1
Exhibit 1.1
DRAFT OF OCTOBER 30, 1996
MARKS BROS. JEWELERS, INC.
2,305,000 Shares*
Common Stock
UNDERWRITING AGREEMENT
October __, 1996
XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
XXXXXXX XXXXX & COMPANY, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Marks Bros. Jewelers, Inc., a Delaware
corporation (the "Company), (the "Company"), proposes to issue and sell
1,100,000 shares of its authorized but unissued Common Stock (the "Common
Stock") and certain stockholders of the Company named in Schedule B annexed
hereto (the "Selling Stockholders") propose to sell an aggregate of 1,205,000
shares of the Company's issued and outstanding Common Stock to you (the
"Underwriters"). Said aggregate of 2,305,000 shares are herein called the
"Firm Common Shares." In addition, the Company and certain of the Selling
Stockholders propose to grant to the Underwriters an option to purchase up to
345,750 additional shares of Common Stock (the "Optional Common Shares"), as
provided in Section 5 hereof. The Firm Common Shares and, to the extent such
option is exercised, the Optional Common Shares are hereinafter collectively
referred to as the "Common Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
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*Plus an option to acquire from the Company and certain of the Selling
Stockholders up to 345,750 additional shares to cover overallotments.
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SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-13903) with
respect to the Common Shares has been prepared by the Company in
conformity in all material respects 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") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file
prior to the effective date of such registration statement an amendment
or amendments to such registration statement, which amendment or
amendments have been or will be similarly prepared. There have been
delivered to you two signed copies of such registration statement and
amendments, together with two copies of each exhibit filed therewith.
Conformed 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 for
each of the Underwriters. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such registration
statement, a further amendment thereto, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and
424(b) of the Rules and Regulations or (iii) a term sheet (the "Term
Sheet") as described in and in accordance with Rules 434 and 424(b) of
the Rules and Regulations. As filed, the final prospectus, if one is
used, or the Term Sheet and Preliminary Prospectus, if a final prospectus
is not used, shall include all Rule 430A Information and, except to the
extent that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and
time that this Agreement was executed and delivered by the parties
hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the
Company shall have previously advised you in writing would be included or
made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement
becomes effective and, in the event any post-effective amendment thereto
becomes effective prior to the First Closing Date (as hereinafter
defined), shall also mean such registration statement as so amended;
provided, however, that such term shall also include (i) 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 (ii) any registration statement
filed pursuant to 462(b) of the Rules and Regulations relating to the
Common 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 either (i) the
prospectus relating to the Common Shares in the form in which it is first
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, (ii) if a Term Sheet is not used and 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 or (iii) if a Term
Sheet is used, the Term Sheet in the form in which it is first filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations,
together with the Preliminary Prospectus included in the Registration
Statement at the time it becomes effective. The term "Rule 430A
Information" means information with respect to the Common Shares and the
offering thereof permitted to be
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omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus
has conformed in all material respects to the requirements of the Act and
the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and at the time
the Registration Statement becomes effective, and at all times subsequent
thereto up to and including each Closing Date hereinafter mentioned, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, will contain all material statements and information
required to be included therein by the Act and the Rules and Regulations
and will in all material respects conform to the requirements of the Act
and the Rules and Regulations, and 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 a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, no representation or warranty
contained in this subsection 2(b) shall be applicable to information
contained in or omitted from any Preliminary Prospectus, the Registration
Statement, the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company
by or on behalf of either Underwriter or any Selling Stockholder,
specifically for use in the preparation thereof.
(c) The Company does not have any direct or indirect equity or other
ownership interest in any other corporation, partnership, joint venture
or other business organization.
(d) 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 and lease its properties and conduct
its business as described in the Prospectus; the Company is in possession
of and operating in compliance with all authorizations, licenses,
permits, consents, certificates and orders material to the conduct of its
business, all of which are valid and in full force and effect, except for
such failure to possess or noncompliance which would not have a material
adverse effect on the Company; the Company is duly qualified to do
business and in good standing as a foreign corporation in each
jurisdiction in which the ownership or leasing of properties or the
conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect upon the Company; and no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or
qualification.
(e) The Company has an authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus; the
issued and outstanding shares of Common Stock have been duly authorized
and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform to the description
thereof contained in the Prospectus. 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,
Company does not have outstanding any options 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
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the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly present in
all material respects the information required to be shown with respect
to such plans, arrangements, options and rights.
(f) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable, and will conform to the description thereof
contained in the Prospectus. No preemptive rights or other rights to
subscribe for or purchase exist with respect to the issuance and sale of
the Common Shares by the Company pursuant to this Agreement. No
stockholder of the Company has any right which has not been waived to
require the Company to register the sale of any shares owned by such
stockholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the transfer and
sale of the Common Shares to be sold by the Selling Stockholders or the
issuance and sale of the Common Shares to be sold by the Company as
contemplated herein.
(g) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company in
accordance with its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
except that no representation or warranty is made relating to indemnity
or contribution. The making and performance of this Agreement by the
Company and the consummation of the transactions herein contemplated will
not violate any provisions of the certificate of incorporation or bylaws,
or other organizational documents, of the Company, and will not conflict
with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company is a party or by which
the Company or its properties may be bound or affected, any statute or
any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of its properties, except in each
case for such violations, conflicts or defaults which would not have a
material adverse effect on the Company. No consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance with
the Act, the Blue Sky laws applicable to the public offering of the
Common Shares by the several Underwriters and the clearance of such
offering with the National Association of Securities Dealers, Inc. (the
"NASD"), except for such consent the failure to have would have not have
a material adverse effect on the Company.
(h) Coopers & Xxxxxxx, L.L.P., who have expressed their opinion with
respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, are independent accountants
as required by the Act and the Rules and Regulations.
(i) The financial statements and schedule of the Company, and the
related notes thereto, included in the Registration Statement and the
Prospectus present fairly the financial
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position of the Company as of the respective dates of such financial
statements and schedule, and the results of operations and changes in
financial position of the Company for the respective periods covered
thereby. Such statements, schedule and related notes have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent accountants named in
subsection 2(h), except as disclosed in such financial statements, and
except that the financial statements for interim periods are not
certified and have been prepared in accordance with generally accepted
accounting principles for interim financial information. No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the
Prospectus under the captions "Capitalization" and "Selected Financial
Data" fairly present the information set forth therein on the basis
stated in the Registration Statement. The pro forma information included
in the Prospectus present fairly the information shown therein, have been
properly compiled on the pro forma basis described therein, and, in the
opinion of the Company, the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate under the
circumstances based on such assumptions.
(j) Except as disclosed in the Prospectus, and except as to defaults
which individually or in the aggregate would not have a material adverse
effect on the Company, the Company is not in violation or default of any
provision of its certificate of incorporation or bylaws, or other
organizational documents, and is not in breach of or default with respect
to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of its properties
are bound; and there does not exist any state of facts which constitutes
an event of default on the part of the Company as defined in such
documents or which, with notice or lapse of time or both, would
constitute such an event of default.
(k) There are no material contracts or other documents required to
be described in the Registration Statement or to be filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
which have not been described or filed as required.
(l) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which
the Company is or may be a party or of which property owned or leased by
the Company is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might,
individually or in the aggregate, prevent or materially and adversely
affect the transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company;
and no labor disturbance by the employees of the Company exists or is
imminent which might be expected to materially and adversely affect such
condition, properties, business, results of operations or prospects. The
Company is not a party or subject to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative
agency or other governmental body which materially and adversely affects
the Company.
(m) The Company has good and marketable title to all the properties
and assets reflected as owned in the financial statements hereinabove
described (or elsewhere in the Prospectus), subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements (or elsewhere in the Prospectus),
or (ii) those which are not material in amount and do not materially and
adversely affect the use made and proposed to be made of such property by
the Company. The Company holds its leased
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properties under valid and binding leases, with such exceptions as are
not materially significant in relation to the business of the Company.
Except as disclosed in the Prospectus, the Company owns or leases all
such properties as are necessary to its operations as now conducted or as
proposed to be conducted, in each case in all material respects.
(n) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company has not
incurred any material liabilities or obligations, indirect, direct or
contingent, or entered into any material verbal or written agreement or
other transaction which is not in the ordinary course of business; (ii)
the Company has not sustained any material loss or interference with its
business or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance; (iii) the Company has not
paid or declared any dividends or other distributions with respect to its
capital stock, and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there has
not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder and upon the exercise of options and warrants
described in the Registration Statement) or indebtedness material to the
Company (other than in the ordinary course of business); and (v) there
has not been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects of
the Company and its subsidiaries.
(o) Except as disclosed in or specifically contemplated by the
Prospectus, the Company has sufficient trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted; the expiration
of any trademarks, trade names, patent rights, mask works, copyrights,
licenses, approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company; and the
Company has no knowledge of any material infringement by it or its
subsidiaries of trademark, trade name rights, patent rights, mask works,
copyrights, licenses, trade secret or other similar rights of others, and
there is no claim being made against the Company regarding trademark,
trade name, patent, mask work, copyright, license, trade secret or other
infringement which could have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects
of the Company.
(p) The Company has not been advised, and has no reason to believe,
that it is not conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations, except where
failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business, results of operations or
prospects of the Company.
(q) The Company has filed all necessary federal, state and foreign
income and franchise tax returns and have paid all taxes shown as due
thereon, and the Company has no knowledge of any tax deficiency which has
been or might be asserted or threatened against the Company, except in
each case for any failure to file, failure to pay or tax deficiency which
would not materially and adversely affect the business, operations or
properties of the Company.
(r) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
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(s) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Prospectus, the
Registration Statement and the other materials permitted by the Act.
(t) The Company maintains insurance of the types and in the amounts
customarily maintained by similarly situated companies, including, but
not limited to, insurance covering real and personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Common Shares.
SECTION 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing
Date and the Second Closing Date hereinafter mentioned will have,
good and marketable title to the Common Shares proposed to be sold
by such Selling Stockholder hereunder on such Closing Date (except
that the Common Shares to be sold by Xxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxxxx, Xxxx X. Xxxxxxxxxx and Xxxx X. Xxxxxxxxx (the "Employee
Selling Stockholders") are to be issued pursuant to currently
outstanding and exercisable options immediately prior to the First
Closing Date or Second Closing Date, as the case may be, so that
such Selling Stockholder, if an Employee Selling Stockholder, does
not have good and marketable title to the Common Shares on the date
hereof but will have such good and marketable title to the Common
Shares to be sold by him on the Closing Date on which such Common
Shares are to be delivered) and full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver
such Common Shares hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, equities, security interests,
restrictions and claims whatsoever; and upon delivery of and
payment for such Common Shares hereunder, the Underwriters will
acquire good and marketable title thereto, free and clear of all
liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever.
(ii) Such Selling Stockholder has executed and delivered a
Power of Attorney and caused to be executed and delivered on his
behalf a Custody Agreement (hereinafter collectively referred to as
the "Stockholders Agreement") and in connection herewith such
Selling Stockholder further represents, warrants and agrees that
such Selling Stockholder has deposited in custody, under the
Stockholders Agreement, with the agent named therein (the "Agent")
as custodian, certificates in negotiable form for the Common Shares
to be sold hereunder by such Selling Stockholder, for the purpose
of further delivery pursuant to this Agreement. Such Selling
Stockholder agrees that the Common Shares to be sold by such
Selling Stockholder on deposit with the Agent are
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subject to the interests of the Company and the Underwriters, that
the arrangements made for such custody are to that extent
irrevocable, and that the obligations of such Selling Stockholder
hereunder shall not be terminated, except as provided in this
Agreement or in the Stockholders Agreement, by any act of such
Selling Stockholder, by operation of law, by the death or
incapacity of such Selling Stockholder or by the occurrence of any
other event. If such Selling Stockholder should die or become
incapacitated, or if any other event should occur, before the
delivery of the Common Shares hereunder, the documents evidencing
Common Shares then on deposit with the Agent shall be delivered by
the Agent in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Agent shall have
received notice thereof. This Agreement and the Stockholders
Agreement have been duly executed and delivered by or on behalf of
such Selling Stockholder and the form of such Stockholders
Agreement has been delivered to you.
(iii) The performance of this Agreement and the Stockholders
Agreement and the consummation of the transactions contemplated
hereby and by the Stockholders Agreement will not result in a
breach or violation by such Selling Stockholder of any of the terms
or provisions of, or constitute a default by such Selling
Stockholder under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license
or other agreement or instrument to which such Selling Stockholder
is a party or by which such Selling Stockholder or any of its
properties is bound, any statute, or any judgment, decree, order,
rule or regulation of any court or governmental agency or body
applicable to such Selling Stockholder or any of its properties.
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Common Shares.
(v) Each Preliminary Prospectus and the Prospectus, insofar as
it has related to such Selling Stockholder has conformed in all
material respects to the requirements of the Act and the Rules and
Regulations and has not included any untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein not misleading in light of the circumstances
under which they were made; and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, as it
relates to such Selling Stockholder, 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.
(b) Each of the Selling Stockholders agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise
dispose of any shares of Common Stock or securities convertible into or
exchangeable for any shares of Common Stock, for a period of 90 days
after the first date that any of the Common Shares are released by you
for sale to the public, without the prior written consent of Xxxxxxxxxx
Securities, which consent may be withheld at the sole discretion of
Xxxxxxxxxx Securities, provided, that this subsection (b) shall not
restrict (i) any bona gift by any Selling Stockholder that is a natural
person or any distribution by any other Selling Stockholder to any
equityholder of such Selling Stockholder in each case so long as the
donee or transferee agrees to comply with this subsection (b) for any
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remaining portion of such 90-day period or (ii) any distribution by U.S.
Trust Company of Californis, N.A., as Trustee for the Marks Bros.
Jewelers, Inc. Employee Stock Ownership Trust, to participants in such
plan pursuant to the terms of such plan.
SECTION 4. Representations and Warranties of the Underwriters. The
Underwriters represent and warrant to the Company and to the Selling
Stockholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and is correct
in all material respects.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, (i) the Company agrees to issue and
sell to the Underwriters 1,100,000 of the Firm Common Shares, and (ii) the
Selling Stockholders agree, severally and not jointly, to sell to the
Underwriters in the respective amounts set forth in Schedule B hereto, an
aggregate of 1,205,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholders, respectively, the number of Firm Common Shares described below.
The purchase price per share to be paid by the Underwriters to the Company and
to the Selling Stockholders, respectively, shall be equal to the initial price
to the public per share less an amount per share equal to the per share
underwriting discount. The initial price to the public, which shall be a fixed
price, and the underwriting discount will be determined by separate agreement
among the Company, the Selling Stockholders and the Underwriters in
substantially the form set forth as Schedule C hereto.
The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,100,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholders shall be to purchase from the Selling
Stockholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,205,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Sidley &
Austin, counsel for the Company, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000
(or such other place as may be agreed upon by the Company and the Underwriters)
at such time and date, not later than the third (or, if the Firm Common Shares
are priced, as contemplated by Rule 15c6-1(c) under the Securities Exchange Act
of 1934, after 4:30 P.M. Washington D.C. time, the fourth) full business day
following the first date that any of the Common Shares are released by you for
sale to the public, as you shall designate by at least 48 hours prior notice to
the Company (or at such other time and date, not later than one week after such
third or fourth, as the case may be, full business day as may be agreed upon by
the Company and the Underwriters) (the "First Closing Date"); provided,
however, that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later
of the third or fourth, as the case may be, full business day following the
first date that any of the Common Shares are released by you for sale to the
public or the date that is 48 hours after the date that the Prospectus has been
so recirculated.
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Delivery of certificates for the Firm Common Shares shall be made by or
on behalf of the Company and the Selling Stockholders to you, for the
respective accounts of the Underwriters with respect to the Firm Common Shares
to be sold by the Company and by the Selling Stockholders against payment by
you, for the accounts of the several Underwriters, of the purchase price
therefor by a wire transfer of immediately available funds to an account
designated by the Company and by the Agent in proportion to the number of Firm
Common Shares to be sold by the Company and the Selling Stockholders,
respectively. The certificates for the Firm Common Shares shall be registered
in such names and denominations as you shall have requested at least two full
business days prior to the First Closing Date, and shall be made available for
checking and packaging on the business day preceding the First Closing Date at
a location in New York, New York, as may be designated by you. Time shall be
of the essence, and delivery at the time and place specified in this Agreement
is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and certain of the Selling Stockholders identified in
Schedule B hereby grant an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 345,750 Optional Common Shares
at the purchase price per share to be paid for the Firm Common Shares, for use
solely in covering any over-allotments made by you for the account of the
Underwriters in the sale and distribution of the Firm Common Shares. The
option granted hereunder may be exercised at any time (but not more than once)
within 30 days after the first date that any of the Common Shares are released
by you for sale to the public, upon notice by you to the Company and each such
Selling Stockholder setting forth the aggregate number of Optional Common
Shares as to which the Underwriters are exercising the option, the names and
denominations in which the certificates for such shares are to be registered
and the time and place at which such certificates will be delivered. Such time
of delivery (which may not be earlier than the First Closing Date), being
herein referred to as the "Second Closing Date," shall be determined by you,
but if at any time other than the First Closing Date shall not be earlier than
three nor later than five full business days after delivery of such notice of
exercise. The number of Optional Common Shares to be purchased by each
Underwriter shall be determined by multiplying the aggregate number of Optional
Common Shares to be sold by the Company and such Selling Stockholders pursuant
to such notice of exercise by a fraction, the numerator of which is the number
of Firm Common Shares to be purchased by such Underwriter as set forth opposite
its name in Schedule A and the denominator of which is 2,305,000 (subject to
such adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New York, New York, as may be designated by you.
The manner of payment for and delivery of the Optional Common Shares shall be
the same as for the Firm Common Shares purchased from the Company and such
Selling Stockholders as specified in the two preceding paragraphs. At any time
before lapse of the option, you may cancel such option by giving written notice
of such cancellation to the Company and such Selling Stockholders. If the
option is cancelled or expires unexercised in whole or in part, the Company
will deregister under the Act the number of Option Shares as to which the
option has not been exercised.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt therefor.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as
soon after the effective date of the Registration Statement as in the judgment
of the Underwriters is advisable and at the public offering price set forth on
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the cover page of and on the terms set forth in the final prospectus, if one is
used, or on the first page of the Term Sheet, if one is used.
SECTION 6. Covenants of the Company. The Company covenants and agrees
that:
(a) 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. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the
filing of the Prospectus is otherwise required under Rule 424(b) of the
Rules and Regulations, the Company will file the Prospectus, properly
completed, pursuant to the applicable paragraph of Rule 424(b) of the
Rules and Regulations within the time period prescribed and will provide
evidence satisfactory to you of such timely filing. The Company will
promptly advise you in writing (i) of the receipt of any comments of the
Commission, (ii) of any request of the Commission for amendment of or
supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have
become effective, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose. If the Commission
shall enter any such stop order at any time, the Company will use its
best efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been
furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or which is not in compliance with the Act and the
Rules and Regulations.
(b) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or
supplements, would include an 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, or if it is
necessary at any time to amend the Prospectus, including any amendments
or supplements, to comply with the Act or the Rules and Regulations, the
Company will promptly advise you thereof and will promptly prepare and
file with the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment or
supplement which will effect such compliance and will use its best
efforts to cause the same to become effective as soon as possible; and,
in case any Underwriter is required to deliver a prospectus after such
nine-month period, the Company upon request, but at the expense of such
Underwriter, will promptly prepare 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.
(c) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date
of the Registration Statement" (as defined in Rule 158(c) of the Rules
and Regulations), the Company will make generally available to its
security holders an earnings statement (which need not be audited)
covering a period of 12 consecutive months beginning after the effective
date of the Registration Statement which will satisfy the provisions of
the last paragraph of Section 11(a) of the Act.
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(d) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to
in Section 10(a)(3) of the Act, will furnish to you and the Selling
Stockholders or mail to your order copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as available and
in such quantities as you and the Selling Stockholders may request, for
the purposes contemplated by the Act.
(e) The Company shall cooperate with you and your counsel in order
to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as you designate, will comply with such laws and will
continue such qualifications, registrations and exemptions in effect so
long as reasonably required for the distribution of the Common Shares.
The Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise you promptly
of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading in
any jurisdiction or any initiation or threat of any proceeding for any
such purpose, and in the event of the issuance of any order suspending
such qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(f) During the period of five years hereafter, the Company will
furnish to the Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year
then ended and the opinion thereon of the Company's independent public
accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Report on Form 8-K or other report filed by the Company with
the Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(g) During the period of 90 days after the first date that any of
the Common Shares are released by you for sale to the public, without the
prior written consent of Xxxxxxxxxx Securities (which consent may be
withheld at the sole discretion of Xxxxxxxxxx Securities), the Company
will not other than pursuant to outstanding stock options and warrants
disclosed in the Prospectus issue, offer, sell, grant options to purchase
(except options granted pursuant to the Company's employee stock option
plan that are not exercisable during such 90 day period) or otherwise
dispose of any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity
security.
(h) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements
under the caption "Use of Proceeds" in the Prospectus.
You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
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SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or
is terminated, the Company agrees to pay all costs, fees and expenses incurred
in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby (except as provided in the
following sentence), including without limiting the generality of the
foregoing, (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Common Shares to the Underwriters, (iv) all fees and expenses of the
Company's counsel and the Company's independent accountants, (v) all costs and
expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, attorneys' fees and expenses reasonably incurred by the
Company or the Underwriters not exceeding $5,000 in connection with qualifying
or registering (or obtaining exemptions from the qualification or registration
of) all or any part of the Common Shares for offer and sale under the Blue Sky
laws, (vii) the filing fee of the National Association of Securities Dealers,
Inc., (viii) any fees and expenses of counsel for the Selling Stockholders
generally, (ix) any fees and expenses of the Agent and (x) all other fees,
costs and expenses referred to in Item 13 of the Registration Statement.
Except as provided in this Section 7, Section 9 and Section 11 hereof, the
Underwriters shall pay all of their own expenses, including the fees and
disbursements of their counsel (excluding those relating to qualification,
registration or exemption under the Blue Sky laws and the Blue Sky memorandum
referred to above) and the travel and other expenses for the "road show"
presentations.
The Selling Stockholders will pay (directly or by reimbursement) all fees
and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to all expenses and taxes incident to the sale and delivery of
the Common Shares to be sold by such Selling Stockholders to the Underwriters
hereunder.
This Section 7 shall not affect any agreements relating to the payment of
expenses between the Company and the Selling Stockholders.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof,
to the performance by the Company and the Selling Stockholders of its or their
respective obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M. (or, in the case of a registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations relating to the
Common Shares, not later than 10 P.M.), Washington, D.C. Time, on the
date of this Agreement, or at such later time as shall have been
consented to by you; if the filing of the Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b) of the Rules and
Regulations, the Prospectus shall have been filed in the manner and
within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to such Closing Date, no
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stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, to the knowledge of the Company,
the Selling Stockholders or you, shall be contemplated by the Commission;
and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any change in the capital stock other than
pursuant to the exercise of outstanding options and warrants disclosed in
the Prospectus of the Company or any material increase in the
indebtedness (other than in the ordinary course of business) of the
Company, (ii) except as set forth or contemplated by the Registration
Statement or the Prospectus, no material verbal or written agreement or
other transaction shall have been entered into by the Company, which is
not in the ordinary course of business, (iii) no loss or damage (whether
or not insured) to the property of the Company shall have been sustained
which materially and adversely affects the condition (financial or
otherwise), business, results of operations or prospects of the Company,
(iv) no legal or governmental action, suit or proceeding affecting the
Company which is material to the Company or which affects or might
adversely affect the transactions contemplated by this Agreement shall
have been instituted or threatened, and (v) there shall not have been any
material change in the condition (financial or otherwise), business,
management, results of operations or prospects of the Company which makes
it impractical or inadvisable in the judgment of the Underwriters to
proceed with the public offering or purchase the Common Shares as
contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly
provided below:
(i) An opinion of Sidley & Austin, counsel for the Company and
the Selling Stockholders, addressed to the Underwriters and dated
the First Closing Date, or the Second Closing Date, as the case may
be, to the effect that:
(1) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of Delaware, is duly qualified to do business as a
foreign corporation and is in good standing in all other
jurisdictions where the ownership or leasing of properties or
the conduct of its business requires such qualification,
except for jurisdictions in which the failure to so qualify
would not have a material adverse effect on the Company, and
has the corporate power and authority to own its properties
and conduct its business as described in the Registration
Statement;
(2) The authorized capital stock of the Company conforms
as to legal matters in all material respects to the
description thereof in the Prospectus; all necessary
corporate proceedings have been taken in order to authorize
validly such authorized Common Stock; all outstanding shares
of Common Stock (including the Firm Common Shares and any
Optional Common Shares) have been duly and validly issued,
are fully paid and nonassessable;
(3) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware
law, and when duly countersigned by the Company's transfer
agent and registrar, and delivered to
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you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions
of this Agreement, the Common Shares represented thereby
will be duly authorized and validly issued, fully paid and
nonassessable, will not have been issued in violation of or
subject to any preemptive rights and will conform as to legal
matters in all material respects to the description thereof
contained in the Prospectus;
(4) (a) The Registration Statement has become
effective under the Act, and, to the best of such
counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been
instituted or are pending or contemplated by the
Commission; 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);
(b) The Registration Statement, the Prospectus and
each amendment or supplement thereto (except for the
financial statements and schedule and other statistical
or financial data included therein as to which such
counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act
and the Rules and Regulations;
(c) To such counsel's knowledge, there are no
franchises, leases, contracts, agreements or documents
of a character required to be disclosed in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not
disclosed or filed, as required; and
(d) To such counsel's knowledge, there are no
legal or governmental actions, suits or proceedings
pending or threatened against the Company which are
required to be described in the Prospectus which are
not described as required.
(5) This Agreement has been duly and validly authorized
by all necessary corporate action by the Company, has been
duly and validly executed and delivered by and on behalf of
the Company, and is a valid and binding agreement of the
Company in accordance with its terms, except as
enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights
generally and except as to those provisions relating to
indemnity or contribution as to which no opinion need be
expressed; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or
with any court, regulatory, administrative or other
governmental body is required for the execution and delivery
of this Agreement by the Company or the consummation of the
transactions contemplated by this Agreement, except such as
have been obtained and are in full force and effect under the
Act and such as may be required under applicable Blue Sky
laws in connection with the purchase and
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distribution of the Common Shares by the Underwriters and
the clearance of such offering with the NASD;
(6) The execution and performance of this Agreement and
the consummation of the transactions herein contemplated will
not (i) conflict with, result in the breach of, or
constitute, either by itself or upon notice or the passage of
time or both, a default under, any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or
other instrument known to such counsel to which the Company
is a party or by which the Company or any of its or their
property may be bound or affected, or (ii) violate any of the
provisions of the certificate of incorporation or bylaws, or
other organizational documents, of the Company or (iii) so
far as is known to such counsel, violate any statute,
judgment, decree, order, rule or regulation of any court or
governmental body having jurisdiction over the Company or any
of its property, except in the case of clauses (i) and (iii)
for any such conflict, breach, default or violation which
could not reasonably be expected to have a material adverse
effect on the Company;
(7) To such counsel's knowledge, this Agreement has been
duly authorized, executed and delivered by or on behalf of
each of the Selling Stockholders; and the performance of this
Agreement and the consummation of the transactions herein
contemplated by the Selling Stockholders will not result in a
breach of, or constitute a default under, any indenture,
mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or
instrument to which any of the Selling Stockholders is a
party or by which any of the Selling Stockholders or any of
their properties may be bound, or violate any statute,
judgment, decree, order, rule or regulation known to such
counsel of any court or governmental body having jurisdiction
over any of the Selling Stockholders or any of their
properties; and to such counsel's knowledge, no approval,
authorization, order or consent of any court, regulatory
body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement or
the Stockholders Agreement or the consummation by the Selling
Stockholders of the transactions contemplated by this
Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required
under the rules of the NASD and applicable Blue Sky laws;
(8) To such counsel's knowledge, the Selling
Stockholders that are not natural persons have corporate,
partnership or trust (as the case may be) power and authority
to enter into this Agreement and the Stockholders Agreement
and to sell, transfer and deliver the Common Shares to be
sold on such Closing Date by such Selling Stockholders
hereunder upon registration of the number of Common Shares
being sold by all the Selling Stockholders on the date hereof
to the Underwriters in the names of the Underwriters in the
stock records of the Company, such Underwriters will,
assuming that such Underwriters are purchasing such shares in
good faith and without notice of any adverse claim within the
meaning of the Uniform Commercial Code as currently in effect
in the State of Illinois, have acquired all rights of such
Selling Stockholder in such shares free and clear of any such
adverse claims; and
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(9) To such counsel's knowledge, this Agreement is the
valid and binding agreement of each of the Selling
Stockholders in accordance with its terms except as
enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights
generally and except with respect to those provisions
relating to indemnities or contributions for liabilities,
as to which no opinion need be expressed.
In rendering such opinion, such counsel may rely (i), as to the matters
set forth in paragraphs (7), (8) and (9), on opinions of other counsel
retained by the Selling Stockholders, (ii) as to matters of local law, on
opinions of local counsel, and (iii) as to matters of fact, on
certificates of the Selling Stockholders and of officers of the Company
and of governmental officials, in which case their opinion is to state
that they are so doing and copies of said opinions or certificates are to
be attached to the opinion unless opinions or certificates (or, in the
case of certificates, the information therein) have been furnished to the
Underwriters in other form. Such counsel shall also include a statement
to the effect that nothing has come to such counsel's attention that
would lead such counsel to believe that either at the effective date of
the Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus, or any such amendment or
supplement (except for the financial statement and schedule and other
statistical or financial data as to which such counsel need express no
belief), contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(ii) Such opinion or opinions of Xxxxxxx, Carton & Xxxxxxx,
counsel for the Underwriters dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement, the
validity of the Common Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably require,
and the Company and the Selling Stockholders shall have furnished
to such counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request for the
purpose of enabling them to pass upon such matters. In connection
with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
(iii) A certificate of the Company executed on its behalf by
the Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the First Closing Date or
the Second Closing Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company
set forth in Section 2 of this Agreement are true and correct
as of the date of this Agreement and as of the First Closing
Date or the Second Closing Date, as the case may be, and the
Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied
on or prior to such Closing Date; and
(2) The Commission has not issued any order preventing
or suspending the use of the Prospectus or any Preliminary
Prospectus filed as a
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part of the Registration Statement or any amendment thereto;
no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of
the knowledge of the respective signers, no proceedings for
that purpose have been instituted or are pending or
contemplated under the Act.
(iv) On the First Closing Date or the Second Closing Date, as
the case may be, a certificate, dated such Closing Date and
addressed to you, signed by or on behalf of each of the Selling
Stockholders to the effect that the representations and warranties
of such Selling Stockholder in this Agreement are true and correct,
as if made at and as of the First Closing Date or the Second
Closing Date, as the case may be, and such Selling Stockholder has
complied with all the agreements and satisfied all the conditions
on his part to be performed or satisfied prior to the First Closing
Date or the Second Closing Date, as the case may be.
(v) On the date before this Agreement is executed and also on
the First Closing Date and the Second Closing Date a letter
addressed to the Underwriters, from Coopers & Xxxxxxx, L.L.P.,
independent accountants, the first one to be dated the day before
the date of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second Closing)
to be dated the Second Closing Date, in form and substance
satisfactory to you.
(vi) On or before the First Closing Date, letters from each
other holder of the Company's Common Stock identified in Schedule D
hereof, substantially in the form of Schedule E.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Xxxxxxx, Carton & Xxxxxxx, counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you reasonably request. Any
certificate signed by any officer of the Company and delivered to the
Underwriters or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company and the Selling Stockholders without liability on the part of any
Underwriter or the Company or the Selling Stockholders except for the expenses
to be paid or reimbursed by the Company and by the Selling Stockholders
pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding any
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 8, or if the sale to the Underwriters of the Common Shares at the
First Closing is not consummated because of any refusal, inability or failure
on the part of the Company or the Selling Stockholders to perform any agreement
herein or to comply with any provision hereof, the Company agrees to reimburse
you and the other Underwriters upon demand for all out-of-pocket expenses that
shall have been reasonably incurred by you and them in connection with the
proposed purchase and the sale of the Common Shares, including but not limited
to fees and disbursements of counsel, printing expenses, travel expenses,
postage, telegraph charges and telephone charges relating directly to the
offering contemplated by the Prospectus.
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Any such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You and the Company
and the Selling Stockholders will use your and its and their best efforts to
cause the Registration Statement to become effective, to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
and, if such stop order be issued, to obtain as soon as possible the lifting
thereof.
SECTION 11. Indemnification. (a) The Company agrees to indemnify and hold
harmless, and Xxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxxx, Xxxx X.
Xxxxxxxxx, and Xxxxxxx Xxxxx Venture Partners III Limited Partnership (each, an
"Identified Selling Stockholder" and, collectively, the "Identified Selling
Stockholders") jointly and severally agree (subject in all cases to the overall
limitation on liability set forth in the second paragraph of this subsection
(a)) to indemnify and hold harmless, each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company or such Identified Selling Stockholder),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading; and will reimburse each Underwriter and each such controlling person
for any legal and other expenses as such expenses are reasonably incurred by
such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that neither the Company nor
the Identified Selling Stockholders will be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon (i) an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof or (ii) any statement or omission contained or made in any preliminary
prospectus and corrected in the Prospectus if (x) such loss, claim, damage,
liability or expense suffered or incurred by any Underwriter (or any such
controlling person) resulted from any claim, action, investigation, inquiry or
other proceeding brought by any person who purchased Common Shares which are the
subject thereof from such Underwriter and (y) such Underwriter failed to deliver
or provide a copy of the Prospectus, as then amended or supplemented, to such
person at or prior to the confirmation of the sale of such Common Shares in any
case where such delivery is required. In addition to its other obligations under
this Section 11(a), the Company and the Identified Selling Stockholders agree
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, as described in
this Section 11(a), it or he will reimburse each Underwriter on a quarterly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's or such Identified Selling
Stockholders' obligation to reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Underwriter shall
promptly return it to the Company or the Identified Selling Stockholder, as the
case may be.
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This indemnity agreement will be in addition to any liability which the Company
or an Identified Selling Stockholder may otherwise have.
Without limiting the full extent of (i) the Company's agreement to
indemnify each Underwriter (and controlling persons thereof, if any) as herein
provided, (ii) the liability of the Company with respect to the breach by the
Company of any representation, warranty or covenant contained in this Agreement
(or in any certificate of the Company delivered pursuant hereto) and (iii) the
liability of any Identified Selling Stockholder with respect to the breach by
such Identified Selling Stockholder of any representation, warranty or covenant
contained in Section 3 of this Agreement (or in any certificate of such
Identified Selling Stockholder delivered pursuant hereto relating thereto),
notwithstanding anything contained in this Agreement to the contrary, each
Identified Selling Stockholder shall be liable under (A) the indemnification
agreements contained in the first paragraph of this Section 11(a) or (B) the
contribution provisions contained in Section 11(e) of this Agreement, only for
an amount not exceeding, in the aggregate, the net proceeds received by such
Identified Selling Stockholder from the sale of Common Shares hereunder. The
Company and the Identified Selling Stockholders may agree or have agreed, as
among themselves and without limiting the rights of the Underwriters and
controlling persons under this Agreement, as to the respective amounts of such
liability for which each of them shall be responsible.
Notwithstanding anything to the contrary under this Section 11(a), each
Underwriter and each person, if any, who controls any Underwriter agrees not to
assert its rights to indemnity against any Identified Selling Stockholder for
losses, claims, damages or liabilities (or actions in respect thereof) arising
out of or based upon any such untrue statement or alleged untrue statement
unless and until (i) such Underwriter or controlling person has requested
indemnification and reimbursement from the Company for such losses, claims,
damages or liabilities (including any legal or other expenses reasonably
incurred) and (ii) the Company does not within 30 days of such request (x)
agree to so indemnify such Underwriter or controlling person and (y) reimburse
in full such Underwriter or controlling person for any such losses, damages or
liabilities (including legal and other expenses) incurred. If, after having
made such demand on the Company for indemnification and reimbursement as herein
provided, any Underwriter and any person, if any, who controls any Underwriter
asserts its rights to indemnity against any Identified Selling Stockholder for
losses, claims, damages or liabilities (or actions in respect thereof) arising
out of or based upon any such untrue statement or alleged untrue statement,
then in such event such Underwriter and each person, if any, who controls such
Underwriter shall first request indemnification and reimbursement from all (and
not less than all) Identified Selling Stockholders for such losses, claims,
damages or liabilities (including legal and other expenses), with such request
for indemnification and reimbursement to be made to each Identified Selling
Stockholder in such proportion as the number of Firm Common Shares to be sold
hereunder by such Identified Selling Stockholder bears to the total number of
Firm Common Shares to be sold by all Identified Selling Stockholders.
(b) Each of the Selling Stockholders not constituting Identified Selling
Stockholders (the "Other Selling Stockholders") severally and not jointly
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Other Selling
Stockholders), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise
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out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in
any of them a material fact required to be stated therein or necessary to make
the statements in any of them not misleading (in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Other Selling Stockholder
specifically for use therein); and will reimburse each Underwriter and each
such controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Other Selling Stockholders will not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon (i) an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with the information furnished to the Company pursuant
to Section 4 hereof or (ii) any statement or omission contained or made in any
preliminary prospectus and corrected in the Prospectus if (x) such loss, claim,
damage, liability or expense suffered or incurred by any Underwriter (or any
such controlling person) resulted from any claim, action, investigation,
inquiry or other proceeding brought by any person who purchased Common Shares
which are the subject thereof from such Underwriter and (y) such Underwriter
failed to deliver or provide a copy of the Prospectus, as then amended or
supplemented, to such person at or prior to the confirmation of the sale of
such Common Shares in any case where such delivery is required. In addition to
their other obligations under this Section 11(b), the Other Selling
Stockholders agree that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission, as
described in this Section 11(b), it will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Other
Selling Stockholders' obligation to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Other Selling Stockholders. This
indemnity agreement will be in addition to any liability which the Other
Selling Stockholders may otherwise have.
Without limiting the full extent of (i) the Company's agreement to
indemnify each Underwriter (and controlling persons thereof, if any) as herein
provided, (ii) the liability of the Company with respect to the breach by the
Company of any representation, warranty or covenant contained in this Agreement
(or in any certificate of the Company delivered pursuant hereto) and (iii) the
liability of any Other Selling Stockholder with respect to the breach by such
Other Selling Stockholder of any representation, warranty or covenant contained
in Section 3 of this Agreement (or in any certificate of such Outsider Selling
Stockholder delivered pursuant hereto relating thereto), notwithstanding
anything contained in this Agreement to the contrary, each Other Selling
Stockholder shall be liable under (A) the indemnification agreements contained
in the first paragraph of this Section 11(b) or (B) the contribution provisions
contained in Section 11(e) of this Agreement, only for an amount not exceeding,
in the aggregate, the net proceeds received by such Other Selling Stockholder
from the sale of Common Shares hereunder. The Company and the Other Selling
Stockholders may agree, as among themselves and without limiting the rights of
the Underwriters and controlling persons under this Agreement, as to the
respective amounts of such liability for which each of them shall be
responsible.
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Notwithstanding anything to the contrary under this Section 11(b), each
Underwriter and each person, if any, who controls any Underwriter agrees not to
assert its rights to indemnity against any Other Selling Stockholder for
losses, claims, damages or liabilities (or actions in respect thereof) arising
out of or based upon any such untrue statement or alleged untrue statement or
for breach of representations and warranties set forth in Section 3 hereof,
unless and until (i) such Underwriter or controlling person has requested
indemnification and reimbursement from the Company for such losses, claims,
damages or liabilities (including any legal or other expenses reasonably
incurred) and (ii) the Company does not within 30 days of such request (x)
agree to so indemnify such Underwriter or controlling person and (y) reimburse
in full such Underwriter or controlling person for any such losses, damages or
liabilities (including legal and other expenses) incurred.
(c) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement , the Selling Stockholders and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company, or any such director, officer, Selling Stockholder or controlling
person may become subject, under the Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof; and will reimburse the Company, or any such director, officer, Selling
Stockholder or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer, Selling Stockholder or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(c), each
Underwriter severally agrees that, as an interim measure during the pendency of
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 this Section 11(c) which relates to information furnished to the
Company pursuant to Section 4 hereof, it will reimburse the Company (and, to
the extent applicable, each officer, director, controlling person or Selling
Stockholder) on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling Stockholder)
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper, the
Company (and, to the extent applicable, each officer, director, controlling
person or Selling Stockholder) shall promptly return it to the Underwriters.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made
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against an indemnifying party under this Section, notify the indemnifying
party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party, except to the extent it is prejudiced as
a proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled
to participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party
and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Underwriters in the case of paragraph (a) or
paragraph (b), representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.
(e) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b),
(c) or (d) in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholders and the Underwriters from the offering of the
Common Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Selling Stockholders and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company, the Selling Stockholders and the Underwriters shall be deemed to be in
the same proportion, in the case of the Company and the Selling Stockholders as
the total price paid to the Company and to the Selling Stockholders,
respectively, for the Common Shares sold by them to the Underwriters (net of
underwriting commissions but before deducting expenses) bears to the total
price to the public set forth on the cover of the Prospectus, and in the case
of the Underwriters as the underwriting commissions received by them bears to
the total price to the public set forth on the cover of the Prospectus. The
relative fault of the Company, the Selling Stockholders and the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, the
Selling Stockholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in subparagraph (d)
of this Section 11, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
The provisions set forth in subparagraph (d) of this Section 11 with respect to
notice of commencement of any action shall apply if a claim for contribution is
to be made under this subparagraph (e); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
given under subparagraph (d) for purposes of indemnification. The Company, the
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Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined solely by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price paid by the public in connection with the Common
Shares underwritten by it and distributed to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such actual or alleged untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to
sell and deliver the Common Shares hereunder, and of each Underwriter to
purchase the Common Shares in the manner as described herein, that, except as
hereinafter in this paragraph provided, each of the Underwriters shall purchase
and pay for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Underwriters of all such shares in accordance with
the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs is more than the above percentage and arrangements
satisfactory to the Underwriters and the Company for the purchase of such
Common Shares by other persons are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders except
for the expenses to be paid by the Company and the Selling Stockholders
pursuant to Section 7 hereof and except to the extent provided in Section 11
hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties,
the non defaulting Underwriter or the Company shall have the right to postpone
the First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
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SECTION 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement
has not become effective, at 2:00 P.M., California time, on the
first full business day following the effectiveness of the Registration
Statement, or (ii) if at the time of execution of this Agreement the
Registration Statement has been declared effective, at 2:00 P.M., California
time, on the first full business day following the date of execution of this
Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the Common
Shares for sale to the public. For the purposes of this Section 13, the Common
Shares shall be deemed to have been so released upon the release for
publication of any newspaper advertisement relating to the Common Shares or
upon the release by you of telegrams (i) advising Underwriters that the Common
Shares are released for public offering, or (ii) offering the Common Shares for
sale to securities dealers, whichever may occur first.
SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling
Stockholders to any Underwriter (except for the expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof) or of any Underwriter to the Company or the Selling Stockholders
(except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum
or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange or in the over the
counter market by the NASD, or trading in securities generally shall have
been suspended on either such Exchange or in the over the counter market
by the NASD, or a general banking moratorium shall have been established
by federal, New York or California authorities, (ii) if an outbreak of
major hostilities or other national or international calamity or any
substantial change in political, financial or economic conditions shall
have occurred or shall have accelerated or escalated to such an extent,
as, in the judgment of the Underwriters, to affect adversely the
marketability of the Common Shares, or (iii) if there shall be any
action, suit or proceeding pending or threatened, or there shall have
been any development or prospective development involving particularly
the business or properties or securities of the Company or any of its
subsidiaries or the transactions contemplated by this Agreement, which,
in the reasonable judgment of the Underwriters, may materially and
adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any
termination pursuant to this subsection (b) shall without liability on
the part of any Underwriter to the Company or the Selling Stockholders or
on the part of the Company or the Selling Stockholders to any Underwriter
(except for expenses to be paid or reimbursed by the Company and the
Selling Stockholders pursuant to Section 7 and, if otherwise applicable,
Section 9 hereof and except to the extent provided in Section 11 hereof.
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SECTION 15. Failure of the Selling Stockholders to Sell and Deliver.
If one or more of the Selling Stockholders shall fail to sell and deliver to
the Underwriters the Common Shares to be sold and delivered by such Selling
Stockholders at the First Closing Date under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the Selling Stockholders, either (i) terminate this Agreement without any
liability on the part of any Underwriter or, except as provided in Sections 7,
9 and 11 hereof, the Company or the Selling Stockholders, or (ii) purchase the
shares which the Company and other Selling Stockholders have agreed to sell and
deliver in accordance with the terms hereof. In the event of a failure by one
or more of the Selling Stockholders to sell and deliver as referred to in this
Section, either you or the Company shall have the right to postpone the Closing
Date for a period not exceeding seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected.
SECTION 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or the Selling Stockholders, or any
of its or their partners, officers or directors or any controlling person, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed c/x Xxxxxxxxxx Securities at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xx. Xxxxx Xxxxxxx, with a copy to Xxxxxxx, Carton
& Xxxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx
X. Xxxx, Esq.; and if sent to the Company or the Selling Stockholders shall be
mailed, delivered or telegraphed and confirmed to the Company at 000 Xxxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, with a copy to Sidley & Austin, Xxx
Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxx X. Xxxx, Esq.
The Company, the Selling Stockholders or you may change the address for receipt
of communications hereunder by giving notice to the others.
SECTION 18. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. No such assignment shall
relieve any party of its obligations hereunder. The term "successors" shall
not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 19. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary
to make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of Illinois.
SECTION 21. General. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements,
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understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Selling Stockholders and
you.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Stockholders represents by so doing that he has been duly appointed
as Attorney-in-fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Stockholders.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
MARKS BROS. JEWELERS, INC.
BY:
--------------------------------------------
PRESIDENT
FRONTENAC DIVERSIFIED III LIMITED PARTNERSHIP
CONTINENTAL ILLINOIS VENTURE CORPORATION
XXXXXXX XXXXX VENTURE PARTNERS III
LIMITED PARTNERSHIP
XXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX
XXXX X. XXXXXXXXXX
XXXX X. XXXXXXXXX
AVY X. XXXXX
XXXX X. XXXXXX
U.S. TRUST COMPANY OF CALIFORNIA, N.A. AS TRUSTEE
FOR THE MARKS BROS. JEWELERS, INC. EMPLOYEE
STOCK OWNERSHIP TRUST
BY:
--------------------------------------------
(ATTORNEY-IN-FACT)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
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BY:
-------------------------------
AUTHORIZED SIGNATORY
XXXXXXX XXXXX & COMPANY, L.L.C.
BY:
--------------------------------
PRINCIPAL
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SCHEDULE A
NUMBER OF FIRM
COMMON SHARES
NAME OF UNDERWRITER TO BE PURCHASED
------------------- ---------------
Xxxxxxxxxx Securities ....................................... 1,152,500
Xxxxxxx Xxxxx & Company, L.L.C. ............................. 1,152,500
---------
TOTAL .................................................... 2,305,000
=========
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SCHEDULE B
NUMBER OF
NUMBER OF FIRM OPTIONAL
COMMON SHARES COMMON SHARES
TO BE SOLD TO BE SOLD
-------------- -------------
Company ........................................ 1,100,000 165,000
Frontenac Diversified III Limited Partnership .. 325,425 0
Continental Illinois Venture Corporation ....... 152,834 22,925
Xxxxxxx Xxxxx Venture Partners III Limited
Partnership .................................... 232,219 34,833
Xxxx X. Xxxxxxxx ............................... 70,000 0
Xxxxxxx X. Xxxxxxxx ............................ 70,000 0
Xxxx X. Xxxxxxxxxx ............................. 75,000 11,250
Xxxx X. Xxxxxxxxx .............................. 20,000 3,000
Avy X. Xxxxx ................................... 26,365 0
Xxxx X. Xxxxxx ................................. 21,421 0
U.S. Trust Company of California, N.A. as
trustee for ESOP ........................... 211,736 108,742
-------------- -------------
TOTAL ................. 2,305,000 345,750
============== =============
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SCHEDULE C
October __, 1996
PRICE DETERMINATION AGREEMENT
Referring to Section 5 of the Underwriting Agreement dated October __,
1996 among the Company, the Selling Stockholders and the Underwriters as
therein defined with respect to the purchase and sale of the Common Shares, we
hereby confirm our agreement that the initial public offering price of the
Common Shares shall be $_____ per share; that the underwriting discount shall
be $_____ per share; and that the purchase price to be paid by the several
Underwriters for the Common Shares to be purchased from the Company and the
Selling Stockholders shall be $_____ per share.
This Agreement may be executed in various counterparts which together
shall constitute one and the same Agreement.
XXXXXXXXXX SECURITIES
BY:
-----------------------------------
AUTHORIZED SIGNATORY
XXXXXXX XXXXX & COMPANY, L.L.C.
BY:
-----------------------------------
PRINCIPAL
MARKS BROS. JEWELERS, INC.
BY:
------------------------------------
FRONTENAC DIVERSIFIED III LIMITED PARTNERSHIP
CONTINENTAL ILLINOIS VENTURE CORPORATION
XXXXXXX XXXXX VENTURE PARTNERS III
LIMITED PARTNERSHIP
XXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX
XXXX X. XXXXXXXXXX
XXXX X. XXXXXXXXX
AVY X. XXXXX
XXXX X. XXXXXX
U.S. TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE
FOR THE MARKS BROS. JEWELERS, INC. EMPLOYEE
STOCK OWNERSHIP TRUST
BY:
--------------------------------------
(ATTORNEY-IN-FACT)
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32
SCHEDULE D
STOCKHOLDERS TO BE SUBJECT TO 90-DAY LOCK-UP AGREEMENTS
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxx
Frontenac Venture V Limited Partnership
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SCHEDULE E
LOCK UP AGREEMENT
Xxxxxxxxxx Securities
Xxxxxxx Xxxxx & Company, L.L.C.
c/x Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Marks Bros. Jewelers, Inc. (the "Company")
------------------------------------------
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry
out a public offering of Common Stock (the "Offering") for which you will act
as the Underwriters. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges
that you and the other underwriters are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering and in entering into underwriting arrangements with the Company with
respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of Xxxxxxxxxx
Securities (which may be withheld in its sole discretion), directly or
indirectly, sell, offer or contract to sell or otherwise dispose of any shares
of Common Stock or securities exchangeable or convertible into shares of Common
Stock currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under Securities Exchange Act of 1934, as amended) by the
undersigned, for a period commencing on the date hereof and continuing to a
date 90 days after the first date any of the Common Stock to be sold in the
Offering is released by you for sale to the public, provided, that this
agreement shall not restrict any bona fide gift by the undersigned or any
distribution by the undersigned to any equityholder of the undersigned in each
case so long as the donee or transferee agrees to comply with this agreement
for any remaining portion of such 90-day period.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
Dated: October ___, 1996
------------------------------------------
Printed Name of Holder
By:
---------------------------------------
Signature
------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
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