XXXXX, XX.
------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Senior Vice President and Head of
Syndicate
28
SCHEDULE A
Name of Underwriter Number of Firm Shares
------------------- ---------------------
Xxxx Xxxx & Co., Inc. 1,080,000
BB&T Capital Markets 1,080,000
29
SCHEDULE B
Mississippi Valley Capital, LLC
Xxxxx X. Xxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
30
EXHIBIT A
LOCK-UP AGREEMENTS
December 19, 2003
Xxxx Xxxx & Co., Inc.
BB&T Capital Markets
As Representatives of the
Several Underwriters
c/o Ryan, Xxxx & Co., LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to that certain proposed Underwriting Agreement (the
"Underwriting Agreement") among Bakers Footwear Group, Inc., a Missouri
corporation (the "Company"), Xxxx Xxxx & Co., Inc. ("Xxxx Xxxx") and BB&T
Capital Markets, a Division of Xxxxx & Xxxxxxxxxxxx, Inc., as representatives of
the several Underwriters named in Schedule A thereto, relating to a proposed
firm commitment underwritten public offering of shares of the Company's Common
Stock (the "Offering"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Underwriting Agreement.
In order to induce the Underwriters to enter into the Underwriting
Agreement and to consummate the transactions contemplated therein, and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
undersigned hereby agrees not to, without the prior written consent of Xxxx Xxxx
& Co., Inc., during the Lock-Up Period (as defined below), directly or
indirectly offer, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer (collectively, a
"Disposition") any shares of the Company's Common Stock or securities
convertible into or exchangeable for shares of the Company's Common Stock
(collectively, the "Company Securities"), or file any registration statement
with respect to any of the foregoing, or enter into any swap or other agreement
that transfers, in whole or in part, directly or indirectly, the economic
consequences of ownership of the Company Securities, whether any such swap or
transaction is to be settled by delivery of Company Securities, in cash or
otherwise, except that the undersigned may (i) transfer Company Securities as a
bona fide gift or gifts, provided that the donee or donees thereof agree(s) to
be bound by the restrictions set forth herein, (ii) transfer Company Securities
to the undersigned's Family Group ("Family Group" means an individual's spouse,
ex-spouse, lineal descendants, father, mother, brother, sister or domestic
partner, whether by law or otherwise, or any grandparent, mother- inlaw, father-
in-law, daughter- in- law, brother- in- law, stepchild, grandchild, step-
grandchild, uncle, niece or nephew, including adoptive relationships, and any
family limited partnership, limited liability company or trust or other
fiduciary relationship solely for the benefit of such individual and/or any of
the foregoing), (iii) transfer Company Securities by will or the laws of descent
and distribution upon the death of the undersigned to his/her executors or
administrators or legal successors, including without limitation trustee(s), or
pursuant to a divorce decree or (iv) exercise options to purchase the Company's
Common Stock, which options have been issued
before the consummation of the Offering or otherwise as described in the
prospectus in the form first used to confirm sales in connection with the
Offering.
For purposes hereof, the "Lock-Up Period" shall mean the period
commencing on the date hereof and ending on the date that is three hundred
sixty-five (365) days following the date of the prospectus in the form first
used to confirm sales in connection with the Offering.
The foregoing restriction has been expressly agreed to preclude the
undersigned holder of the Company Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Company Securities during the Lock-Up Period, even if
such Company Securities would be disposed of by someone other than such holder.
Such prohibited hedging or other transactions would include, without limitation,
any short sale (whether or not against the box) or any purchase, sale or grant
of any right (including, without limitation, any put or call option) with
respect to any Company Securities or with respect to any security (other than a
broad-based market basket or index) that included, relates to or derives any
significant part of its value from the Company Securities.
Furthermore, the undersigned hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Company Securities in violation of this agreement.
In addition, the undersigned hereby agrees that for a period of twelve
(12) months from the date of the final prospectus in the form used to confirm
sales in connection with the Offering, Xxxx Xxxx shall have a right of first
refusal to purchase for its account or to sell for the account of the
undersigned, within seven (7) business days, any Company Securities sold by the
undersigned pursuant to Rule 144 under the Securities Act of 1933, as amended.
The undersigned hereby agrees to consult (at no cost to the undersigned or the
Company) with Xxxx Xxxx with regard to any such sales and will offer Xxxx Xxxx
the exclusive opportunity to purchase or sell such securities on terms
(including without limitation the price, commissions, xxxx-ups or other charges
or expenses, and the terms of execution) that are at least as favorable to the
undersigned as can be secured elsewhere. If Xxxx Xxxx fails to accept in writing
any such offer within three (3) business days after receipt of a notice
containing such proposal, then Xxxx Xxxx shall have no claim or right with
respect to any such sales contained in the notice. If, thereafter, such proposal
is modified in any material respect in a manner that is not adverse to the
undersigned, the undersigned shall adopt the same procedure as with respect to
the original proposal.
January ___, 2004
Xxxx Xxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned is exchanging convertible debentures (the "2002
Debentures") of Bakers Footwear Group, Inc., a Missouri corporation (the
"Company"), which were originally acquired on April 4, 2002 pursuant to a
private placement by the Company, for New Debentures pursuant to a Convertible
Debenture Exchange Agreement dated as of the date hereof. The undersigned
understands that the Company proposes to engage in an underwritten public
offering of newly issued shares of the Company's Common Stock, $.0001 per share
(the "Proposed Offering"), pursuant to a registration statement on Form S-1
(File No. 333-86322) filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended. In connection with the Proposed Offering,
the Company will enter into an Underwriting Agreement (the "Underwriting
Agreement") among the Company, Xxxx Xxxx & Co., Inc. and BB&T Capital Markets, a
Division of Xxxxx & Xxxxxxxxxxxx, Inc., as representatives of the several
Underwriters to be named in Schedule A thereto (the "Underwriters"), relating to
the Proposed Offering.
In order to induce the Underwriters to enter into the proposed
Underwriting Agreement and to consummate the Proposed Offering, the undersigned
hereby agrees not to, without the prior written consent of Xxxx Xxxx & Co. Inc.,
during the Lock-Up Period (as defined below), directly or indirectly offer,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of
or otherwise dispose of or transfer any shares of the Company's Common Stock or
securities convertible into or exchangeable for shares of the Company's Common
Stock, including without limitation the New Debentures, now owned or acquired
upon conversion of the New Debentures by the undersigned (collectively, the
"Company Securities") or file any registration statement with respect to any of
the foregoing, or enter into any swap or other agreement that transfers, in
whole or in part, directly or indirectly, the economic consequences of ownership
of the Company Securities, whether any such swap or transaction is to be settled
by delivery of Company Securities, in cash or otherwise, except that the
undersigned may (x) transfer Company Securities as a bona fide gift or gifts,
provided that the undersigned provides prior written notice of such gift or
gifts to Xxxx Xxxx & Co., Inc. and the donee or donees thereof agree(s) to be
bound by the restrictions set forth herein, or (y) exercise options to purchase
the Company's Common Stock, which options have been issued as of the date
hereof.
For purposes hereof, the "Lock-Up Period" shall mean the period
commencing on the date hereof and ending on the later to occur of (1) the date
that is ninety (90) days following the date of the consummation of the Proposed
Offering pursuant to the Underwriting Agreement and (2) June 30, 2004.
Furthermore, the undersigned hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Company Securities in violation of this agreement.
EXHIBIT B
FORM OF OPINION OF XXXXX XXXX LLP
(a) Based solely on a recently dated good standing certificate
from the Secretary of State of the State of Missouri, the Company is validly
existing as a corporation, in good standing under the laws of the State of
Missouri. The Company has all requisite corporate power to own, lease and
operate its properties and assets and conduct its business as now being
conducted and set forth in or contemplated by the Prospectus.
(b) Based solely on recently dated good standing certificates from
the Secretaries of State of the applicable jurisdictions, the Company is duly
qualified or admitted to transact business and is in good standing as a foreign
corporation in the jurisdictions set forth on Exhibit __ attached hereto.
(c) The execution and delivery by the Company of the Underwriting
Agreement, the Warrant Agreement and the Warrants and the consummation by the
Company of its obligations thereunder are within the Company's corporate power
and have been duly authorized by all necessary corporate action on the part of
the Company.
(d) The Registration Statement and the Prospectus (other than the
financial statements and related notes and schedules and the other financial,
statistical and accounting data included therein, or omitted therefrom, as to
which we express no opinion), as of the Effective Date appear on their face to
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder. The Registration Statement, its execution and
the filing thereof with the Securities and Exchange Commission have been duly
authorized by all necessary corporate action on the part of the Company, and the
Registration Statement has been duly executed pursuant to such authorization by
and on behalf of the Company.
(e) We have been advised by the staff of the Securities and
Exchange Commission that the Registration Statement is effective under the
Securities Act of 1933, as amended (the "Securities Act"), and, to our
knowledge, based solely upon an oral acknowledgment by the staff of the
Securities and Exchange Commission, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act or
proceedings therefor initiated or threatened by the Securities and Exchange
Commission.
(f) The Company has an authorized capitalization as set forth in
the Prospectus under the caption "Description of Capital Stock." To our
knowledge, there are __________ shares of the Company's Common Stock
outstanding. For purposes of this paragraph ___, our opinion with respect to the
outstanding shares of Common Stock
is based solely on our review of the stock records provided to us by the Company
and a certificate of the Company's Chief Executive Officer.
(g) The statements in the Prospectus under the caption
"Description of Capital Stock," insofar as such statements constitute summaries
of the terms and provisions of the documents or matters of law referred to
therein, fairly summarize such terms and provisions in all material respects
(except for the financial statements and related notes and schedules and other
financial, statistical and accounting data included therein or omitted
therefrom, as to which we express no opinion).
(h) All of the outstanding shares of the Company's capital stock
have been duly issued and are fully paid and nonassessable, and none of them
have been issued in violation of any statutory preemptive right, or to our
knowledge, any similar contractual preemptive right of any shareholder of the
Company contained in the Company's Restated Articles of Incorporation or any
agreement filed as an exhibit to the Registration Statement. To our knowledge,
there are no outstanding securities of the Company convertible into or
evidencing the right to purchase or subscribe for any shares of capital stock of
the Company, there are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale or transfer of any shares of capital stock of the
Company to which the Company is a party, except as set forth in or contemplated
by the Prospectus. For purposes of this paragraph __, our opinion with respect
to the issued and outstanding shares of capital stock is based solely on our
review of the stock record books of the Company and a certificate of the
Company's Chief Executive Officer.
(i) The Firm Shares and the Represenatives' Shares are not subject
to any statutory preemptive right, or to our knowledge, any similar contractual
preemptive right of any shareholder of the Company contained in the Company's
Restated Articles of Incorporation or any agreement filed as an exhibit to the
Registration Statement.
(j) Upon issuance in accordance with the terms of the Underwriting
Agreement, and receipt by the Company of all consideration therefor set forth in
the Underwriting Agreement, the Shares will be validly issued, fully paid and
nonassessable.
(k) Upon issuance in accordance with the terms of the Warrant
Agreement, and receipt by the Company of all consideration therefor set forth in
the Warrant Agreement, the Warrants will be validly issued, fully paid and
nonassessable. Upon issuance in accordance with the terms of the Warrant
Agreement, and receipt by the Company of the exercise price therefor set forth
in the Warrant Agreement and the Warrant, the Representatives' Shares issuable
upon exercise of the Warrants, will be validly issued, fully paid and
nonassessable.
(l) The Underwriting Agreement, the Warrant Agreement and the
Warrants have been duly executed and delivered by the Company and constitute the
valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
(m) Except for the registration of the Securities under the
Securities Act, the execution and delivery by the Company of the Underwriting
Agreement, the Warrant Agreement and the Warrants and the consummation by the
Company of its obligations thereunder do not result in (a) any violation by the
Company of (i) any provision of applicable law that we, based on our experience,
reasonably recognize as applicable to the Company in a transaction of this type
(other than state securities or blue sky laws, or the rules of the National
Association of Securities Dealers, Inc., as to which we express no opinion), or
(ii) any order, writ, judgment or decree known to us of any court or
governmental authority or regulatory body that names the Company or is
specifically directed to the Company or any of its material properties or
assets, or (b) a breach or default or require the creation or imposition of any
security interest or lien upon any of the Company's properties pursuant to any
material agreement, contract or instrument known to us to which the Company is a
party or by which it is bound. For purposes of the foregoing, we have assumed
that the only material agreements, contracts or instruments to which the Company
is a party or by which it is bound are those included as exhibits to the
Registration Statement.
(n) The application by the Company of the net proceeds of the sale
of the Shares as described in the Registration Statement under "Use of Proceeds"
would not result in a breach or default or require the creation or imposition of
any security interest or lien upon any of the Company's properties pursuant to
any material agreement, contract or instrument known to us to which the Company
is a party or by which it is bound. For purposes of the foregoing, we have
assumed that the only material agreements, contracts or instruments to which the
Company is a party or by which it is bound are those included as exhibits to the
Registration Statement.
(o) No consent, approval, authorization or order of, and no notice
to or filing with, any federal or Missouri governmental authority or regulatory
body is required for the due execution, delivery and consummation by the Company
of its obligations under the Underwriting Agreement or the Warrant Agreement or
the performance by the Company of its obligations under the Underwriting
Agreement, except for the registration of the Shares under the Securities Act
and such consents, approvals, authorizations, registrations or qualifications or
other actions which have been obtained or made, or as may be required under
state securities or blue sky laws, or the rules of the National Association of
Securities Dealers, Inc. in connection with the purchase of the Securities and
the distribution of the Shares by you, as to which we express no opinion.
(m) To our knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
(other than rights which have been waived or satisfied) to require the Company
to file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the
securities registered pursuant to the Registration Statement or in any other
registration statement filed by the Company under the Securities Act.
(n) Except as set forth in or as contemplated by the Prospectus,
we hereby confirm to you that, to our knowledge, no action or proceeding against
the Company is pending or overtly threatened by written communication before any
court, governmental authority or arbitrator that calls into question the
validity or enforceability of the Underwriting Agreement or which is required to
be disclosed in the Prospectus.
(o) The Company is not, nor will it be upon the issuance of the
Shares and the application of the proceeds therefrom as set forth under the
caption "Use of Proceeds" in the Prospectus, an "investment company" or an
entity "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(p) All descriptions in the Prospectus of agreements, contracts
and instruments to which the Company is a party, insofar as such statements
constitute summaries of the terms and provisions of the agreements, contracts or
instruments referred to therein, are accurate in all material respects (except
for the financial statements and related notes and schedules and other
financial, statistical and accounting data included therein or omitted
therefrom, as to which we express no opinion). For purposes of the foregoing, we
have assumed that the only agreements, contracts or instruments to which the
Company is a party or by which it is bound are those included as exhibits to the
Registration Statement. We hereby confirm to you that we are unaware of any
material agreements, which we believe are required to be filed as exhibits to
the Registration Statement that have not been so filed, provided that our
judgment as to the materiality of the amount or significance of any such
agreement is based upon the views of officers and other representatives of the
Company.
(q) To the best of our knowledge, based solely on verbal
assurances from representatives of the National Association of Dealers
Regulation, Inc., the Common Stock has been designated for inclusion in the
Nasdaq National Market, subject to official notice of issuance of the Shares.
(r) The form of certificate used to evidence the Shares complies
with applicable statutory requirements, with any applicable requirements of the
Articles and Bylaws and the requirements of the Nasdaq National Market.
(s) The statements made in the Registration Statement under Item
14, insofar as they purport to constitute summaries of the terms of the General
and Business Corporation Law of the State of Missouri, constitute accurate
summaries of the terms of such statutes in all material respects.
During the preparation of the Registration Statement and the Prospectus, we have
participated in conferences with officers and other representatives of the
Company, representatives of the independent accountants for the Company and you
and your representatives and counsel, at which conferences the contents of the
Prospectus, the Registration Statement and related matters were discussed,
reviewed and revised.
Although we are not passing upon, and do not assume any responsibility for, the
accuracy, completeness or fairness of such contents, and have not made any
independent investigation thereof, on the basis of the information which was
developed in the course thereof, considered in light of our understanding of
applicable law and the experience we have gained through our practice
thereunder, this is to advise you that nothing has come to our attention which
causes us to believe that, at the time the Registration Statement became
effective, the Registration Statement or the Prospectus, as of its date (except
as to the financial statements and related notes and schedules and other
financial, statistical and accounting data included therein or omitted
therefrom, as to which we express no belief), contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein (and with respect to the
Prospectus, in light of the circumstances under which they were made), not
misleading, or at the date hereof, the Registration Statement or Prospectus
(except as aforesaid) contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein (and with respect to the Prospectus,
in light of the circumstances under which they were made), not misleading.
