2,070,000 Shares
SIGNATURE EYEWEAR, INC.
Common Stock
UNDERWRITING AGREEMENT
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August , 1997
Xxxxxxx X. Xxxxxxxxx
Senior Managing Director, Corporate Finance
Fechtor, Xxxxxxxx & Co., Inc.
0000 Xxxxxx Xxxx, Xxxxx 000-X
Xxxx Xxxxx, XX 00000
Xxx Xxxxxx & Company
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Signature Eyewear, Inc., a California corporation (the "Company"), proposes
to issue and sell 1,600,000 shares (the "Company Firm Shares") of its authorized
but unissued Common Stock, par value $0.001 per share (the "Common Stock"), and
200,000 shares from the selling stockholders identified on Schedule A attached
hereto (the "Selling Stockholders"), to Fechtor, Xxxxxxxx & Co., Inc. (the
"Representative"), Xxx Xxxxxx & Company ("Xxx Xxxxxx") and the other
underwriters named in Schedule B attached hereto (the Representative, Xxx Xxxxxx
and the other underwriters being herein collectively the "Underwriters"). In
addition, solely for the purpose on covering overallotments, the Company and the
Selling Stockholders propose to grant to the Underwriters the option to purchase
up to an additional 270,000 shares of Common Stock (the "Overallotment Shares")
on the terms set forth in Section 3(c). The Company also proposes to grant to
the Representative a Warrant to purchase up to 180,000 additional shares (the
"Representative's Warrant") of Common Stock on the terms and for the purposes
set forth in Section 3(b). The Company Firm Shares, Selling Shareholder Shares,
Overallotment Shares and the shares of Common Stock issuable upon exercise of
the Representative's Warrant are hereinafter collectively referred to as the
"Shares."
The Company wishes to confirm as follows its agreements with you and the
other Underwriters in connection with the purchase of these Shares.
1. REGISTRATION STATEMENT. A registration statement on Form S-1 (File No.
33-[ ]) including a prospectus relating to the Shares and each amendment
thereto has been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission" or "SEC") thereunder, and has been filed with the
Commission. There have been delivered to you three signed copies of such
registration statement and amendments, together with three copies of each
exhibit filed therewith. Copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested. If such
registration statement has not become effective, a further amendment to such
registration statement, including a form of final prospectus, necessary to
permit such registration statement to become effective will be filed promptly by
the Company with the Commission. If such registration statement has become
effective, a final prospectus containing all Rule 430A Information (as
hereinafter defined) will be filed by the Company with the Commission in
accordance with Rule 424(b) of the Rules and Regulations on or before the second
business day after the date hereof (or such earlier time as may be required by
the Rules and Regulations).
The term "Registration Statement" as used in this Agreement shall mean such
registration statement (including all exhibits and financial statements and all
documents incorporated by reference therein, if any) at the time such
registration statement becomes or became effective and, in the event any post-
effective amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined), shall also mean such registration statement as so amended;
provided, however, that such term shall include all Rule 430A Information deemed
to be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and shall also mean any registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations with respect to the Shares. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Shares in the form in which it is first filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no
filing pursuant to Rule 424 (b) of the Rules and Regulations is required, shall
mean the form of final prospectus included in the Registration Statement at the
time such registration statement becomes effective. The term "Rule 430A
Information" means information with respect to the Shares and the offering
thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLING STOCKHOLDERS.
The Company and the Selling Stockholders jointly and severally represent
and warrant for and agree with, the several Underwriters, as set forth below in
this Section 2.
(a) SEC Compliance. The Company has not received, and has no notice of,
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any order of the Commission preventing or suspending the use of any Preliminary
Prospectus and, to the knowledge of the Company, the Commission has not
instituted proceedings for that
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purpose, and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the Rules
and Regulations. When the Registration Statement became or becomes, as the case
may be, effective (the "Effective Date") and at all times subsequent thereto up
to and at the Closing Date (as hereinafter defined), any later date on which
Overallotment Shares are to be purchased and when any post-effective amendment
to the Registration Statement becomes effective or any amendment or supplement
to the Prospectus is filed with the Commission, (i) the Registration Statement
and Prospectus, and each amendment or supplement thereto, will contain all
statements which are required to be stated therein by, and will comply with the
requirements of, the Act and the Rules and Regulations, and (ii) neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The foregoing representations and warranties
in this section 2(a) do not apply to any statements or omissions made in
reliance on and in conformity with the information contained in the section of
the Prospectus entitled "Underwriting" [and the information in the last
paragraph on the front cover page of the Prospectus]. The Company has not
distributed any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or any other materials, if any, permitted by the Act.
(b) Corporate Governance. The Company has been duly organized and is
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validly existing as a corporation in good standing under the laws of the State
of California, with full corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Registration
Statement. The Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or leasing
of its properties or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business, properties, assets, financial condition, results of operations
or prospects of the Company (as hereinafter defined) (a "Material Adverse
Effect"). The Company has no subsidiaries (as defined in the Rules and
Regulations). The Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity. Complete and correct copies of the certificate of incorporation
and of the by-laws of the Company and all amendments thereto have been delivered
to the Representative, and except as set forth in the exhibits to the
Registration Statement no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Additional Closing Date.
(c) Corporate Authority. The Company has full power and authority
-------------------
(corporate and otherwise) to enter into this Agreement and to perform the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement on
the part of the Company, enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution hereunder may be limited
by applicable laws or equitable principles and except as enforcement hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles. The Company is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
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observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company is a party or by
which it may be bound, or to which any of its property may be subject, except
for such defaults that would not result in a Material Adverse Effect; and the
performance of this Agreement by the Company and the consummation by the Company
of the transactions herein contemplated will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, (i) any
indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, or any lease, contract or other
agreement or instrument to which the Company is a party or by which its
properties are bound, or (ii) the certificate of incorporation or by-laws of the
Company, or (iii) any law, order, rule, regulation, writ, injunction or decree
of any court or governmental agency or body to which the Company or its assets
is subject. The Company is not required to obtain or make (as the case may be)
any consent, approval, authorization, order, designation or filing by or with
any court or regulatory, administrative or other governmental agency or body as
a requirement for the consummation by the Company of the transactions herein
contemplated, except such as may be required under the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), state securities or blue
sky ("Blue Sky") laws or the rules and regulations of the National Association
of Securities Dealers, Inc. ("NASD").
(d) Litigation. There is not pending or, to the Company's knowledge,
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threatened, any action, suit, claim, proceeding or investigation against the
Company or any of its respective officers or directors or any of its respective
properties, assets or rights before any court or governmental agency or body or
otherwise which, singly or in the aggregate, might result in a Material Adverse
Effect or have a Material Adverse Effect on the Company's properties, assets or
rights, or prevent consummation of the transactions contemplated hereby. There
are no statutes, rules, regulations, agreements, contracts, leases or documents
that are required to be described in the Prospectus, or to be filed as exhibits
to the Registration Statement by the Act or by the Rules and Regulations that
have not been accurately described in all material respects in the Prospectus or
filed as exhibits to the Registration Statement.
(e) Capitalization. The authorized and outstanding capital stock of the
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Company conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus (and such description correctly
states the substance of the provisions of the instruments defining the capital
stock of the Company). All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right.
(f) Issuance of Shares. The Shares to be sold by the Company have been
------------------
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment therefor
in accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable. The Shares conform to the description thereof
in the Prospectus. No preemptive right, co-sale right, right of first refusal
or other similar rights of securityholders exists with respect to any of the
Shares or the issue and sale thereof other than those that have been expressly
waived prior to the date
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hereof. No holder of securities of the Company has the right to cause the
Company to include such holder's securities in the Registration Statement. No
further approval or authorization of any security holder, the Board of Directors
or any duly appointed committee thereof or others is required for the issuance
and sale or transfer of the Shares by the Company, except as may be required
under the Act, the Exchange Act or under state securities or Blue Sky laws.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company, and the related notes thereto, included in the
Prospectus, the Company does not have outstanding any options or warrants to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. The description of the Company's
stock option and other plans or arrangements, and the options or other rights
granted and exercised or exercisable thereunder, set forth in the Prospectus
accurately and fairly presents, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and
rights.
(g) Financial Statements. Xxxxxxxxxx, Melvoin and Xxxxxxx LLP (the
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"Accountants"), who have examined the financial statements, together with the
related schedules and notes, of the Company filed with the Commission as a part
of the Registration Statement, which are included in the Prospectus, are
independent public accountants within the meaning of the Act and the Rules and
Regulations. The financial statements of the Company, together with the related
schedules and notes, forming part of the Registration Statement and the
Prospectus, fairly present the financial position and the results of Operations
of the Company at the respective dates and for the respective periods to which
they apply. All financial statements, together with the related schedules and
notes, filed with the Commission as part of the Registration Statement have been
prepared in accordance with generally accepted accounting principles as in
effect in the United States consistently applied throughout the periods involved
except as may be otherwise stated in the Registration Statement. The selected
and summary financial and statistical data included in the Registration
Statement present fairly the information shown therein and have been compiled on
a basis consistent with the financial statements presented therein. No other
financial statements or schedules are required by the Act or the Rules and
Regulations to be included in the Registration Statement.
(h) Recent Developments. Subsequent to the respective dates as of which
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information is given in the Registration Statement and the Prospectus, there has
not been (i) any Material Adverse Effect, (ii) any transaction which is material
to the Company, except transactions in the ordinary course of business, (iii)
any obligation, direct or contingent, which is material to the Company, incurred
by the Company, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the Company
or (v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company. The Company does not have any material contingent
obligation which is not disclosed in the Registration Statement.
(i) Property. The Company has good and marketable title to all properties
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and assets described in the Prospectus as owned by them, free and clear of any
pledge, lien, security interest, charge, encumbrance, claim, equitable interest,
or restriction, other than those, if any,
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disclosed in the Prospectus. The agreements to which the Company is a party
described in the Prospectus are valid agreements, enforceable against the
Company and the other party or parties thereto in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles, and, to the
Company's knowledge, the other contracting party or parties thereto are not in
material breach or default under any of such agreements, and the Company has
valid and enforceable leases for the properties described in the Prospectus as
leased by it, and such leases conform in all material respects to the
description thereof, if any, set forth in the Registration Statement.
(j) Compliance. The Company now holds and at the Closing Date and any
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later Additional Closing Date, as the case may be, will hold, all licenses,
certificates, approvals and permits from all state, United States, foreign and
other regulatory authorities that are material to the conduct of the business of
the Company as such business is currently conducted, except for such licenses,
certificates, approvals and permits the failure of which to hold would not have
a Material Adverse Effect, all of which are valid and in full force and effect,
and there is no proceeding pending or, to the knowledge of the Company,
threatened which may cause any such license, certificate, approval or permit to
be withdrawn, cancelled, suspended or not renewed. The Company is not in
violation of any law, order, rule, regulation, writ, injunction or decree of any
court or governmental agency or body. All of the descriptions in the
Registration Statement and Prospectus of the legal and governmental proceedings
or any foreign, state or local government body exercising comparable authority
are true, complete and accurate in all material respects.
(k) Taxes. The Company has filed on a timely basis all necessary federal,
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state and foreign income, franchise and other tax returns and has paid all taxes
shown thereon as due, and the Company has no knowledge of any tax deficiency
which has been or might be asserted against the Company which might have a
Material Adverse Effect. All material tax liabilities are adequately provided
for within the financial statements of the Company.
(l) Insurance. The Company maintains insurance of the types and in the
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amounts adequate for its business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering product liability and real and personal property
owned or leased against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full force
and effect.
(m) Labor. The Company is not involved in any labor dispute or disturbance
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nor, to the knowledge of the Company, is any such dispute or disturbance
threatened; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers,
customers or contractors which, in either case may reasonably be expected to
result in a Material Adverse Effect.
(n) Trademarks, Licenses. The Company owns or possesses adequate licenses
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or other rights to use all trademarks, trademark applications, service marks,
service xxxx
6
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets, know-how, franchises, and other intangible property and assets
(collectively, "Intellectual Property") necessary to the conduct of its business
as conducted and as proposed to be conducted as described in the Prospectus.
The Company has no knowledge that it lacks or will be unable to obtain any
rights or licenses to use any of the Intellectual Property necessary to conduct
the business now conducted or proposed to be conducted by it as described in the
Prospectus, except as described in the Prospectus. The Prospectus fairly and
accurately describes the Company's rights with respect to the Intellectual
Property. The Company is not in breach or violation of any contract, agreement,
license or commitment with respect to Intellectual Property. The Company has
not received any notice of infringement or of conflict with rights or claims of
others with respect to any Intellectual Property. The Company is not aware of
any trademarks or copyrights of others which are infringed upon by products
referred to in the Prospectus. [Additional reps or modifications to follow based
upon completion of due diligence on trademark licenses].
(o) Investment Company Act. The Company is not and, upon the issuance and
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sale of the Shares as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus, will not be an "investment
company," or a "promoter" or "principal underwriter" for or an entity controlled
by a registered investment company, as such terms are defined in the Investment
Company Act of 1940, as amended.
(p) Finder's Fee. The Company has not incurred any liability for a fee,
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commission, or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than the underwriting discounts and commissions contemplated hereby, all of
which are accurately described in the Prospectus under the heading
"Underwriting".
(q) Contributions; Payments. Neither the Company nor any Selling
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Stockholder has at any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose any
contribution in violation of law, or (ii) made any payment to any foreign,
United States or state governmental officer or official, or other person charged
with similar public of quasi-public duties, other than payments required or
permitted by the laws of the United States.
(r) NASDAQ Qualification. The Common Stock is registered pursuant to
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Section 12(g) of the Exchange Act. The Shares have been duly authorized for
quotation on the National Association of Securities Dealers, Inc. Automated
Quotation System National Market System ("Nasdaq National Market"). The Company
has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the Nasdaq National Market is contemplating
terminating such registration or listing.
(s) Stabilization. Neither the Company nor any Selling Stockholder, nor,
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to their knowledge, any of the Company's officers, directors or affiliates, has
taken and at the Closing Date and at any later Additional Closing Date or will
have taken, directly or indirectly,
7
any action which has constituted, or might reasonably be expected to constitute,
the stabilization or manipulation of the price of sale or resale of the Shares.
(t) Registration Rights. There are no persons with registration rights or
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other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the Act
other than the Selling Stockholders whose rights have been satisfied by
registering that number of Shares as is included in the Registration Statement.
(u) Doing Business with Cuba. The Company has complied with, and is and
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will be in compliance with, the provisions of that certain Florida Statute
relating to disclosure of doing business with Cuba, codified as Section 517.075
of the Florida Statutes and the rules and regulations thereunder (collectively,
the "Cuba Act") or is exempt therefrom.
(v) ERISA. Except as disclosed in the Prospectus, the Company does not
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maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). The Company does not maintain or contribute
now, or at any time previously maintained or contributed, to a defined benefit
plan, as defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, which could subject the
Company to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in compliance with all material
reporting, disclosure and other requirements of the Code and ERISA as they
relate to any such ERISA Plan. The Company has not ever completely or partially
withdrawn from a "multiemployer plan."
(w) Selling Stockholders. Each Selling Stockholder represents and warrants
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to, and agrees with, each Underwriter that:
(i) On the Closing Date or the Additional Closing Date as the case may be,
such Selling Stockholder will be the lawful owner of the Selling Stockholder
Shares to be sold by such Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Selling Stockholder Shares, as provided
herein, such Selling Stockholder will convey to the Underwriters good and valid
title to such Selling Stockholder Shares, free and clear of all liens,
restrictions, encumbrances, charges, equities and claims whatsoever.
(ii) Such Selling Stockholder nor any of such Selling Stockholder's
affiliates (as defined in the Act and Exchange Act) has or will take, directly
or indirectly, prior to the termination of this Agreement, any action designed
to stabilized or manipulate the price of any security of the Company, or which
has caused or resulted in, or which might in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Shares
which would be required to be disclosed pursuant to Item 701 of Regulation S-K.
8
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such Selling
Stockholder of the transactions contemplated herein, except such as may have
been obtained under the Act and such as may be required under the Blue Sky law
of any jurisdiction in connection with the purchase and distribution of the
Selling Stockholder by the Underwriters and such other approvals as have been
obtained.
(iv) Neither the sale of the Selling Stockholder Shares being sold by such
Selling Stockholder nor the consummation of any other of the transactions herein
contemplated by such Selling Stockholder or the fulfillment of the terms hereof
by such Selling Stockholder will conflict with, result in a breach or violation
of, or constitute a default under any law or the terms of any indenture or other
agreement or instrument to which such Selling Stockholder is a party or bound,
or any judgment, order or decree applicable to such Selling Stockholder of any
court, regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Stockholder.
(v) All information furnished or to be furnished to the Company by or on
behalf of such Selling Stockholder for use in connection with the preparation of
the Registration Statement and the Prospectus does not and will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
(vi) Except as may be set forth in the Prospectus, such Selling Stockholder
has not incurred any liability for a fee, commission, or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
(vii) Such Selling Stockholder is not prompted to sell Shares by any
material non-public information concerning the Company which is not included in
the Registration Statement.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) Company Firm Shares and Selling Stockholder Shares. On the basis of
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the representations and warranties and subject to the terms and conditions
herein set forth, (i) the Company agrees to issue and sell the Company Firm
Shares to the several Underwriters, and the Underwriters, severally and not
jointly, agree to purchase from the Company the number of Shares set forth
opposite the respective names of the Underwriters in column (2) of Schedule B
hereto, and (ii) each of the Selling Stockholders agrees to sell the
Underwriters, and the Underwriters severally and not jointly agree to purchase
from the Selling Stockholders, the number of Shares set opposite the name of
such Selling Stockholder in Schedule A hereto; plus such additional number of
Overallotment Shares which the Underwriters may elect to purchase pursuant to
Section 3(c) hereof. The price at which the Shares shall be sold by the Company
and the Selling Stockholders, and purchased by the Underwriters shall be
[$_____________] per share.
9
(b) Defaulting Underwriters. If for any reason one or more of the
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Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 11
hereof) to purchase and pay for the number of Shares agreed to be purchased by
such Underwriter or Underwriters, the Company shall immediately give notice
thereof to you and the non-defaulting Underwriters shall have the right within
twenty-four (24) hours after such default to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the Shares which such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such Shares
and portion, the number of Shares which each non-defaulting underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis (as adjusted by you in such manner as you deem
advisable to avoid fractional shares) to absorb the remaining Shares and portion
which the defaulting Underwriter or Underwriters agreed to purchase; provided,
however, that the non-defaulting Underwriters shall not be obligated to purchase
the Shares and portion which the defaulting Underwriter or Underwriters agreed
to purchase if the aggregate number of such Shares exceeds 10% of the total
number of Shares which all Underwriters agreed to purchase hereunder. If the
total number of Shares which the defaulting Underwriter or Underwriters agreed
to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within the twenty-four
(24) hours next succeeding the 24-hour period referred to above, to make
arrangements with other underwriters or purchasers reasonably satisfactory to
you for purchase of such Shares and portion on the terms herein set forth. In
any such case, the Company shall have the right to postpone the Closing Date
determined as provided in Section 5 hereof for not more than seven (7) business
days after the date originally fixed as the Closing Date pursuant to said
Section 5 in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If the aggregate
number of Shares which the defaulting Underwriter or Underwriters agreed to
purchase exceeds ten percent (10%) of the total number of Shares which all
Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the 24-hour periods
stated above for the purchase of all the Shares which the defaulting Underwriter
or Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company
to any non-defaulting Underwriter nor of any non-defaulting Underwriter to the
Company. Nothing in this paragraph (b), and no action taken hereunder, shall
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
(c) Overallotment Shares. On the basis of the representations, warranties
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and covenants herein contained, and subject to the terms and conditions herein
set forth, upon the Closing Date (as defined below) or the Additional Closing
Date (as defined below), as the case may be, the Company and Selling
Stockholders will sell to the Underwriters the Overallotment Shares. The
Overallotment Shares are solely for the purpose of covering overallotments, if
any, in the sale of Shares. The Underwriters shall have the option to purchase
75% of the Overallotment Shares from the Selling Stockholders and 25% of the
Overallotment Shares from the Company; on the same terms as the other Shares
publicly offered. The option will be
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exercisable for a period of 30 days following the Closing Date (as defined
below). Delivery of certificates for the Overallotment Shares, and payment
therefor, shall be made as provided in Section 5 hereof.
(d) Representative's Warrants. On the basis of the representations,
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warranties and covenants herein contained, and subject to the terms and
conditions herein set forth, upon the Closing Date (as defined below) the
Company will sell to the Representative, for a consideration of one mil ($.001)
per warrant, warrants to purchase an aggregate of One Hundred Eighty Thousand
(180,000) Shares (equivalent to ten percent (10%) of the common stock offered to
the public, exclusive of the exercise of any portion of the Overallotment
Shares). The Representative's Warrant and all underlying securities shall be
registered in the Registration Statement. Each Share under the Representative's
Warrant shall be exercisable at a price equal to 120% of the offering price to
the public. The Representative's Warrant shall be exercisable for a period of
four years commencing one year after the Closing Date (as defined below), and
shall contain appropriate anti-dilution provisions. Such anti-dilution
provisions shall include, without limitation, protection against dilution in
both price and percentage of the Company if there is (a) any issuance of shares
of common stock or other securities convertible into common stock as a dividend
or (b) a subdivision or combination of the outstanding shares of common stock or
other securities convertible into common stock as the result of a merger,
consolidation, spin-off or otherwise. The Representative's Warrant shall be set
forth in a Warrant Agreement in substantially the form filed as Exhibit 1.2 to
the Registration Statement.
4. OFFERING BY UNDERWRITERS.
(a) Pricing. The terms of the initial public offering of the Shares by the
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Underwriters shall be as set forth in the Prospectus. The Underwriters may from
time to time change the public offering price after the closing of the initial
public offering and increase or decrease the concessions and discounts to
dealers as it may determine.
(b) Disclosure of Underwriters. You, on behalf of the Underwriters,
--------------------------
represent and warrant that (i) the information set forth in the last paragraph
on the front cover page and paragraph ___ under the caption "Underwriting" in
the Registration Statement, any Preliminary Prospectus and the Prospectus
relating to the Shares (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and the
Prospectus, and that the statements made therein are correct and do not omit to
state any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were made
not misleading, and (ii) the Underwriters have not distributed and will not
distribute prior to the Closing Date (as defined below) or on any Additional
Closing Date (as defined below), as the case may be, any of offering material in
connection with the offering and sale of the shares other than the Preliminary
Prospectus, the Prospectus, the Registration Statement and other materials
permitted by the Act.
11
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of Certificates. Delivery of certificates for the Firm Shares
------------------------
and the Overallotment Shares (if the option granted pursuant to Section 3(c)
hereof shall have been exercised not later than 1:00 p.m., New York time, on the
date at least two business days preceding the Closing Date), and payment
therefor, shall be made at the office of the Representative, 000 Xxxx Xxxxxx,
00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:00 a.m., New York time, on the
fourth business day after the date of this Agreement, or at such time on such
other day, not later than seven full business days after such fourth business
day, as shall be agreed upon in writing by the Company and you (the "Closing
Date").
(b) Exercise of Overallotment Option. If the option granted pursuant to
--------------------------------
Section 3(c) hereof shall be exercised after 1:00 p.m., New York time, on the
date two business days preceding the Closing Date, and on or before the 30th day
after the date of Closing Date, delivery of certificates for the Overallotment
Shares, and payment therefor, shall be made at the office of the Representative,
000 Xxxx Xxxxxx, 00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:00 a.m., New York
time, on the third business day after the exercise of such option (the
"Additional Closing Date").
(c) Payments. Payment for the Company Firm Shares purchased from the
--------
Company shall be made to the Company or its order by wire transfer of
immediately available funds to a bank account designated by the Company.
Payment for the Selling Stockholder Shares purchased from the Selling
Stockholders shall be made to the respective Selling Stockholder pursuant to
their reasonable instructions. Such payment shall be made upon delivery of
certificates for the Shares to you for the respective accounts of the several
Underwriters against receipt therefore signed by you. Certificates for the
Shares to be delivered to you shall be registered in such name or names and
shall be in such denominations as you may request at least three business days
before the Closing Date, in the case of Company Firm Shares, and at least two
business days prior to the Additional Closing Date. Such certificates will be
made available to the Underwriters for inspection, checking and packaging at a
location in New York, New York designated by the Representative not less than
one full business day prior to the Closing Date or, in the case of the
Overallotment Shares, by 3:00 p.m., New York time, on the business day preceding
the Additional Closing Date. Each Selling Stockholder will pay all applicable
stock transfer taxes, if any, involved in the transfer to the several
Underwriters of the Shares to be purchased by them from such Selling Stockholder
and the respective Underwriters will pay any additional stock transfer taxes
involved in further transfers.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later Additional Closing Date. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company and Selling
Stockholders covenant and agree as follows:
12
(a) SEC Effectiveness. The Company will use its best efforts to cause the
-----------------
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective as promptly as possible; it will notify you, promptly after it
shall receive notice thereof, of the time when the Registration Statement or any
subsequent amendment to the Registration Statement has become effective or any
supplement to the Prospectus has been filed. If the Company omitted information
from the Registration Statement at the time it was originally declared effective
in reliance upon Rule 43OA(a), the Company will provide evidence satisfactory to
you that the Prospectus contains such information and has been filed, within the
time period prescribed, with the Commission pursuant to subparagraph (1) or (4)
of Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to such Registration Statement as originally declared effective which
is declared effective by the Commission. If for any reason the filing of the
final form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the time
period prescribed. The Company will notify you promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information. Promptly upon your request, it
will prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel to the
Underwriters ("Underwriters' Counsel"), may be necessary or advisable in
connection with the distribution of the Shares by the Underwriters. The Company
will promptly prepare and file with the Commission, and promptly notify you of
the filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which the Prospectus
or any other prospectus relating to the Shares as then in effect would include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. In case you are required to deliver a
prospectus within the nine-month period referred to in Section 10(a)(3) of the
Act in connection with the sale of the Shares, the Company will prepare promptly
upon request, but at the expense of you, such amendment or amendments to the
Registration Statement and such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act. The
Company will file no amendment or supplement to the Registration Statement or
Prospectus that shall not previously have been submitted to you a reasonable
time prior to the proposed filing thereof or to which you shall reasonably
object in writing or which is not in compliance with the Act and Rules and
Regulations or the provisions of this Agreement.
(b) Stop Order. The Company will advise you, promptly after it shall have
----------
received notice or obtained knowledge thereof of the issuance of any stop order
by the Commission suspending the effectiveness of the Registration Statement or
the use of the Prospectus or of the initiation or threat of any proceeding for
that purpose; and the Company will promptly use its best efforts to prevent the
issuance of any such stop order or to obtain its withdrawal at the earliest
possible moment if such stop order should be issued.
13
(c) State Qualification. The Company will cooperate with you in
-------------------
endeavoring to qualify the Shares for offering and sale under the securities
laws of such jurisdictions as you may designate and to continue such
qualifications in effect for so long as may be required for purposes of the
distribution of the Shares, except that the Company shall not be required in
connection therewith or as a condition thereof to qualify as a foreign
corporation, to execute a general consent to service of process in any
jurisdiction or to make any undertaking with respect to the conduct of its
business. In each jurisdiction in which the Shares shall have been qualified,
the Company will make and file such statements, reports and other documents in
each year as are or may be reasonably required by the laws of such jurisdiction
so as to continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the Shares or as otherwise may be
required by law. The Company will promptly notify you of the receipt by the
Company of any notification with respect to the qualification of the Shares for
offering or sale in any jurisdiction or the initiation or threatening of any
proceedings for any such purpose.
(d) Registration Statement; Prospectus. The Company will furnish to you,
----------------------------------
as soon as available, copies of the Registration Statement (three of which will
be signed and which will include all exhibits), each Preliminary Prospectus, the
Prospectus and any amendments or supplements to such documents, including any
prospectus prepared to permit compliance with Section 10(a)(3) of the Act, all
in such quantities as you may from time to time reasonably request.
(e) Earnings Statement. The Company will make generally available to its
------------------
stockholders as soon as practicable, but in any event not later than the 45th
day following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited) complying
with the provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and covering a twelve-month period beginning after the effective
date of the Registration Statement, and will advise you in writing when such
statement has been made available.
(f) Annual Reports. During a period of five years after the date hereof,
--------------
the Company, as soon as practicable after the end of each respective period,
will furnish to its stockholders annual reports (including financial statements
audited by independent certified public accountants) and will furnish to its
stockholders unaudited quarterly reports of operations for each of the first
three quarters of the fiscal year, and will, upon request, furnish to you and
the other several Underwriters hereunder (i) concurrently with making such
reports available to its stockholders, statements of operations of the Company
for each of the first three quarters in the form made available to the Company's
stockholders; (ii) concurrently with the furnishing thereof to its stockholders,
a balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity and of cash flow of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants; (iii)
concurrently with the furnishing of such reports to its stockholders, copies of
all reports (financial or other) mailed to stockholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to or
filed with the
14
Commission, any securities exchange or the Nasdaq National Market by the Company
(except for documents for which confidential treatment is requested); and (v)
every material press release and every material news item or article in respect
of the Company or its affairs which was generally released to stockholders or
prepared for general release by the Company. During such five-year period, if
the Company shall have any active subsidiaries, the foregoing financial
statements shall be on a consolidated basis to the extent that the accounts of
the Company are consolidated with any Subsidiaries, and shall be accompanied by
similar financial statements for any significant subsidiary that is not so
consolidated.
(g) Lock-Up Agreements. Prior to or simultaneously with the execution and
------------------
delivery of this Agreement, the Company will obtain a letter, in the form
attached hereto as Appendix A from each of the Company's stockholders, Officers
----------
and Directors listed on Schedule C to this Agreement providing that such person
----------
will not, for a period of one year after the date of the Prospectus, without the
prior written consent of the Representative, directly or indirectly, offer to
sell, sell, hypothecate, contract to sell, grant any option to purchase, or
otherwise dispose of (collectively, "transfer"), any shares of Common Stock
beneficially owned as of the date such lockup agreement is executed (including,
without limitation, shares of Common Stock which may be deemed to be
beneficially owned in accordance with the Rules and Regulations and shares of
Common Stock which may be issued upon exercise of a stock option or warrant) or
any securities convertible into or exercisable or exchangeable for such Common
Stock except (i) pursuant to a bona fide gift to any person or other entity
which agrees in writing to be bound by this restriction; (ii) in connection with
a merger of the Company or a tender offer made to all of the Company's
stockholders for control of the then outstanding shares of Common Stock; and
(iii) if after a period of 180 days from the date of this Prospectus, in an
amount not in excess of 104,000 shares of Common Stock in the aggregate. Each
such person or entity shall also agree and consent to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of shares of
Common Stock held by such person or entity, except in compliance with the
foregoing restriction.
(h) Additional Registration Statements. The Company shall not, during the
----------------------------------
180 days following the effective date of the Registration Statement, except with
your prior written consent as Representative, file a registration statement
covering any of its shares of capital stock [except that one or more
registration statements on Form S-8 may be filed at any time following the
effective date of the Registration Statement.]
(i) Additional Sales of Selling Stockholder Shares. The Company shall not,
----------------------------------------------
during the 180 days following the effective date of the Registration Statement,
except with your prior written consent as Representative, issue, sell, offer or
agree to sell, grant, distribute or otherwise dispose of, directly or
indirectly, any shares of Common Stock, or any options, rights or warrants with
respect to shares of Common Stock, or any securities convertible into or
exchangeable for Common Stock, other than (i) the sale of Shares hereunder, (ii)
the grant of options or the issuance of shares of Common Stock under the
Company's stock option plans or stock purchase plan, as the case may be,
existing on the date hereof, (iii) the issuance of shares of Common Stock upon
exercise of the currently outstanding options or warrants described in the
Registration Statement.
15
(j) Proceeds. The Company will apply the net proceeds from the sale of the
--------
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(k) Transfer Agent. The Company will maintain a Transfer Agent and, if
--------------
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
(l) NASDAQ National Market. The Company will use its best efforts to
-----------------------
maintain quotation of the Common Stock, including the Shares, on the Nasdaq
National Market and will file with the Nasdaq National Market all documents and
notices required of companies that have issued securities that are quoted
thereon.
(m) Investment Company Act. The Company is familiar with the Investment
----------------------
Company Act of 1940, as amended (the "Investment Company Act"), and the rules
and regulations thereunder, and has in the past conducted its affairs, and will
in the future conduct its affairs, in such a manner so as to ensure that the
Company was not and will not be an "investment company" within the meaning of
the Investment Company Act and the rules and regulations thereunder.
(n) Publicity. If at any time during the 180 day period after the
---------
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
reasonable opinion the market price of the Common Stock has been or is likely to
be materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, consult with you in good faith regarding the necessity of disseminating a
press release or other public statement responding to or commenting on such
rumor, publication or event and, if the Company in its reasonable judgment
determines that such a press release or other public statement is appropriate,
the substance of any press release or other public statement.
(o) Board of Directors. At its option, the Representative following the
------------------
Closing Date and for a period of three (3) years thereafter, may designate a
representative to serve on the Company's Board of Directors, and the Company
will use its best efforts to cause such designee to be elected to the Board.
Alternatively, a representative of the Representative shall be entitled to
notice of, to attend as an observer, and to participate in the discussion (but
not vote) at all meetings of the Company's Board of Directors; provided,
however, that the Company may exclude such observer from portions of any meeting
relating to: (i) any matter between the Company and the Representative and (ii)
any claim or potential claim by any third party, or matter which may result in a
claim or potential claim by a third party, which is to be discussed with Company
counsel and with respect to which counsel advises the Board that the presence of
such observer could result in a loss of the attorney-client privilege. The
Company will reimburse the Representative's designee, whether a director or
observer, for all reasonable out-of-pocket travel, lodging, meal and ancillary
expenses incurred in attendance at any Board meeting.
16
(p) Employment Agreements. Effective as of the Closing Date, the Company
---------------------
will enter into employment agreements with each of Xxxxxxx Xxxxx, Xxxxx Xxxxxxx,
Xxxxxxx Xxxxxx, Xxxxxx Xxxxx and Xxxxxx Xxxxxxxx on terms that are satisfactory
to the Representative.
(q) Future Transactions; Rights of First Refusal. Following the Closing
--------------------------------------------
Date and for a period of three (3) years thereafter, the Representative shall
have a right of first refusal to provide investment banking or brokerage
services with respect to: (i) any public or private offering of securities
(including without limitation, debt, equity and convertible instruments) of the
Company, (ii) any merger, reorganization, recapitalization, sale, license or
other disposition of all or substantially all of the assets of the Company or
any acquisition of assets or securities of another (other than in the ordinary
course of business) or similar type of transaction, or (iii) any other type of
transaction for which the Company desires to engage the services of an
investment banker or brokerage firm (collectively, a "Covered Transaction").
In the event that the Company desires to undertake a Covered Transaction it
shall first provide written notice of the proposed Covered Transaction, which
notice shall describe in reasonable detail the material terms of such Covered
Transaction, including without limitation, the proposed terms of compensation of
the Representative for its services with respect to the Covered Transaction.
The Representative shall have thirty (30) days from receipt of such notice to
notify the Company whether it intends to participate in the Covered Transaction.
The Company shall promptly comply with all reasonable requests and inquiries for
additional information with respect to the Covered Transaction. In the event
the Representative does not elect to participate in the Covered Transaction,
then the Company may engage the services of another investment banking or
brokerage firm for such purposes; provided, however, that (i) the terms of such
engagement are no more favorable than those offered to the Representative, (ii)
the terms of the proposed Covered Transaction do not materially change from the
terms described in the Company's notice to the Representative, and (iii) both
the engagement of any such other investment banking or brokerage firm and the
commencement of the Covered Transaction occur within six (6) months of the date
after which the Representative elected not to participate in such Covered
Transaction.
(r) Public Relations Firm. Following the Closing Date and for a period of
---------------------
(2) two years thereafter, the Company agrees to engage a financial public
relations firm that is reasonably acceptable to the Representative.
(s) Minimum Shareholder Equity. On the Closing Date, without giving effect
--------------------------
to the proceeds from the sale of the Shares, the Company shall have Shareholder
Equity of at least Two Million Dollars ($2,000,000).
7. EXPENSES.
The Company agrees with each Underwriter that:
(a) Payment by Company. The Company will pay and bear all costs, fees and
------------------
expenses in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and exhibits),
Preliminary Prospectuses and the Prospectus and any amendments or supplements
thereto; the reproduction of this Agreement, the
17
[Preliminary Blue Sky Memorandum and any Supplemental Blue Sky Memorandum] and
any instruments related to any of the foregoing; the issuance and delivery of
the Shares hereunder to the Underwriters, including transfer taxes (except as
may be otherwise provided in Section 5 hereof), if any; the cost of all stock
certificates representing the Shares and Transfer Agents' and Registrars' fees;
the fees and disbursements of corporate counsel for the Company; all fees and
other charges of the Company's independent public accountants; the cost of
furnishing to the Underwriters copies of the Registration Statement (including
appropriate exhibits), Preliminary Prospectuses and the Prospectus, and any
amendments or supplements to any of the foregoing; NASD filing fees and expenses
incident to securing any required review and the cost of qualifying the Shares
under the laws of such jurisdictions within the United States as you may
designate (including filing fees and fees and disbursements of the Underwriter's
Counsel in connection with such NASD filings and Blue Sky law qualifications);
listing application fees of the Nasdaq National Market; and all other expenses
directly incurred by the Company in connection with the performance of its
obligations hereunder.
(b) Obligation of Company. If the transactions contemplated hereby are not
---------------------
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed hereunder or to
fulfill any condition of the Underwriters' obligations hereunder, the Company
will, in addition to paying the expenses described in clause (a) above,
reimburse the Underwriters for all out-of-pocket expenses (including reasonable
fees and disbursements of Underwriters' Counsel) incurred by the Underwriters in
reviewing the Registration Statement and the Prospectus and in otherwise
investigating, preparing to market or marketing the Shares. The Company will
not in any event be liable to the Underwriters for any loss of anticipated
profits from the sale by them of the Shares.
(c) General. The provisions of paragraphs (a) and (b) of this Section are
-------
intended to relieve the Underwriters from the payment of the expenses and costs
which the Company hereby agrees to pay.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the several Underwriters to purchase and pay for the
Shares, as provided herein, shall be subject to the accuracy, as of the date
hereof and the Closing Date and any later Additional Closing Date, as the case
may be, of the representations and warranties of the Company herein, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) SEC Effectiveness. The Registration Statement shall have become
-----------------
effective not later than 9:00 a.m., New York time, on the date following the
date of this Agreement, or such later time or date as shall be consented to in
writing by you. If the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) and Rule 430A of the Rules and Regulations, the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b) and Rule 430A of the Rules and Regulations. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that
18
purpose shall have been initiated or, to the knowledge of the Company or any
Underwriter, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of Underwriter's Counsel.
(b) Underwriters' Counsel. All corporate proceedings and other legal
---------------------
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares shall have been reasonably satisfactory to Underwriters'
Counsel, and such counsel shall be furnished with such papers and information as
they may reasonably have requested to enable them to pass upon the matters
referred to in this subsection.
(c) Opinion of Company Counsel. You shall have received, at no cost to
--------------------------
you, on the Closing Date and on any later Additional Closing Date, as the case
may be, the opinion of corporate counsel to the Company dated the Closing Date
or such later Additional Closing Date, in the form attached hereto on Appendix B
----------
addressed to the Underwriter.
(d) Selling Stockholder Opinion. The Selling Stockholders shall have
---------------------------
furnished to you, the opinion of Troop, Meisinger, Steurber & Pasich, counsel
for the Selling Stockholders, dated the Closing Date or such later Additional
Closing Date, in the form attached hereto on Appendix C, addressed to the
----------
Underwriter.
(e) Opinion of Underwriters' Counsel. You shall have received from
--------------------------------
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP, Underwriters' Counsel, an opinion or
opinions, dated the Closing Date or on any later Additional Closing Date, as the
case may be, in form and substance reasonably satisfactory to you, with respect
to the sufficiency of all corporate proceedings undertaken by the Company and
other legal matters relating to this Agreement and the transactions contemplated
hereby as you may reasonably require, and the Company shall have furnished to
such counsel such documents as it may have reasonably requested for the purpose
of enabling it to pass upon such matters.
(f) Accountant Update Letter. You shall have received on the Closing Date
------------------------
and on any later Additional Closing Date, as the case may be, a letter from the
Accountants addressed to the Company and the Underwriters, dated the Closing
Date or such later Additional Closing Date, as the case may be, confirming that
it is an independent certified public accountant with respect to the Company
within the meaning of the Act and the Rules and Regulations thereunder and based
upon the procedures described in its letter delivered to you concurrently with
the execution of this Agreement (herein called the "Original Letter"), but
carried out to a date not more than three days prior to the Closing Date or any
such later Additional Closing Date, as the case may be, (i) confirming that the
statements and conclusions set forth in the Original Letter are accurate as of
the Closing Date or such later Additional Closing Date, as the case may be; and
(ii) setting forth any revisions and additions to the statements and conclusions
set forth in the Original Letter that are necessary to reflect any changes in
the facts described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change, or any
19
development involving a prospective change, in or affecting the business or
properties of the Company which, in your reasonable judgment, makes it
impracticable or inadvisable to proceed with the public offering of the Shares
as contemplated by the Prospectus. In addition, you shall have received from
the Accountants a letter addressed to the Company and made available to you for
the use of the Underwriters stating that its review of the Company's system of
internal accounting controls, to the extent it deemed necessary in establishing
the scope of its latest examination of the Company's financial statements, did
not disclose any weaknesses in internal controls that it considered to be
material weaknesses. All such letters shall be in a form reasonably
satisfactory to the Underwriters and its counsel.
(g) Certificate by Corporate Officer. You shall have received on the
--------------------------------
Closing Date and on any later Additional Closing Date, as the case may be, a
certificate of the President and the Chief Financial Officer of the Company,
dated the Closing Date or such later date, as applicable, to the effect that as
of such date (and you shall be satisfied that as of such date):
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or
any later Additional Closing Date, as the case may be; and the Company has
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied at or prior to the Closing Date or
any later Additional Closing Date, as the case may be.
(ii) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus has been
issued, and no proceedings for that purpose have been instituted or are
pending or, to the best of their knowledge, threatened under the Act.
(iii) They have carefully reviewed the Registration Statement
and the Prospectus; and, when the Registration Statement became effective
and at all times subsequent thereto up to the delivery of such certificate,
the Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required to be
included therein or necessary to make the statements therein not
misleading; and when the Registration Statement became effective, and at
all times subsequent thereto up to the delivery of such certificate, none
of the Registration Statement, the Prospectus or any amendment or
supplement thereto included any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus that has
not been so set forth.
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has not
been (A) any Material Adverse Effect, (B) any transaction which is material
to the Company, except transactions entered into in the ordinary course of
business, (C) any obligation, direct or contingent, incurred by the
Company, which is material to the Company, (D) any change in the
20
capital stock or outstanding indebtedness of the Company which is material
to the Company (other than as contemplated and disclosed in the Prospectus)
or (E) any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company.
(h) Other Certificates. The Company shall have furnished to you such
------------------
further certificates and documents as the Representative shall reasonably
request as to the accuracy of the representations and warranties of the Company,
as to the performance by the Company of its obligations hereunder and as to the
other conditions concurrent and precedent to the obligations of the Underwriters
hereunder.
(i) Selling Stockholder Certificates. Each Selling Stockholder shall
--------------------------------
have furnished to the Underwriters a certificate, signed by such Selling
Stockholder, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement, the Prospectus,
any supplement to the Prospectus and this Agreement and that the representations
and warranties of such Selling Stockholder in this Agreement are true and
correct in all material respects on and as of the Closing Date to the same
effect as if made on the Closing Date.
(j) NASDAQ National Market. The Shares shall have been approved for
----------------------
designation upon notice of issuance on the Nasdaq National Market.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
In case any of the conditions specified in this Section 8 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses,
including without limitation the fees and expenses of counsel to the
Underwriters, incident to the performance of the obligations of the Company
under this Agreement, and (ii) if this Agreement is terminated by you because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by the Underwriters, the
Company will reimburse the Underwriters upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the transactions contemplated
hereby.
9. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND SELLING STOCKHOLDERS.
The obligation of the Company and Selling Stockholders to deliver the Shares
shall be subject to the conditions that (a) the Registration Statement shall
have become effective and (b) no stop order
21
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 9 shall not
be fulfilled, this Agreement may be terminated by the Company by giving notice
to you. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that in the event of any such termination the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by Company and Selling Stockholders. The Company
---------------------------------------------------
and the Selling Stockholders, jointly and severally agree to indemnify and hold
harmless each Underwriter and each person (including each managing director,
director, partner, officer, employee or agent of any Underwriter or such person)
who controls any Underwriter within the meaning of Section 15 of the Act from
and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Act, the Exchange Act, or the common law or otherwise, and the Company
agrees to reimburse each such Underwriter and controlling person for any legal
or other out-of-pocket expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any 462(b)
registration statement) or any post-effective amendment thereto (including any
462(b) registration statement), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (iii) any of the matters which were the subject of the
Letter of Intent dated March 7, 1997 between the Company and the Representative;
provided, however, that (1) the indemnity agreements of the Company contained in
this paragraph (a) shall not apply to any such losses, claims, damages,
liabilities or expenses if such statement or omission is contained in the
section of the Prospectus entitled "Underwriting" (except with respect to the
____ paragraph thereof) or the last paragraph of text on the cover page of the
Prospectus, (2) the indemnity agreement contained in this paragraph (a) with
respect to any Preliminary Prospectus shall not inure to the benefit of the
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Shares which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
(excluding
22
any documents incorporated therein by reference) and the untrue statement or
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented)
unless the failure is the result of noncompliance by the Company with paragraph
(a) of Section 6 hereof. The indemnity agreement of the Company contained in
this paragraph (a) and the representations and warranties of the Company
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of any payment for the Shares.
(b) Selling Stockholders Indemnification. Each Selling Stockholder,
------------------------------------
severally and not jointly, agrees to indemnify and hold harmless the Company,
the Underwriters and each person (including each managing director, director,
partner, officer, employee or agent of the Company or any Underwriter or such
person) who controls the Company or any Underwriter within the meaning of
Section 15 of the Act, from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Act, the Exchange Act, or the common law or
otherwise and to reimburse each of them for any legal or other expenses
including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that in the cases of clauses (i) and (ii) above,
such statement or omission directly relates to information in the Section of
the Prospectus entitled "Selling Stockholders" or [include any other pertinent
sections or paragraphs regarding the Selling Stockholders]. The indemnity
agreement of the Selling Stockholders contained in this paragraph (b) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Shares.
(c) Underwriter Indemnification. Each Underwriter severally agrees to
---------------------------
indemnify and hold harmless the Company, each Selling Stockholder, each other
Underwriter and each person (including each officer, director or employee
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Act, from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Act, the Exchange Act, or the common
law or otherwise and to reimburse each of them for any legal or other expenses
including, except as
23
otherwise hereinafter provided, reasonable fees and disbursements of counsel
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any 462(b) registration statement) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that in the cases of clauses (i) and (ii) above, such statement or omission
directly relates to the Section of the Prospectus entitled "Underwriting"
(except for the [________] paragraph thereof) or the last paragraph on the cover
page of the Prospectus. The indemnity agreement of each Underwriter contained
in this paragraph (c) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Shares.
(d) Notification. Each party indemnified under the provision of
------------
paragraphs (a), (b) and (c) of this Section 10 agrees that, upon the service of
a summons or other initial legal process upon it in any action or suit
instituted against it or upon its receipt of written notification of the
commencement of any investigation or inquiry of, or proceeding against it, in
respect of which indemnity may be sought on account of any indemnity agreement
contained in such paragraphs, it will promptly give written notice (a "Notice")
of such service or notification to the party or parties from whom
indemnification may be sought hereunder. No indemnification provided for in
such paragraphs shall be available to any party who shall fail so to give the
Notice if the party to whom such Notice was not given was unaware of the action,
suit, investigation, inquiry or proceeding to which the Notice would have
related and was prejudiced by the failure to give the Notice. Any indemnifying
party shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense of
such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the indemnifying party or parties,
by counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that (i) if
the indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the
24
defense to the extent reasonably determined by such counsel to be necessary to
protect the interests of the indemnified party or parties and (ii) in any event,
the indemnified party or parties shall be entitled, at its or their own expense
to have counsel chosen by such indemnified party or parties participate in, but
not conduct, the defense. It is understood that the indemnifying parties shall
not, in respect of the legal defenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for (a) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act, and (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (d) of this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized to be
incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding. The
indemnifying party or parties shall not be liable for any settlement of any
proceeding effected without its or their written consent, provided such consent
has not been unreasonably withheld.
(e) Contribution. If the indemnification provided for in this Section
------------
10 is unavailable or insufficient to hold harmless an indemnified party under
paragraph (a), (b) or (c) of this Section 10, 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 the losses, claims,
damages or liabilities referred to in paragraph (a), (b) or (c) of this Section
10: (i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party 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 each indemnifying
party in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, or actions in respect thereof, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other, shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares received
by the Company and the Selling Stockholders and the total underwriting discount
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the Shares. Relative
fault shall be determined by reference to, among other things, whether the
25
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) 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 in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparation to defend or defense against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter, No person guilty of fraudulent misrepresentation (within the
meaning of Section 11 (f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 10).
(f) Limits on Liability. The liability of each Selling Stockholder
-------------------
under such Selling Stockholder's representations and warranties contained in
Section 2(w) hereof and this Section 10(b) shall be limited to an amount equal
to the initial public offering price of the Selling Stockholder Shares sold by
such Selling Stockholder to the Underwriters. The liability of each Underwriter
hereunder shall be limited to an amount equal to the underwriting discount and
commission applicable to the Shares purchased by each such Underwriter from the
Company and the Selling Stockholders.
(g) Settlement. The Company will not, without the prior written
----------
consent of the Representative, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not
Representative or any other Underwriter or any person who controls such
Representative or Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Representative and Underwriters and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
26
(h) Representation by Counsel. The parties to this Agreement hereby
-------------------------
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof, including
without limitation the provisions of this Section 10 and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 10 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Act and the Exchange Act.
11. TERMINATION. This Agreement may be terminated by you at any time on
or prior to the Closing Date or on or prior to any later Additional Closing
Date, as the case may be, by giving written notice to the Company (i) if the
Company shall have failed, refused or been unable, at or prior to the Closing
Date, or on or prior to any later Additional Closing Date, as the case may be,
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, or (ii) if trading on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq National Market shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market,
by such trading exchanges or by order of the Commission or any other
governmental authority having jurisdiction, or if a banking moratorium shall
have been declared by federal or New York authorities, or (iii) if the Company
shall have sustained a loss by strike, fire, flood, accident or other calamity
of such character as to have a Material Adverse Effect regardless of whether or
not such loss shall have been insured, or (iv) if there shall have been a
material adverse change in the general political or economic conditions or
financial markets in the United States as in the judgment of the Representative
makes it inadvisable or impracticable to proceed with the offering, sale and
delivery of the Shares, or (v) if there shall have occurred an outbreak, or
escalation of hostilities between the United States and any foreign power or of
any other insurrection or armed conflict involving the United States or other
national or international calamity, hostilities or crisis or the declaration by
the United States of a national emergency which, in the judgment of the
Representative, adversely affects the marketability of the Shares, or (vi) if
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall have occurred any Material Adverse
Effect or any development involving a prospective Material Adverse Effect,
whether or not arising in the ordinary course of business, or (vii) if any
foreign, federal or state statute, regulation, rule or order of any court or
other governmental authority shall have been enacted, published, decreed or
otherwise promulgated which in the judgment of the Representative materially and
adversely affects or will materially and adversely affect the business or
operations of the Company, or trading in the Common Stock shall have been
suspended, or (viii) there shall have occurred a material adverse decline in the
value of securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market or (ix) action shall be taken by any
foreign, federal, state or local government or agency in respect of its monetary
or fiscal affairs which, in the judgment of the Representative, has a material
adverse effect on the securities markets in the United States. If this
Agreement shall be terminated in accordance with this Section 11, there shall be
no liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination (i)
27
the Company agrees to indemnify and hold harmless the Underwriters from all
costs or expenses incident to the performance of the obligations of the Company
under this Agreement, including, without limitation, all costs and expenses
referred to in Section 7, 10 and 12 hereof and (ii) if such termination is
pursuant to clause (i) of this Section 11, the Company agrees to reimburse and
hold harmless the Underwriters from all costs or expenses incurred by the
Underwriters in connection with the proposed offering, including, without
limitation, Underwriters' Counsel fees and expenses and blue sky fees and
expenses.
If you elect to terminate this Agreement as provided in this Section 11,
the Company shall be notified promptly by you by telephone, telecopy or
telegram, confirmed by letter.
12. REIMBURSEMENT OF CERTAIN EXPENSES.
(a) Underwriter Expenses (General). In addition to its other
------------------------------
obligations under Section 10 of this Agreement, the Company agrees to reimburse
the Underwriters for all reasonable legal and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in paragraph (a) of
Section 10 of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 12 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of its ability to effect any refund, when and if
due.
(b) Underwriter Expenses (Special). In addition to its other
------------------------------
obligations under Section 10 of this Agreement, the Underwriters hereby agree to
reimburse the Company for all reasonable legal and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in paragraph (b) of
Section 10 of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 12 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the Company shall promptly refund it and (ii)
the Company shall provide to the Underwriters, upon request, reasonable
assurances of its ability to effect any refund, when and if due.
13. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants and agreements of the Underwriters, the
Company and the Selling Stockholders, including the indemnity and contribution
agreements contained in Section 10, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any indemnified person, or by or on behalf of the Company, the Selling
Stockholders, or any person or entity which is entitled to be
28
indemnified under Section 10, and shall survive termination of this Agreement or
the delivery of the Shares to the several Underwriters. In addition, the
provisions of Sections 6, 7, 10, 11, 12, 13, 14, 15, 16, 17 and 18 shall survive
termination of this Agreement, whether such termination, whether such
termination occurs before or after the Closing Date or any Additional Closing
Date.
14. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of the Company, the Selling Stockholders and the several
Underwriters and, with respect to the provisions of Section 10 hereof, the
several parties (in addition to the Company, Selling Stockholders and the
several Underwriters) indemnified under the provisions of said Section 10, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Shares from any of the several Underwriters, other than any
purchasers whom participate in the underwriting syndicate for the public
offering.
15. NOTICES. Except as otherwise provided herein, all notices, requests,
consents and other communications required or permitted under this Agreement
shall be in writing (including telex, telecopy and telegraphic communication)
and shall be (as elected by the person giving such notice) hand delivered by
messenger or courier service, telecopied, telecommunicated, or mailed (airmail
if international) by registered or certified mail (postage prepaid), return
receipt requested, addressed to:
If to Company:
Signature Eyewear, Inc.
000 X. Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx, Esq.
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
29
and if to the Underwriters:
Xxxxxxx X. Xxxxxxxxx
Senior Managing Director, Corporate Finance
Fechtor, Xxxxxxxx & Co., Inc.
0000 Xxxxxx Xxxx, Xxxxx 000-X
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxxx XX, Esq.
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxx Xxxx, Xxxxx 000-X
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
16. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or controlling
person thereof, or by or on behalf of the Company or the Company's respective
directors or officers, and (ii) delivery of and payment for the Shares under
this Agreement.
17. APPLICABLE LAW; ARBITRATION. This Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts.
Any dispute between the parties arising under or related to this letter shall be
resolved by binding arbitration conducted in Boston, Massachusetts in accordance
with the rules of commercial arbitration.
18. AUTHORITY OF REPRESENTATIVE. You will act as Representative of the
several Underwriters in all dealings with the Company under this Agreement, and
any action under or in respect of this Agreement taken by you as Representative
will be binding upon all of the Underwriters.
30
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement among the Company,
the Selling Stockholders and the Underwriters in accordance with its terms.
Very truly yours,
SIGNATURE EYEWEAR, INC.
By:
-----------------------------
Xxxxxxx Xxxxx
Chief Executive Officer
Selling Stockholders:
----------------------------------
Xxxxxxx X. Xxxxx
----------------------------------
Xxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx
31
Selling Stockholders Cont'd
-----------------------------------
Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
FECHTOR, XXXXXXXX & CO., INC.
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Managing Director,
Corporate Finance
XXX XXXXXX & COMPANY
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
Each acting on behalf of the several
Underwriters, including themselves,
named on Schedule B hereto.
32
SCHEDULE A
SELLING STOCKHOLDERS
Number of
Shares to be
Name Purchased
-------------------- -------------
Xxxxxxx X. Xxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
____________
200,000
33
SCHEDULE B
UNDERWRITERS
Number of Shares
Underwriter to be Purchased
----------- ---------------
Fechtor, Xxxxxxxx & Co., Inc.
Xxx Xxxxxx & Company
34
SCHEDULE C
Lock-Up Agreements
------------------
[List of all Directors, Officers and
Shareholders providing Lock-up Agreements]
Xxxxxxx X. Xxxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
35
APPENDIX A
Public Offering of Common Stock
-------------------------------
____________, 1997
Fechtor Xxxxxxxx & Co., Inc.
0000 Xxxxxx Xxxx, Xxxxx 000-X
Xxxx Xxxxx, XX 00000
Dear Sirs:
This letter agreement is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement") between Signature
Eyewear, Inc., a California corporation (the "Company"), certain Selling
Stockholders named therein and you as the Representative of the Underwriters
named therein, relating to an underwritten public offering of Common Stock,
$0.001 par value ("Common Stock"), of the Company.
In order to induce you to enter into the Underwriting Agreement, the
undersigned agrees not to offer, sell, pledge, hypothecate or contract to sell,
grant any option to purchase or otherwise dispose of, directly or indirectly
(collectively, "transfer"), any shares of Common Stock beneficially owned by the
undersigned or any securities convertible into, or exchangeable for, shares of
Common Stock for a period of one year following the day on which the
Underwriting Agreement is executed without your prior written consent, other
than: (i) shares of Common Stock transferred as bona fide gifts, and pursuant
to which the recipient agrees in writing to be bound by the terms of this letter
to the same extent as the undersigned; (ii) transfers in connection with a
merger of the Company or a tender offer to all of the stockholders of the
Company for control of the then outstanding shares of Common Stock; and (iii)
the transfer of up to 104,000 shares in the aggregate, if such transfer is after
180 days following the effective date of the registration statement.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), this letter
agreement shall likewise be terminated.
Yours very truly,
[Signature]
[Name and address]
00
XXXXXXXX X
Opinion of Corporate Counsel to the Company.
-------------------------------------------
[Note: Defined terms have the same meanings as ascribed to such
terms in the Underwriting Agreement.]
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP shall opine to the effect that:
(A) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of California;
(B) The Company has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect;
(C) The Company does not own or control, directly or indirectly, any
corporation, association or other entity;
(D) The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock, of which there
are outstanding no shares of Preferred Stock and [5,470,531] shares of Common
Stock (including the Company Firm Shares [plus the number of Overallotment
Shares issued on the date hereof]). The issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid and nonassessable, and have not been issued in violation of any
preemptive right, co-sale right, registration right, right of first refusal or
other similar right known to such counsel;
(E) The Shares to be issued by the Company pursuant to this Agreement
have been duly authorized and will be, upon issuance and delivery against
payment therefor in accordance with the terms hereof, validly issued, fully paid
and nonassessable, and, to the knowledge of such counsel, the stockholders of
the Company do not have any preemptive right, co-sale right, registration right,
right of first refusal or other similar right, which rights have not previously
been waived or complied with, in connection with the purchase or sale of any of
the Shares;
37
(F) The terms and provisions of the capital stock of the Company
conform to the description thereof contained in the Registration Statement and
the Prospectus, and the information in the Prospectus under the caption
"Description of Capital Stock", to the extent that it constitutes matters of law
or legal conclusions, has been reviewed by such counsel and is correct, and the
form of certificate evidencing the Common Stock complies with the applicable
provisions of California law;
(G) The statements in the Registration Statement and the Prospectus
summarizing statutes, rules and regulations, including the California
Corporation Law and the description of the certificate of incorporation and By-
laws are accurate and fairly and correctly present the information required to
be presented by the Act or the Rules and Regulations in all material respects;
and such counsel does not know of any statutes, rules or regulations required to
be described in the Registration Statement or the Prospectus that are not
described or referred to therein as required;
(H) The Company has full corporate power and authority to enter into
the Underwriting Agreement and to issue, sell and deliver to the Underwriters
the Company Firm Shares or the Overallotment Shares, as the case may be, to be
issued and sold by it thereunder;
(I) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms, except that rights to
indemnity and contribution hereunder may be limited by applicable laws or
equitable principles and except as enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting creditors' rights generally or by general equitable principles.
(J) The Registration Statement has become effective under the Act and,
to such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the Prospectus has
been issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Act; any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules and Regulations has
been made in the manner and within the time period required by such Rule 424(b);
(K) The Registration Statement, all Preliminary Prospectuses, the
Prospectus, and each amendment or supplement thereto (other than the financial
statements, financial data and supporting schedules included therein, as to
which no opinion is expressed) comply as to form in all material respects with
the requirements of the Act and the applicable Rules and Regulations and to such
counsel's knowledge, there are no agreements, contracts, leases or documents of
a character required to be described in, or filed as an exhibit to, the
Registration Statement which are not described or filed as required by the Act
and the applicable Rules and Regulations;
(L) The statements under the captions "Shares Eligible for Future
Sale," and "Description of Capital Stock" in the Prospectus, insofar as such
statements constitute a summary of documents referred to therein or matters of
law, are accurate summaries and fairly and
38
correctly present, in all material respects, the information called for with
respect to such documents and matters; provided that such counsel shall be
entitled to rely on representations of the Company with respect to certain
factual matters contained in such statements, and provided further that such
counsel shall state that nothing has come to the attention of such counsel which
leads them to believe that such representations are not true and correct in all
material respects;
(M) The execution, delivery and performance of this Agreement and the
consummation of the transactions therein contemplated do not and will not (a)
conflict with or result in a breach of any of the terms or provisions of or,
constitute a default under, the certificate of incorporation or By-laws of the
Company, any agreement or document filed as an exhibit to the Registration
Statement, or any statute, rule or regulation applicable to the Company (except
that no opinion need to be expressed with respect to compliance with federal and
state securities laws) or (b) to the knowledge of such counsel, result in the
creation or imposition of any lien or encumbrance upon any of the assets of the
Company pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default or
result in the acceleration of any obligation under, any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement, other evidence
of indebtedness, lease, contract or other agreement or instrument to which the
Company is a party or by which its property is bound or (c) to the knowledge of
such counsel, conflict with or result in a violation or breach of, or constitute
a default under, any applicable license, authorization, approval, permit,
judgment, franchise, order, writ or decree of any court or governmental agency
or body;
(N) The Company is not in violation of its certificate of
incorporation or By-laws, and to the best of such counsel's knowledge, the
Company is not in breach of or default with respect to any provision of any
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument by which it or any of its properties may be bound or
affected, except where such default would not have a Material Adverse Effect on
the Company and, to the best of such counsel's knowledge, the Company is in
compliance with all laws, rules, regulations, judgments, decrees, orders and
statutes of any court or jurisdiction to which it is subject, except where
noncompliance would not have a Material Adverse Effect on the Company;
(O) To such counsel's knowledge, there are no pending or threatened
actions, suits, claims, proceedings or investigations that, if successful, would
have a Material Adverse Effect or would limit, revoke, cancel, suspend, or cause
not to be renewed any existing license, certificate, registration, approval or
permit, known to such counsel, from any state, federal, or regulatory authority
that is material to the conduct of the business of the Company as presently
conducted, or that is of a character otherwise required to be disclosed in the
Registration Statement or the Prospectus under the Act or the applicable Rules
and Regulations;
(P) No transfer taxes are required to be paid in connection with the
sale or delivery to the Underwriters of the Company Firm Shares or the
Overallotment Shares;
39
(Q) The Company will not, upon consummation of the transactions
contemplated by this Agreement, be an "investment company, or a "promoter" or
"principal underwriter" for, a "registered investment company," as such terms
are defined in the Investment Company Act of 1940, as amended; and
(R) The Shares issued and sold by the Company have been duly
designated for quotation by the Nasdaq National Market.
In addition, such counsel shall include a statement to the effect that
such counsel has participated in conferences with officials and other
representatives of the Company, the Representative, Underwriters' Counsel and
the independent public accountants of the Company, at which conferences the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and although they have not verified the accuracy or completeness
of the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which caused them to believe
that, at the time the Registration Statement became effective the Registration
Statement (except as to financial statements, financial and statistical data and
supporting schedules contained therein, as to which no opinion is expressed)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or at the Closing Date or any later Additional Closing Date, as
the case may be, the Registration Statement or the Prospectus (except as
aforesaid) 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, in light of the circumstances under which they were made,
not misleading.
[Counsel rendering the foregoing may rely (i) as to questions of law
not involving the laws of the State of California or the United States upon
opinions of local counsel, and (ii) representations or certificates of officers
of the Company and of governmental officials, as the case may be, in which case
its opinion is to state that it is so doing and that it has no actual knowledge
of any material misstatement or inaccuracy in such opinions, representations or
certificates, and that they believe that they and the Underwriters are justified
in relying on such opinions or certificates. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you and to
Underwriters' Counsel.]
40
APPENDIX C
Opinion of Counsel to the Selling Stockholders.
----------------------------------------------
[Note: Defined terms have the same meanings as ascribed to such
terms in the Underwriting Agreement.]
[Further Note: If desired, this opinion may be combined with
the opinion set forth in Appendix B]
Troop, Meisinger, Steurber & Pasich shall opine to the effect that:
(A) The Underwriting Agreement has been duly executed and delivered by
each Selling Stockholder and each Selling Stockholder, subject to paragraph (B)
immediately below, has full legal right and authority to sell, transfer and
deliver in the manner provided in the Underwriting Agreement the Selling
Stockholder Shares being sold by such Selling Stockholder hereunder, subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting or relating to the enforcement of creditors' rights
generally and general equitable principles.
(B) Upon delivery on behalf of each of the Selling Stockholders to the
Underwrites of certificates for the Selling Stockholder Shares being sold
hereunder by such Selling Stockholder against payment therefor as provided
herein, the Underwriters will acquire all the rights of such Selling Stockholder
to such Selling Stockholder Shares and will acquire such Selling Stockholder
Shares free and clear of any "adverse claim" (as such term is used in Section
____ of the Uniform Commercial Code as in effect in the State of California),
assuming the Underwriters acquire such Selling Stockholder Shares in good faith
and without notice of any such "adverse claim".
(C) No consent, approval, authorization or order of any federal or
state court or governmental agency or body is required for the consummation by
any Selling Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required under the Blue
Sky of any jurisdiction in connection with the purchase and distribution of the
Selling Stockholder Shares by the Underwriters and such other approvals
(specified in such opinion) as have been obtained.
(D) Neither the sale of the Selling Stockholder Shares being sold by
any Selling Stockholder nor the consummation of any other of the transactions
herein contemplated by any Selling Stockholder or the fulfillment of the terms
hereof by any Selling Stockholder will conflict with, result in a breach or
violation of, or constitute a default under any law or the terms of any
indenture or other agreement or instrument actually known to such counsel and to
which any Selling Stockholder is a party or bound, or any judgment, order or
decree actually known to such counsel to be applicable to any Selling
Stockholder of any federal State court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over any Selling
Stockholder.
41
