1
2,200,000 SHARES
1-800 CONTACTS, INC.
(A DELAWARE CORPORATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
------------------------------, 1998
XxXXXXXX & COMPANY SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
as Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
0000 XxXxxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
Each of 1-800-CONTACTS, INC., a Delaware corporation (the "Company"), and
Xx. Xxxxxxxx X. Xxxx (the "Selling Stockholder") confirms its agreement with
XxXxxxxx & Company Securities, Inc. ("McDonald"), Xxxxxx Xxxxxx & Company, Inc.
("Xxxxxx") and each of the other underwriters named in Schedule A hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom McDonald and
Xxxxxx are acting as representatives (in such capacity, McDonald and Xxxxxx
shall hereinafter be referred to as the "Representatives"), with respect to the
sale by the Company and the Selling Stockholder of an aggregate 2,200,000 shares
of common stock, par value $.01 per share (the "Common Stock"), of the Company,
and the purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock set forth in said Schedule A,
aggregating 2,200,000 shares of Common Stock, and with respect to the grant by
the Company of the option described in Section 2(b) hereof to purchase all or
any part of 330,000 shares of Common Stock, par value $.01 per share, solely to
cover over-allotments, in each case except as may otherwise be provided in the
Pricing Agreement, as hereinafter defined. As used herein, where appropriate,
the term "Company" shall also refer to predecessors of the Company as described
in the Registration Statement. Of the 2,200,000 shares of Common Stock,
1,925,000 are being sold by the Company and 275,000 are being sold by the
Selling Stockholder. The aforesaid 2,200,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the 330,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "Option Securities") are collectively hereinafter called the
"Securities."
Prior to the purchase and public offering of the Securities by the
Underwriters, the Representatives, acting on behalf of the several Underwriters,
shall enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement may take the form of an exchange of
any standard form of written telecommunication between the Company, the Selling
Stockholder and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Securities
will be governed by this Underwriting Agreement (this "Agreement"), as
supplemented by the Pricing Agreement. From and after the date of the execution
and delivery of the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") registration statement on Form S-1 (No. 333-41055) and a related
preliminary prospectus for the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), and has filed such
amendments thereto, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. Such registration statement (as amended,
if applicable) and the prospectus constituting a part thereof (including the
information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the
rules and regulations of the Commission under
2
the 1933 Act (the "1933 Act Regulations")), as from time to time amended or
supplemented pursuant to the 1933 Act or otherwise, are hereinafter referred to
as the "Registration Statement" and the "Prospectus," respectively, except that
if any revised prospectus shall be provided to the Underwriters by the Company
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised Prospectus from and after the time
it is first provided to the Underwriters for such use. Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is
hereinafter referred to as the "462(b) Registration Statement," and after such
filing the term Registration Statement shall include the 462(b) Registration
Statement.
Each of the Company and the Selling Stockholder understands that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after the Registration Statement and any 462(b)
Registration Statement become effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties of the Company and Selling
Stockholder. (a) The Company and the Selling Stockholder represent and warrant
to each Underwriter as of the date hereof and as of the date of the Pricing
Agreement (such latter date being hereinafter referred to as the "Representation
Date") as follows:
(i) At the time the Registration Statement and any 462(b) Registration
Statement become effective and at the Representation Date, the Registration
Statement and the 462(b) Registration Statement will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations, and the Registration Statement and the 462(b) Registration
Statement will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Underwriters for such use) and at the Closing Time referred to in Section
2, will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement, the 462(b) Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through the Representatives expressly
for use in the Registration Statement or Prospectus.
(ii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iii) The financial statements included in the Registration Statement
and the Prospectus present fairly the financial position of the Company as
of the dates indicated and the results of their operations for the periods
specified; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the
supporting schedules in the Registration Statement present fairly the
information required to be stated therein.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business, (B) there have been no transactions entered into by the Company,
other than those in the ordinary course of business, which are material
with respect to the Company, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
2
3
(v) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Delaware with corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus; and, except as otherwise set
forth in the Registration Statement and the Prospectus, the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company. The Company has no
subsidiaries and neither owns nor has any obligation to acquire any debt or
equity securities of any corporation, partnership, limited liability
company, joint venture or other business enterprise.
(vi) The Company has the authorized, issued and outstanding
capitalization set forth in the Prospectus; the shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; the shares of Common
Stock to be issued and 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 in the manner contemplated by this
Agreement, will be validly issued and fully paid and non-assessable; the
issuance of shares of Common Stock contemplated by this Agreement is not
subject to preemptive or other similar rights; the Common Stock conforms in
all material respects to all statements relating thereto contained in the
Prospectus; the certificates for the Securities are in due and proper form;
and the holders of the Securities will not be subject to personal liability
by reason of being such holders.
(vii) This Agreement has been duly authorized, executed and delivered
by the Company.
(xii) The Company is not in violation of its respective charter or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, loan
agreement or note or in any material contract, lease or other instrument to
which the Company is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company; the consummation of
the transactions contemplated herein and by the Pricing Agreement has been
duly authorized by the Company by all necessary corporate action and the
issuance, sale and delivery of the shares of Common Stock to be issued and
sold by the Company and the execution, delivery and performance of this
Agreement by the Company will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company is
subject, nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any applicable law, administrative
regulation or administrative or court decree.
(ix) No labor dispute with the employees of the Company or, to the
knowledge of the Company, is imminent; and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
principal suppliers or distributors which might be expected to result in
any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of the Company, threatened, against or affecting the Company,
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which, considered singly or in the aggregate, may
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company considered as one enterprise, or which may materially and
adversely affect the properties or assets thereof or which may materially
or adversely affect the consummation of this Agreement or the Pricing
Agreement; all pending legal or governmental proceedings to which the
Company is a party or of which any of their respective property or assets
is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material; and there are no
3
4
contracts or documents of the Company which are required to be filed as
exhibits to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed.
(xi) The Company owns or possesses, or can acquire on reasonable
terms, the patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "intellectual
property") presently employed by them in connection with the business now
operated by them, except where the failure to own or possess or have the
ability to acquire any such intellectual property would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company considered
as one enterprise, and the Company has not received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company.
(xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the sale
of the Securities hereunder, except such as may be required under the 1933
Act or the 1933 Act Regulations, which qualification has been obtained, or
state and foreign securities laws.
(xiii) Except as otherwise set forth in the Registration Statement and
the Prospectus, the Company possesses such material certificates,
authorizations or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, and, except as set forth in the Registration Statement
and the Prospectus, the Company has not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company.
(xiv) The Company and its corporate predecessor have each qualified as
an "S corporation" since its incorporation and continue to qualify through
the date hereof. All United States federal income tax returns of the
Company required by law to be filed have been filed and all taxes shown by
the said returns or otherwise assessed which are due and payable have been
paid, except assessments against which appeals have been or will be
promptly taken. The United States federal income tax returns of the Company
through the fiscal year ended December 31, 1996 have been filed and no
assessment in connection therewith has been made against the Company, and
the United States federal income tax return for the fiscal year ended
December 31, 1997 will be filed on or before March 16, 1998 (the date on
which such return is required by law to be filed) or pursuant to any
extension or extensions that may be granted thereon. The Company has filed
all other tax returns which are required to have been filed by it pursuant
to applicable state, local or other law except (i) with respect to such
taxes as are being contested in good faith and (ii) insofar as the failure
to file such returns individually and in the aggregate would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company, and have
paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Company, if any, as are being contested in good faith and
as to which adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company in respect of any income and
corporation tax liability for any years not finally determined are adequate
to meet any assessments or re-assessments for additional income tax for any
years not finally determined, except to the extent of any inadequacy which
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects of
the Company considered as one enterprise.
(xv) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization,
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (C) access to assets
is permitted only in accordance with management's general or specific
authorization,
4
5
and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xvi) There are no holders of securities (debt or equity) of the
Company, or holders of rights, options or warrants to obtain securities of
the Company, who, by reason of the filing of the Registration Statement
under the 1933 Act, have the right to request the Company to register under
the 1933 Act securities held by them; and (b) the Company complied in all
material respects with all of the terms of any of their outstanding
agreements relating to the rights of any holder of securities to have
securities registered under the Registration Statement. Except as described
in the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue, any shares of Common Stock or any security
convertible into or exchangeable or exercisable for any shares of Common
Stock.
(xvii) The Company has good title to all properties owned by them, in
each case free and clear of all liens, encumbrances and defects except (A)
as do not materially interfere with the use made and proposed to be made of
such properties, (B) as referred to in the Registration Statement
(including the notes to the financial statements included therein) or (C)
as could not reasonably be expected to materially and adversely affect the
condition, financial or otherwise, or the earnings or business affairs of
the Company.
(xviii) Except as disclosed in the Registration Statement, the Company
is in material compliance with all applicable existing federal, state and
local laws and regulations (including any laws or regulations relating to
Hazardous Material ("Environmental Laws")), except where such
noncompliance, singly or in the aggregate, would not have a material and
adverse effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company. The term "Hazardous Material" means (A)
any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (B) any
"hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (C) any petroleum or petroleum product, (D) any polychlorinated
biphenyl and (E) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, waste or substance regulated under or within the
meaning of any other Environmental Law.
(xix) There is no alleged liability, or to the best knowledge and
information of the Company, potential liability (including, without
limitation, alleged or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) of the Company arising out of,
based on or resulting from (A) the presence or release into the environment
of any Hazardous Material at any location at which the Company has
previously conducted or is currently conducting any business (whether or
not owned by the Company) or has previously owned or currently owns any
property, or (B) any violation or alleged violation of any Environmental
Law, (X) which alleged or potential liability is required to be disclosed
in the Registration Statement, other than as disclosed therein, or (Y)
which alleged or potential liability, singly or in the aggregate, would
have a material and adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company.
(xx) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(xxi) The Company maintains reasonably adequate insurance with respect
to its properties and business against loss or damage of the kinds
customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such
types and in such amounts as are customarily carried under similar
circumstances by such other corporations.
(xxii) The shares of Common Stock to be issued and sold by the Company
pursuant to the Agreement will at the Closing Time be duly authorized for
listing on the Nasdaq National Market System ("Nasdaq"), subject only to
official notice of issuance.
(xxiii) The Company has furnished the Representatives letters from
each of the executive officers and directors of the Company pursuant to
which such persons have agreed during a period of 120 days from the date
hereof that, without the prior written consent of McDonald, such persons
will not sell, offer to sell, contract to sell, or otherwise dispose of,
directly or indirectly, any shares of Common Stock, any other
5
6
equity security of the Company, or any security convertible into or
exchangeable or exercisable for shares of Common Stock, beneficially owned
by such person or with respect to which such person has the power of
disposition, other than as bona fide gifts.
(b) The Selling Stockholder represents, warrants and agrees that:
(i) The Selling Stockholder has, and immediately prior to the Closing
Time (as defined in Section 2 hereof) the Selling Stockholder will, have
good and valid title to the shares of Stock to be sold by the Selling
Stockholder hereunder on such date, free and clear of all liens,
encumbrances, equities or claims; and upon delivery of such shares and
payment therefor pursuant hereto, good and valid title to such shares, free
and clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters.
(ii) The Selling Stockholder has placed in custody under a custody
agreement (the "Custody Agreement") with , as custodian (the
"Custodian"), for delivery under this Agreement, certificates in negotiable
form (with signature guaranteed by a commercial bank or trust company
having an office or correspondent in the United States or a member firm of
the New York or American Stock Exchanges) representing the shares of Stock
to be sold by the Selling Stockholder hereunder.
(iii) The Selling Stockholder has duly and irrevocably executed and
delivered a power of attorney (the "Power of Attorney") appointing the
Custodian and one or more other persons, as attorneys-in-fact, with full
power of substitution, and with full authority (exercisable by any one or
more of them) to execute and deliver this Agreement and to take such other
action as may be necessary or desirable to carry out the provisions hereof
on behalf of the Selling Stockholder.
(iv) The Selling Stockholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody Agreement;
the execution, delivery and performance of this Agreement, the Power of
Attorney and the Custody Agreement by the Selling Stockholder and the
consummation by the Selling Stockholder of the transactions contemplated
hereby and thereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling Stockholder is a party or by
which the Selling Stockholder is bound or to which any of the property or
assets of the Selling Stockholder is subject, nor will such actions result
in any violation of the provisions of the organizational documents or
documents creating a partnership or a trust of the Selling Stockholder or
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Selling Stockholder or the
property or assets of the Selling Stockholder; and, except for the
registration of the Stock under the 1933 Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Securities Exchange Act of 1934, as amended (the "1934 Act") and
applicable state securities laws in connection with the purchase and
distribution of the Common Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Power of Attorney or the Custody
Agreement by the Selling Stockholder and the consummation by the Selling
Stockholder of the transactions contemplated hereby and thereby.
(v) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the shares of the Common Stock.
(vi) The Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in this Section are
not true and correct, is familiar with the Registration Statement and the
Prospectus and has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement, as of the
effective date, or the Prospectus, as of the applicable filing date, which
has adversely affected or may adversely affect the business of the Company
and is not prompted to sell shares of Common Stock by any information
concerning the Company which is not set forth in the Registration Statement
and the Prospectus.
6
7
(c) Any certificate signed by an officer of the Company or by the Selling
Stockholder, as the case may be, and delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company or the Selling Stockholder, as the case may be, to each Underwriter
as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing. (a) On the basis of
the representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell 1,925,000
shares of Common Stock and the Selling Stockholder agrees to sell 275,000 shares
of Common Stock to each Underwriter, and each Underwriter, severally and not
jointly, agrees to purchase from the Company and the Selling Stockholder, at the
price agreed upon by the Representatives, the Company and the Selling
Stockholder as set forth in the Pricing Agreement, the number of shares of
Common Stock set forth in Schedule A opposite the name of such Underwriter
(except as otherwise provided in the Pricing Agreement). Each Underwriter shall
be obligated to purchase from the Company and from the Selling Stockholder that
number of shares of the Common Stock which represents the same proportion of the
number of shares of the Common Stock to be sold by the Company and by the
Selling Stockholder as the number of shares of the Common Stock set forth
opposite the name of such Underwriter in Schedule A represents of the total
number of shares of the Common Stock to be purchased by all of the Underwriters
pursuant to this Agreement. The respective purchase obligations of the
Underwriters with respect to the Common Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
(i) If the Company has elected not to rely upon Rule 430A under the
1933 Act Regulations, the initial public offering price of the Securities
and the purchase price of the Securities to be paid by the several
Underwriters shall be agreed upon and set forth in the Pricing Agreement,
dated the date hereof, and an amendment to the Registration Statement and
the Prospectus will be filed before the Registration Statement becomes
effective.
(ii) If the Company has elected to rely upon Rule 430A under the 1933
Act Regulations, the initial public offering price of the Securities and
the purchase price of the Securities to be paid by the several Underwriters
shall be determined by agreement among the Representatives, the Company and
the Selling Stockholder and set forth in the Pricing Agreement. In the
event that such prices have not been agreed upon and the Pricing Agreement
has not been executed and delivered by all parties thereto by the close of
business on the fourth business day following the date of this Agreement,
this Agreement shall terminate forthwith, without liability of any party to
any other party, unless otherwise agreed to by the Company, the Selling
Stockholder and the Representatives.
(b) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not jointly, to
purchase up to 330,000 shares of Common Stock at the price per share set forth
in the Pricing Agreement. The option hereby granted will expire 30 days after
(i) the date the Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the 1933 Act Regulations or (ii) the date
of the Pricing Agreement, if the Company has elected to rely on Rule 430A under
the 1933 Act Regulations, and may be exercised in whole or in part from time to
time (but not more than twice) only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Representatives to the Company setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of payment (a "Date of Delivery")
shall be determined by the Representatives, but shall not be later than seven
full Business Days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined, unless otherwise agreed by the
Representatives and the Company. If the option is exercised as to all or any
portion of the Option Securities, each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total number of Option
Securities then being purchased which the number of Initial Securities set forth
in Schedule A opposite the name of such Underwriters bears to the total number
of Initial Securities (except as otherwise provided in the Pricing Agreement),
subject in each case to such adjustments as the Representatives in their
discretion shall make to eliminate any sales or purchases of fractional shares.
7
8
(c) Payment of the purchase price for, and delivery of certificates for,
the Initial Securities shall be made at the offices of XxXxxxxx & Company
Securities, Inc., XxXxxxxx Investment Center, Cleveland, Ohio or at such other
place as shall be agreed upon by the Representatives, the Company and the
Selling Stockholder, at 10:00 A.M. on the third business day (unless postponed
in accordance with the provisions of Section 10) following the date the
Registration Statement becomes effective (or, if the Company has elected to rely
upon Rule 430A, the third business day after execution of the Pricing
Agreement), or such other time not later than ten business days after such date
as shall be agreed upon by the Representatives, the Company and the Selling
Stockholder (such time and date of payment and delivery being herein called the
"Closing Time"); provided, however, that if the Registration Statement becomes
effective later than 4:30 p.m., Eastern Time, on any date, then, subject to the
foregoing, the Closing Time shall be the fourth business day thereafter (or, if
the Company has elected to rely upon Rule 430A, and the Pricing Agreement is not
executed until after 4:30 p.m., Eastern Time, on any date, the fourth business
day after execution of the Pricing Agreement). In addition, in the event that
any or all of the Option Securities are to be purchased by the Underwriters,
payment of the purchase price for, and delivery of certificates for, such Option
Securities shall be made at the above-mentioned offices of XxXxxxxx & Company
Securities, Inc., or at such other place as shall be agreed upon by the
Representatives and the Company on each Date of Delivery as specified in the
notice from the Representatives to the Company. Payment shall be made to the
Company and the Selling Stockholder by wire transfer of immediately available
funds to accounts designated by the Company and the Selling Stockholder, against
delivery of the Securities to the Underwriters. The certificates representing
Securities shall be in such denominations and registered in such names as the
Representatives may request in writing at least two business days before the
Closing Time. It is understood that each Underwriter has authorized the
Representatives, for their account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Securities which it has agreed to
purchase. The Representatives may (but shall not be obligated to) make payment
of the purchase price for the Securities to be purchased by any Underwriter
whose check has not been received by the Closing Time, but such payment shall
not relieve such Underwriter from its obligations hereunder. The Securities will
be made available for examination and packaging by the Underwriters not later
than 10:00 A.M. on the last business day prior to the Closing Time at such place
as the Underwriters may designate in Cleveland, Ohio.
SECTION 3. Covenants of the Company and the Selling Stockholder. The
Company and the Selling Stockholder, as the case may be, covenant with each
Underwriter as follows:
(a) The Company will notify the Underwriters immediately, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statement, the
462(b) Registration Statement and any amendments thereto (including any
post-effective amendments), (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the suspension of the
qualification of the Securities for offering or sale, in any jurisdiction, or
the threatening or initiation of any proceeding for that purpose. The Company
will make every reasonable effort to prevent the issuance of any stop order or
any order preventing or suspending the use of any preliminary prospectus or
suspending such qualification and, if any stop order or any order preventing or
suspending the use of any preliminary prospectus or suspending such
qualification is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) The Company will give the Underwriters notice of its intention to file
or prepare any amendment to the Registration Statement (including any
post-effective amendment), the 462(b) Registration Statement or any amendment or
supplement to the Prospectus (including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Securities which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Underwriters with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such amendment or supplement or use any
such prospectus to which counsel for the Underwriters and counsel for the
Company mutually agree shall not be filed or used.
8
9
(c) The Company will deliver to the Underwriters one signed copy of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) and
will also deliver to the Underwriters conformed copies of the Registration
Statement as originally filed and of each amendment thereto (without exhibits).
(d) The Company will furnish to each Underwriter, from time to time during
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934
Act Regulations.
(e) If any event shall occur as a result of which counsel for the Company
and counsel for the Underwriters mutually agree that it is necessary to amend or
supplement the Prospectus in order to make the Prospectus not misleading in
light of the circumstances existing at the time it is delivered to a purchaser
or if for any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the 1933 Act, the 1933 Act Regulations, the
1934 Act or the rules and regulations of the Commission under the 1934 Act (the
"1934 Act Regulations"), the Company will forthwith amend or supplement the
Prospectus (in form and substance mutually satisfactory to counsel for the
Underwriters and counsel for the Company and in compliance with the 1933 Act and
the 1933 Act Regulations) so that, as so amended or supplemented, the Prospectus
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading and will comply with the 1933 Act, the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations, and the Company will furnish to the
Underwriters a reasonable number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the Underwriters, to
qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Representatives may designate; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which it is
not so qualified. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect, for a
period of not less than one year from the effective date of the Registration
Statement.
(g) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration Statement.
(h) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
1933 Act Regulations, then immediately following the execution of the Pricing
Agreement, the Company will prepare, and file or transmit the filing with the
Commission in accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or, if required by such Rule 430A,
a post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.)
(i) If the Company elects to rely upon Rule 462(b), the Company shall both
file a 462(b) Registration Statement with the Commission in compliance with Rule
462(b) of the 1933 Act Regulations and pay the applicable fees in accordance
with Rule 111 of the 1933 Act Regulations by the time confirmations are sent or
given, as specified by Rule 462(b)(2).
(j) The Company, during the period when the Prospectus is required to be
delivered under the 1933 Act, will file all documents required to be filed with
the Commission pursuant to Sections 13, 14 or 15 of the 1934 Act within the time
periods required by the 1934 Act and the 1934 Act Regulations.
(k) The Company will effect the listing of the Common Stock issued and sold
pursuant to this Agreement on the Nasdaq National Market System.
9
10
(l) During a period of 120 days from the date hereof, the Company and the
Selling Stockholder will not, without the prior written consent of McDonald,
sell, offer to sell, contract to sell, or otherwise dispose of, directly or
indirectly, any shares of Common Stock, any other equity security of the Company
or any security convertible into or exchangeable or exercisable for Common Stock
(except for shares of Common Stock issued pursuant to this Agreement and the
Pricing Agreement, the grant of options or the issuance of shares of Common
Stock upon the exercise of outstanding options under the Company's existing
stock option plans).
(m) The Company and the Selling Stockholder will each use all commercially
reasonable efforts to do and perform all things required or necessary to be done
and performed by it under this Agreement prior to the Closing Time and will
satisfy all conditions precedent to the delivery of the Securities.
(n) Prior to the Closing Time, the Company shall have reincorporated itself
from Utah to Delaware and made associated changes to the Company's charter and
by-laws in connection with such reincorporation.
(o) The Existing Stockholders (as defined in the Registration Statement)
and the Company shall enter into the Agreement for Distribution of Retained
Earnings and Tax Indemnification (also as defined therein).
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing and filing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment thereto, during
the period specified in Section 3(d) hereof (excluding any fees, costs or
expenses of counsel to the Underwriters), (ii) the printing of this Agreement
and the Pricing Agreement, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel and accountants, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey, which counsel fees shall not exceed $10,000,
(vi) the printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and each amendment thereto, of the preliminary
prospectuses, and of the Prospectus and any amendments or supplements thereto,
(vii) the printing and delivery to the Underwriters of the Blue Sky Survey,
(viii) the fees and expenses of the Company's transfer agent, (ix) the fee of
the National Association of Securities Dealers, Inc. and (x) the fees and
expenses incurred in connection with the listing of the Securities on Nasdaq.
If this Agreement is terminated by the Representatives in accordance with
the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse the
Underwriters for all of their out-of-pocket expenses relating to the
transactions contemplated hereby, including the reasonable fees and
disbursements of counsel for the Underwriters in an amount not to exceed
$100,000.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company and the Selling Stockholder herein contained, to
the performance by each of the Company and the Selling Stockholder of its
obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M. on the date hereof, or with the consent of the Representatives, at a
later time and date, not later, however, than 5:30 P.M. on the first business
day following the date hereof, or at such later time and date as may be approved
by the Underwriters; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission. If
the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, the
price of the Securities and any price related information previously omitted
from the effective Registration Statement pursuant to such Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b) of the
1933 Act Regulations within the prescribed time period, and prior to Closing
Time the Company shall have provided evidence satisfactory to McDonald of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the 1933 Act Regulations.
10
11
(b) At the Closing Time the Underwriters shall have received:
(i) An opinion, dated the Closing Time, of Xxxxxxxx & Xxxxx, counsel
for the Company and the Selling Stockholder, substantially in the form set
forth on Annex I attached hereto.
(ii) An opinion, dated the Closing Time, of Squire, Xxxxxxx & Xxxxxxx
L.L.P., counsel for the Underwriters, in form and substance reasonably
satisfactory to the Underwriters.
(iii) In giving their opinions required by subsections (b)(i) and
(ii), respectively, of this section, Xxxxxxxx & Xxxxx and Xxxxxx, Xxxxxxx &
Xxxxxxx L.L.P. shall each additionally state that although such counsel has
not undertaken to determine independently the accuracy, completeness and
fairness of the statements contained in the Registration Statement or in
the Prospectus and takes no responsibility therefor, such counsel has
participated in discussions and meetings with officers and other
representatives of the Company and discussions with the auditors for the
Company in connection with the preparation of the Registration Statement
and the Prospectus. Such counsel has not, however, undertaken to determine
independently and, therefore, does not assume any responsibility,
explicitly or implicitly, for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus.
Nothing has come to such counsel's attention that has caused such counsel
to believe that (A) the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or (B) the Prospectus, at
the Closing Time, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that in each case such counsel need not express any
opinion or belief with respect to the financial statements or other
financial data contained in the Registration Statement or the Prospectus.
(c) At the Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary course
of business, and the Underwriters shall have received a certificate of the
President of the Company and the chief financial or chief accounting officer of
the Company, dated as of the Closing Time, to the effect that (A) there has been
no such material adverse change, (B) the representations and warranties in
Section 1 are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (C) each of the Company and the
Selling Stockholder has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Time, and (D) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission.
(d) At the time of the execution of this Agreement, the Underwriters shall
have received from Xxxxxx Xxxxxxxx LLP, independent certified public
accountants, a letter dated such date, in form and substance previously approved
by the Representatives, with respect to the financial statements and certain
financial information contained or incorporated by reference in the Registration
Statement and the Prospectus.
(e) At the Closing Time, the Underwriters shall have received from Xxxxxx
Xxxxxxxx LLP, independent certified public accountants, a letter, dated as of
Closing Time, to the effect that it reaffirms the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than five days prior to the Closing
Time.
(f) At the Closing Time, the Representatives shall have been furnished with
such documents and opinions as it may reasonably require for the purpose of
enabling counsel for the Underwriters to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Representatives and counsel for the Underwriters.
11
12
(g) At the time of the execution of this Agreement, the Representatives
shall have received from each of the executive officers and directors of the
Company a letter in which each such person agrees during a period of 120 days
from the date hereof, that such person will not, without the prior written
consent of McDonald, sell, offer to sell, contract to sell, or otherwise dispose
of, directly or indirectly, any shares of Common Stock, any other equity
security of the Company or any security convertible into or exchangeable or
exercisable for shares of Common Stock, beneficially owned by such person or
with respect to which such person has the power of disposition, other than as
bona fide gifts.
(h) In the event that the Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be true
and correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Representatives shall have received:
(i) A certificate, dated such Date of Delivery, of the President of
the Company and of the chief financial or chief accounting officer of the
Company confirming that the certificate delivered at the Closing Time
pursuant to Section 5(c) hereof remains true and correct as of such Date of
Delivery.
(ii) An opinion, dated such Date of Delivery, of Xxxxxxxx & Xxxxx,
counsel for the Company and the Selling Stockholder, substantially in the
form set forth on Annex I attached hereto.
(iii) An opinion, dated such Date of Delivery, of Squire, Xxxxxxx &
Xxxxxxx L.L.P., counsel for the Underwriters, in form and substance
reasonably satisfactory to the Underwriters.
(iv) A letter from Xxxxxx Xxxxxxxx LLP, in form and substance
satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished to the
Underwriters pursuant to Section 5(e) hereof, except that the "specified
date" in the letter furnished pursuant to this Section 5(h)(vi) shall be a
date not more than five days prior to such Date of Delivery.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 6 and 7 shall remain in effect.
SECTION 6. Indemnification. (a) Each of the Company and the Selling
Stockholder agrees, jointly and severally, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act, and each officer and director of each
Underwriter and any such controlling person to the extent and in the manner set
forth as follows:
(i) against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the information deemed to be part of
the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
regulations, if applicable, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation; or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel
chosen by the Underwriters), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by a governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
12
13
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply (A) to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus and (B) with respect to the Prospectus or
any preliminary prospectus to the extent that any loss, liability, claim, damage
or expense results from the fact that such Underwriter sold Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (and any amendment or
supplement thereto) in any case where such delivery is required by the 1933 Act
if the Company previously furnished copies thereof to such Underwriter and the
loss, liability, claim, damage or expense results from an untrue statement or
omission of a material fact contained in the Prospectus or any preliminary
prospectus which was corrected in the Prospectus (or any amendment or supplement
thereto).
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Selling Stockholder, the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses (which fees and expenses shall be reasonable) of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances; provided, however, that if an indemnified party
shall have been advised in writing by counsel selected to represent the
indemnified parties that an actual or potential conflict of interest exists
between the position of that indemnified party and other indemnified parties,
the indemnified party in question shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party, and the indemnifying parties shall be responsible for the
reasonable fees and expenses of such separate counsel.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company, the Selling
Stockholder and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and one or more Underwriters, as
incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the 1933 Act, and each officer and director of any
Underwriter and of any such control person, shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as the Company.
13
14
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers of
the Company submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of the Agreement. (a) The Representatives may
terminate this Agreement, by notice to the Company, at any time at or prior to
Closing Time (i) if there has been, since the date of this Agreement or since
the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States, or any new outbreak of hostilities or material escalation thereof or
other calamity or crisis, the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in the
Common Stock has been suspended by the Commission, or if trading generally on
the Nasdaq National Market System has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by either of said Exchanges or by order of the Commission or
any other governmental authority, or if a banking moratorium has been declared
by federal, Utah, New York or Ohio authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4. Notwithstanding any such termination, the provisions of
Sections 6 and 7 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Initial Securities
which it or they are obligated to purchase under this Agreement and the Pricing
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements with such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Initial Securities, the non-defaulting Underwriters shall be
obligated to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Initial Securities, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in the termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
The Underwriters shall have the right to amend Schedule A hereto by making
such substitutions or corrections as indicated in the Pricing Agreement.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunications. Notices to the
Underwriters shall be directed to the Representatives, in care of XxXxxxxx &
Company Securities, Inc. at 0000 XxXxxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000, attention: Xxxx X. Xxxxxx, Senior Vice President, and notices to the
Company shall be directed to it at 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx X-000
Xxxxxx, Xxxx 00000, attention: Xxxxxxxx X. Xxxx, President, telecopy number
(000) 000-0000.
14
15
SECTION 12. Parties. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriters, the Company and
the Selling Stockholder and their respective successors. Nothing expressed or
mentioned in this Agreement or the Pricing Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters,
the Company and the Selling Stockholder and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein and therein contained. This Agreement and the Pricing Agreement
and all conditions and provisions hereof and thereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Company and the Selling
Stockholder and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No Purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. Governing Laws and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Ohio without giving effect to principles of conflict of
laws. Specified times of day refer to Cleveland Time. As used herein, the term
"business day" means any day on which the Nasdaq National Market System is open
for business.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters, the Company and the Selling Stockholder in accordance with its
terms.
Very truly yours,
1-800 CONTACTS, INC.
By:
--------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED --------------------------------------
as of the date first above written: Xxxxxxxx X. Xxxx
XxXXXXXX & COMPANY SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
BY: XxXXXXXX & COMPANY SECURITIES, INC.
By:
----------------------------------------------------
Name:
Title:
For themselves and as Representatives of the
other Underwriters in Schedule A hereto.
15
16
SCHEDULE A
NUMBER
OF SHARES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
XxXxxxxx & Company Securities, Inc. ........................
Xxxxxx Xxxxxx & Company, Inc. ..............................
---------
Total............................................. 2,200,000
=========
17
EXHIBIT A
2,200,000 SHARES
1-800 CONTACTS, INC.
(A DELAWARE CORPORATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
PRICING AGREEMENT
------------------------------, 1998
XxXXXXXX & COMPANY SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
as Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
0000 XxXxxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated ,
1998 (the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom XxXxxxxx & Company
Securities, Inc. and Xxxxxx Xxxxxx & Company, Inc. are acting as
representatives, of the above shares of the Common Stock, par value $.01 per
share, of 1-800 CONTACTS, INC. (the "Company").
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees
with the Underwriters as follows:
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $XX.XX.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $XX.XX, being an amount equal to the initial
public offering price set forth above less $X.XXX per share.
18
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Company and the Selling Stockholder (as defined in the
Underwriting Agreement) in accordance with its terms.
Very truly yours,
1-800 CONTACTS, INC.
By:
--------------------------------------
Its:
--------------------------------------
--------------------------------------
Xxxxxxxx X. Xxxx
CONFIRMED AND ACCEPTED
as of the date first above written:
XxXXXXXX & COMPANY SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
BY XxXXXXXX & COMPANY SECURITIES, INC.
By:
----------------------------------------------------
Name:
Title:
For themselves and as Representatives of the
other Underwriters in Schedule A to the
Underwriting Agreement.
19
ANNEX I
FORM OF OPINION OF
XXXXXXXX & XXXXX
(i) The Company is duly incorporated, validly existing, and in good
standing under the laws of the state of Delaware, and has the corporate power
and authority to own or lease its properties and to conduct its business as
described in the Prospectus, and to execute, deliver and perform its obligations
under the Underwriting Agreement. The Selling Stockholder has the requisite
power and authority to execute, deliver and perform its obligations under the
Underwriting Agreement.
(ii) The Company is duly qualified to do business and is in good standing
in all jurisdictions where it is required to be so qualified, except where the
failure to be so qualified would not individually or in the aggregate have a
material adverse effect on the business, condition (financial or other), results
of operations or properties of the Company taken as a whole.
(iii) The authorized capital stock of the Company consists of: (a)
220,000,000 shares of Common Stock, $.01 par value per share ("Common Stock"),
of which upon completion of this offering 6,584,469 shares are issued and
outstanding; and (b) 1,000,000 shares of Preferred Stock, par value $.01 per
share, none of which shares are issued and outstanding. Except as otherwise
stated in the Prospectus, all of the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. The Securities to be sold by the Company pursuant to the
Underwriting Agreement have been duly authorized for issuance and sale to the
Underwriters pursuant to the Underwriting Agreement and, when issued and
delivered by the Company in the manner contemplated by the Underwriting
Agreement, will be validly issued and fully paid and nonassessable. The sale of
the Securities by the Company and the Selling Stockholder is not subject to
preemptive or other similar statutory rights or contractual preemptive or other
similar contractual rights pursuant to any contract or agreement filed as an
exhibit to either the Registration Statement and by which the Company is bound.
(iv) Except for the order of the Commission declaring the Registration
Statement effective, and permits and similar authorizations required under the
securities or Blue Sky laws of certain jurisdictions, and a listing application
for the Securities filed with Nasdaq, and except for such consents that are
required and have been received, no consent, approval, authorization or other
order from, and no filing with or notice to, any Ohio or Federal regulatory
body, administrative agency, or other governmental authority, and no filing with
or notice to, to the best of our knowledge, any other person or entity, is
required for the due authorization, execution, delivery and performance by the
Company and the Selling Stockholder of the Underwriting Agreement.
(v) The Underwriting Agreement, in the case of the Company, has been duly
authorized, executed and delivered by the Company, and, in the case of the
Selling Stockholder, executed and delivered by the Selling Stockholder, and is a
valid and binding obligation of each of the Company and the Selling Stockholder,
enforceable against the Company and the Selling Stockholder in accordance with
its terms except as rights to indemnity and contribution thereunder may be
limited under applicable securities laws.
(vi) The Company is not an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(vii) The execution and delivery by the Company and Selling Stockholder of
the Underwriting Agreement and the performance of its obligations thereunder
will not (A) result in the violation of any statute or regulation, or any order
or decree known to us of any court or governmental authority binding upon the
Company, its property or the Selling Stockholder, (B) conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute a
default or in creation of a lien under any of the provisions of the Company's
Certificates of Incorporation or Bylaws or any indenture, mortgage, deed of
trust, loan agreement or other agreement filed as an exhibit to the Registration
Statement and by which the Company is bound, or (C) result in the creation of
any lien upon any of the properties or assets of the Company or the Selling
Stockholder.
I-1
20
We have participated in the preparation of the Registration Statement, the
462(b) Registration Statement and Prospectus. From time to time we have had
discussions with officers, directors and employees of the Company, the Selling
Stockholder, Xxxxxx Xxxxxxxx LLP, the independent accountants who examined
certain of the consolidated financial statements of the Company included in the
Registration Statement, the 462(b) Registration Statement and Prospectus, and
your representatives concerning the information contained in the Registration
Statement and Prospectus and the proposed responses to various items in Form
S-1. Based thereupon we are of the opinion that the Registration Statement, the
462(b) Registration Statement, the Prospectus and each amendment or supplement
thereto and the documents incorporated by reference therein comply as to form in
all material respects with the requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934, as applicable, and the applicable rules and
regulations thereunder (except for the operating statistics, financial
statements and the notes thereto, financial schedules, other financial,
statistical and accounting data included therein as having been included in the
Registration Statement, the 462(b) Registration Statement and Prospectus on the
authority of Xxxxxx Xxxxxxxx LLP as experts).
We further are of the opinion that the statements contained in Item 15 in
part II of the Registration Statement, insofar as they purport to summarize the
provisions of the documents referred to therein, present fair summaries of such
provisions.
We do not know of any litigation or any governmental proceedings or
investigations, pending or threatened, required to be described in the
Prospectus that are not described as required, or of any contracts or other
documents of a character required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement that are
not described and filed as required.
The Registration Statement and the 462(b) Registration Statement have
become effective under the Securities Act of 1933; any required filing of the
Prospectus or any supplement thereto pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and, to the best
of our knowledge, no stop order suspending the effectiveness of the Registration
Statement or the 462(b) Registration Statement has been issued and no
proceedings for that purpose are pending before or threatened by the Commission.
We have not independently verified and are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness (except as
set forth in the third preceding paragraph above) of the information contained
in the Registration Statement and Prospectus. Based upon the participation and
discussions described above, however, no facts have come to our attention that
cause us to believe that the Registration Statement (except for the operating
statistics, financial statements and the notes thereto, financial schedules,
other financial, statistical and accounting data included therein and except for
the information referred to under the caption "Experts" as having been included
in the Registration Statement and Prospectus on the authority of Xxxxxx Xxxxxxxx
LLP, as experts, as to all of which we express no view), at the time it became
effective 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 that the Prospectus (with the foregoing
exceptions), at such time or on the date hereof included or includes any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
I-2
