EXHIBIT 1.1
2,752,404 Shares
DM MANAGEMENT COMPANY
Common Stock
UNDERWRITING AGREEMENT
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__________, 1997
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
XXXXXXXXXX SECURITIES
As Representatives of the several Underwriters
x/x Xxxxxxx, Xxxxxx & Xxxxxxxxx, X.X.X.
000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Dear Sirs:
SECTION 1. Introduction. DM Management Company, a Delaware corporation
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(the "Company"), proposes to issue and sell 1,000,000 shares of its authorized
but unissued Common Stock (the "Common Stock") and the stockholders of the
Company named in Schedule B annexed hereto (the "Selling Stockholders") propose
to sell 1,752,404 shares of the Company's issued and outstanding Common Stock to
the several underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as Representatives. Said aggregate of
2,752,404 shares of Common Stock are herein called the "Firm Common Shares."
In addition, the Company proposes to grant to the Underwriters an option to
purchase up to 412,861 additional shares of Common Stock (the "Optional Common
Shares"), as provided in Section 4 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 the Selling Stockholders hereby confirm their respective
agreements with respect to the purchase of the Common Shares by the Underwriters
as follows:
SECTION 2. Representations and Warranties of the Company. The Company
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represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-2 (File No. 333-35267) with
respect to the Common Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission under the Act. 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
manually 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 (meeting the requirements of Rule 430 of the Rules and
Regulations) contained therein have been delivered to you in such reasonable
quantities as you have requested for each of the Underwriters. Copies of such
registration statement, including any amendments thereto, the preliminary
prospectuses contained therein, the exhibits, financial statements and
schedules, and the documents incorporated by reference therein, as finally
amended and revised, have heretofore been delivered by the Company to you and,
to the extent applicable, were identical to the electronically transmitted
copies thereof filed with the Commission pursuant to the Commission's Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX"), except to the extent
permitted by Regulation S-T. The Company will next file with the Commission one
of the following: (i) prior to the effectiveness of such registration
statement, a further amendment thereto, including the form of final prospectus,
or (ii) a final prospectus in accordance with Rules 430A and 424(b) of the Rules
and Regulations. As filed, such amendment and form of final prospectus, or such
final prospectus, shall include all Rule 430A Information (as hereinafter
defined) 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. If such
registration statement has been declared effective by the Commission under the
Act, no post-effective amendment to such registration statement has been filed
as of the date of this Agreement.
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The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes
effective, together with any registration statement filed by the Company
pursuant to Rule 462(b) of the Act, 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 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. 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 any time prior to the time it becomes
effective. The term "Prospectus" as used in this Agreement shall mean (a) the
prospectus relating to the Common Shares in the form in which it is first filed
with the Commission pursuant to Rule 424(b) and Rule 430A of the Rules and
Regulations, (b) the term sheet or abbreviated term sheet filed by the Company
with the Commission pursuant to Rule 424(b)(7) together with the last
preliminary prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Common Shares, or, (c) if no filing pursuant to Rule 430A and Rule 424(b) of the
Rules and Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such registration statement
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations. Any reference herein to the Registration
Statement, a Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include any documents incorporated by reference therein; and any
reference herein to financial statements and schedules and other information
which is "contained," "included" or "stated" in the Registration Statement, a
Preliminary Prospectus or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is incorporated by reference therein. Any
reference herein to any Prospectus shall be deemed to refer to and include any
supplements thereto filed with the Commission after the date of filing of the
Prospectus under Rules 424(b) and 430A, and prior to the termination of the
offering of the Common Shares by the Underwriters. Additionally, all references
to the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement to any of the foregoing, shall be deemed to include
the respective copies thereof filed with the Commission pursuant to XXXXX.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, nor has the Commission instituted
proceedings for that purpose. Each Preliminary Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and Regulations
and,
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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. 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, as the case may be, will contain all statements and information
required to be included therein by the Act and the Rules and Regulations and in
all material respects conform or will conform, as the case may be, to the
requirements of the Act and the Rules and Regulations. Neither the Registration
Statement nor any amendment 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, and neither the
Prospectus nor any supplement thereto will include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
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 any Underwriter,
directly or through the Representatives, or by or on behalf of any Selling
Stockholder, specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity, other than DM Management Security
Corporation, a Massachusetts securities corporation (the "Subsidiary"). The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with full power and
authority (corporate and other) 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 in all material respects 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; 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.
(d) The Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Massachusetts. The Company owns all of the outstanding capital stock of the
Subsidiary, free and clear of all claims, liens, charges and encumbrances. All
issued
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and outstanding shares of capital stock of the Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
outstanding options or rights to purchase or acquire any capital stock, or
securities or obligations convertible into capital stock of the Subsidiary. The
Subsidiary conducts no business and engages in no activities, other than the
investment of funds made available to it by the Company. Any references herein
(or in any certificate delivered hereunder) to the condition (financial or
otherwise), properties, business, results of operations, prospects, liabilities
or indebtedness of the Company shall be deemed to refer to that of the Company
and the Subsidiary on a consolidated basis.
(e) The Company has an authorized and outstanding capital stock as set
forth in the Prospectus; the issued and outstanding shares of Common Stock,
including all issued and outstanding shares to be sold by the Underwriters, 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 in all material respects to
the description thereof contained in the Prospectus. Except as disclosed in or
contemplated by the Prospectus and the consolidated financial statements of the
Company, and the related notes thereto, included in the Prospectus, the 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, except for shares issuable under the 1993 Employee Stock Purchase
Plan of the Company. The description of 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
presents in all material respects the information shown with respect to such
plans, arrangements, options and rights.
(f) The Common Shares to be issued and 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, other than with respect to the Common Shares of the Selling
Stockholders to be included in such offering. 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
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issuance and sale of the Common Shares to be sold by the Company as contemplated
herein.
(g) The Company has the corporate 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 enforceable in accordance with its
terms. 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 charter or Bylaws of the Company or the Subsidiary 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 or the Subsidiary is a party or by
which the Company or the Subsidiary or any of their properties may be bound or
affected, any statute (not including the Blue Sky or state securities laws
applicable to the public offering of the Common Shares contemplated hereby) 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 the Subsidiary or any of their properties (not including the
Blue Sky or state securities laws applicable to the public offering of the
Common Shares contemplated hereby or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") applicable to such
offering). 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 or state securities laws applicable to the public offering of the
Common Shares by the several Underwriters and the clearance of such offering
with the NASD.
(h) To the knowledge of the Company, Coopers & Xxxxxxx LLP, who have
expressed their opinion with respect to the consolidated 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 public accountants as required by the Act and the Rules and
Regulations.
(i) The consolidated financial statements of the Company, together
with the related notes and schedules included in the Registration Statement and
the Prospectus, present fairly the consolidated financial position of the
Company as of the respective dates of such consolidated financial statements,
and the results of operations, changes in stockholders' equity and cash flows of
the Company for the respective periods covered thereby. Such consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, and all adjustments necessary for a
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fair presentation of results for such periods have been made. No other
consolidated financial statements or schedules are required to be included in
the Registration Statement. The selected consolidated financial data set forth
in the Prospectus under the captions "Prospectus Summary - Summary Consolidated
Financial Data," "Capitalization" and "Selected Consolidated Financial Data"
fairly present the information set forth therein on the basis stated in the
Registration Statement.
(j) Except as to violations, breaches and defaults which individually
or in the aggregate would not have a material adverse effect on the Company,
neither the Company nor the Subsidiary is in violation or default of any
provision of its charter or Bylaws or 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 a default on the part of the
Company or the Subsidiary under such documents or which, with notice or lapse of
time or both, would constitute such a default.
(k) There are no 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 or the Subsidiary is or may be a party or of which property owned or
leased by the Company or the Subsidiary is or may be the subject, which actions,
suits or proceedings might, individually or in the aggregate, prevent or
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. Neither the
Company nor the Subsidiary is a party to any injunction, judgment, decree or
order of any court, regulatory body, administrative agency or other governmental
body.
(m) The Company has good and marketable title to all the properties
and assets reflected as owned in the consolidated financial statements
hereinabove described (or elsewhere described in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such consolidated financial statements (or elsewhere described
in the Prospectus), or (ii) those which are not material in amount and do not
materially adversely affect the use made and proposed to be made of such
property by the Company. The Company holds its leased properties under valid
and binding leases, with such exceptions as are not material 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.
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(n) Since the respective dates as of which information is given in the
Registration Statement, as it may be amended, (i) the Company has not incurred
any material liabilities or obligations, direct or contingent, or entered into
any material verbal or written agreement or other transaction which is not in
the ordinary course of business or which could result in a material reduction in
the future earnings of the Company; (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 material change in the capital stock (other than upon the sale
of the Common Shares hereunder and upon the exercise of options described in the
Registration Statement) or any change in indebtedness that has a material
adverse effect on the Company; and (v) there has not been any material adverse
change in or affecting the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company, whether or not
occurring in the ordinary course of business. The Company has no material
contingent obligations that are not disclosed in the Registration Statement, as
it may be amended.
(o) Except as disclosed in or specifically contemplated by the
Prospectus, the Company has sufficient trademarks, trade names, trade secrets,
servicemarks, inventions, licenses, approvals and governmental authorizations to
conduct its business as now conducted; the expiration of any trademarks, trade
names, trade secrets, servicemarks, inventions, licenses, approvals or
governmental authorizations would not have a material adverse effect on the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company; and the Company has no knowledge of any
infringement by it of trademarks, trade name rights, patent rights, copyrights,
licenses, trade secret, servicemarks or other similar rights of others, and
there is no claim being made against the Company regarding trademark, trade
name, patent, copyright, license, trade secret or other infringement which could
have a material adverse effect on the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company.
(p) The Company has not been advised, nor does it have any 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, federal
and foreign 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) Each of the Company and the Subsidiary has filed all necessary
federal, state and foreign income and franchise tax returns and has paid all
taxes
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shown as due thereon; and the Company has no knowledge of any tax deficiency
which has been or might successfully be asserted or threatened against the
Company or the Subsidiary which could materially and adversely affect the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company.
(r) Neither the Company nor the Subsidiary has, directly or
indirectly, at any time during the past five years (i) made any unlawful
contributions to any candidate for political office, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to a federal,
state or foreign governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
(s) All material transactions during the Company's current or last
three fiscal years between the Company and the officers, directors and 5%
shareholders of the Company have been accurately disclosed in the Prospectus to
the extent required; and the terms of each such transaction are in all material
respects fair to the Company and no less favorable to the Company than the terms
that could have been obtained from unrelated parties.
(t) The Company maintains insurance of the types and in the amounts
which it deems adequate for its business, including, but not limited to, general
liability insurance and insurance covering all real and personal property owned
or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and other risks customarily insured against, all
of which insurance is in full force and effect.
(u) The Company does not maintain any employee benefit plan subject to
Title IV of the Employee Retirement Income Security Act of 1974, as amended.
(v) The Company is not an "investment company" as defined in the
Investment Company Act of 1940 (the "1940 Act").
(w) 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 Preliminary Prospectuses, the
Registration Statement, the Prospectus and other materials permitted by the Act.
(x) The Company has not taken and will not take, directly or
indirectly, any action designed to or that has constituted or that 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.
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(y) The Company's Common Stock is registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); all
outstanding shares of Common Stock are listed on the Nasdaq National Market, and
the Common Shares to be issued and sold by the Company hereunder have been
approved for quotation on the Nasdaq National Market, subject to official notice
of issuance; and the Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Shares under the
Exchange Act, nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has filed all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act in the manner and within the time periods required by the
Exchange Act. The documents incorporated by reference in the Prospectus, at the
time they were filed with the Commission, complied in all material respects with
the requirements of the Exchange Act, and, when read together with the other
information in the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the First Closing Date and the Second
Closing Date, as the case may be, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 3. Representations, Warranties and Covenants of the Selling
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Stockholders.
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(a) Each of the Selling Stockholders, severally and not jointly,
represents and warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing Date
hereinafter mentioned will have, good and valid title to the Common Shares
proposed to be sold by such Selling Stockholder hereunder, free and clear of all
voting trust arrangements, liens, encumbrances, equities, security interests,
restrictions and claims whatsoever, and the corporate or trust power and
authority to execute and deliver this Agreement and the Power of Attorney (the
"Power of Attorney") and the Custody Agreement (the "Custody Agreement")
hereinafter referred to and to sell, assign, transfer and deliver such Common
Shares hereunder; and upon delivery of and payment for such Common Shares
hereunder, the several Underwriters will acquire good and valid 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 appointing Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxx,
and each of them, as such Selling Stockholder's Attorneys-in-Fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Stockholder, to determine the purchase price to be paid
by the
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Underwriters to such Selling Stockholder for the Common Shares as provided in
Section 4 hereof and to authorize the delivery of the Common Shares to be sold
by such Selling Stockholder in connection with this Agreement, and caused to be
executed and delivered on its behalf a Power of Attorney and a Custody Agreement
(the Power of Attorney and Custody Agreement hereinafter collectively referred
to as the "Stockholders Agreement") and in connection therewith 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 subject to the interests of the Underwriters, that the
arrangements made for such custody and the appointment by such Selling
Stockholder of the Attorneys-in-Fact under the Power of Attorney 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 liquidation, dissolution, merger or consolidation of such Selling
Stockholder or by the occurrence of any other event. If such Selling Stockholder
shall be liquidated, dissolved, merged or consolidated, or if any other event
should occur, before the delivery of the Common Shares hereunder, the documents
evidencing the 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 dissolution, liquidation, merger or consolidation, or other event had not
occurred, regardless of whether or not the Agent shall have received notice
thereof.
(iii) The execution, delivery and performance of this
Agreement and the Stockholders Agreement and the consummation of the
transactions contemplated hereby and by the Stockholders Agreement will not
conflict with or 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 (not including the
Blue Sky or state securities laws applicable to the public offering of the
Common Shares contemplated hereby), 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 (not including the Blue Sky or
state securities laws applicable to the public offering of the Common Shares
contemplated hereby or the by-laws and rules of the NASD applicable to such
offering) or the Certificate of Incorporation or By-laws (or comparable
organizational or governing documents) of such Selling Stockholder.
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(iv) All consents, approvals, authorizations and orders (other
than such as may be required under Blue Sky or state securities laws and the by-
laws and rules of the NASD in connection with the public offering of the Common
Shares) necessary for the execution and delivery by such Selling Stockholder of
this Agreement and the Stockholders Agreement, and for the sale and delivery of
the Common Shares to be sold by such Selling Stockholder hereunder, have been
obtained.
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action that is designed to or that has constituted
or that 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.
(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder agrees to deliver to you prior to or at the First Closing Date (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(c) Such Selling Stockholder agrees with the Company and the
Underwriters that it will not, directly or indirectly, sell, offer to sell,
contract to sell, grant an option to purchase, grant a security interest in, or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable for any shares of Common Stock, or any interest in such
shares or securities, for a period of 90 days from the date of the Prospectus,
without the prior written consent of the Representatives.
SECTION 4. Purchase, Sale and Delivery of Common Shares. On the basis of
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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 1,000,000 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 1,752,404 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
with respect to each Underwriter. The purchase price per share to be paid by
the several Underwriters to the Company and to the Selling Stockholders,
respectively, shall be $_____ per share.
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
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determined by you) bears to the number of Firm Common Shares being sold by the
Company 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 each Selling Stockholder
shall be to purchase from such Selling Stockholder that number of full shares
which (as nearly as practicable, as determined by you) bears to the number of
Firm Common Shares being sold by such Selling Stockholder 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 Xxxxxxx,
Xxxxxx & Xxxxxxxxx, L.L.C., 000 Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx (or such
other place as may be agreed upon by the Company and the Representatives) at
8:00 a.m. (Minneapolis time) on __________, 1997, or such other time and date,
not later than the third full business day following the date of this Agreement,
unless otherwise required or permitted pursuant to Rule 15c6-1 of the Exchange
Act (the "First Closing Date"). (As used herein, "business day" means a day on
which the New York Stock Exchange is open for trading and on which banks in New
York are open for business and not permitted by law or executive order to be
closed.)
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
certified or official bank check or checks payable in next day funds to the
order of the Company and of 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 upon at least 48 hours' prior
written notice, and shall be made available for checking and packaging on the
business day preceding the First Closing Date at a location in Boston,
Massachusetts or 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 hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 412,861 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
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may be exercised in whole or in part at any time (but not more than once) upon
prior written notice by you to the Company, given within 30 days after the date
of the Prospectus, 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 number of Optional Common Shares to be sold by
the Company 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 the
total number of Firm Common Shares to be purchased by all Underwriters (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 Boston, Massachusetts or 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 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. If the option is cancelled or expires unexercised
in whole or in part, the Company will deregister under the Act the number of
Optional Common 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 furnish receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
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
Representatives is advisable and at the initial public offering price set forth
on the cover page of and on the terms set forth in the Prospectus.
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SECTION 5. 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 in a form approved by
you, pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
reasonably 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 the use of the Prospectus, or the institution or
threatening of any proceedings for that purpose. The Company will use its best
efforts to prevent the issuance of any such stop order and, 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 to the Registration Statement (either
before or after it becomes effective), or any supplement to 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. To the extent
applicable, the copies of the Registration Statement and each amendment thereto
(including all exhibits filed therewith), any Preliminary Prospectus or the
Prospectus (in each case, as amended or supplemented) furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments to the Registration Statement or supplements
to the Prospectus which in your reasonable judgment may be necessary or
advisable to enable the several Underwriters to continue the distribution of the
Common Shares and will use its best efforts to cause the same to become
effective as promptly as possible. The Company will comply with the provisions
of Rule 430A of the Rules and Regulations with respect to any information
omitted from the Registration Statement in reliance upon such Rule.
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(c) If at any time 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, as then supplemented, 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 for any other
reason it is necessary at any time to supplement the Prospectus, as then
supplemented, 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 appropriate amendment to the Registration
Statement or supplement to the Prospectus which will correct such statement or
omission or an amendment to the Registration Statement or supplement to the
Prospectus which will effect such compliance and will use its best efforts to
cause the same to become effective as soon as possible.
(d) 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 and the relevant Rules and Regulations (including, at the
option of the Company, Rule 158).
(e) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives, at any time when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter supplemented, as the Representatives may reasonably
request. The Company will deliver to the Representatives on or before the First
Closing Date such number of copies of the Registration Statement, including
documents incorporated by reference therein, but without exhibits, and of all
amendments thereto, as the Representatives may reasonably request.
(f) 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 not 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
-16-
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. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Common Shares.
(g) During the period of five years after the First Closing Date (but
only for so long as the Common Stock is registered under the Exchange Act), the
Company will continue to file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner
and within the time periods required by the Exchange Act. During the period of
five years after the First Closing Date (but only for so long as the Common
Stock is registered under the Exchange Act), the Company will furnish to the
Representatives and, upon request of the Representatives, to each of the other
Underwriters: (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the consolidated balance
sheet of the Company as of the close of such fiscal year and consolidated
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 l0-Q, Current
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. To the extent applicable, such reports or documents shall be identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(h) During the period beginning on the date hereof and continuing to
and including the date 90 days after the date of the Prospectus, without the
prior written consent of the Representatives, the Company will not issue, sell,
offer to sell, contract to sell, grant options to purchase 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; provided
that the Company may (i) issue shares of its Common Stock under the employee
stock purchase plan described in the Prospectus or upon the exercise of options
granted under its employee stock options plans described in the Prospectus, and
(ii) grant options under its employee stock option plans and employee stock
purchase plan described in the Prospectus upon terms and in amounts consistent
with past practice.
(i) 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
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caption "Use of Proceeds" in the Prospectus. The Company will invest such
proceeds pending their use in such a manner that, upon completion of such
investment, the Company will not be an "investment company" as defined in the
1940 Act.
(j) The Company will list the Common Shares to be issued and sold by
the Company on the Nasdaq National Market.
(k) The Company will use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the First Closing Date or the Second Closing Date, as the case
may be, and to satisfy all conditions precedent to the delivery of the Common
Shares.
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C., on behalf of the Underwriters, may, in
its 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.
SECTION 6. Payment of Expenses. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and, unless otherwise paid by the Company, the Selling
Stockholders agree to pay (in such proportions as they may agree upon among
themselves) all costs, fees and expenses incurred by them in connection with the
performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses of preparing certificates for 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, copying, 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, and all costs and expenses
incurred in connection with the printing, copying, shipping and distribution of
this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement, the Underwriters' Questionnaire, The Underwriters' Selling
Memorandum, the Invitation Letter, the Underwriters' Power of Attorney and the
Blue Sky memoranda, and any amendments or supplements thereto, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
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, and all fees and
expenses incurred by the Company or the Underwriters and their counsel incident
to securing any required approval from, the NASD and (viii) all other fees,
costs and expenses referred to in Item 13 of the Registration Statement. The
Underwriters may deem the
-18-
Company to be the primary obligor with respect to all costs, fees and expenses
to be paid by the Company and by the Selling Stockholders. Except as provided in
this Section 6, Section 8 and Section 10 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 memoranda referred to above and in securing any
approval of the NASD). This Section 6 shall not affect any agreements relating
to the payment of expenses among the Company and the Selling Stockholders.
To the extent not paid by the Company, 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 (i) any fees and expenses of
counsel for the Selling Stockholders; (ii) any fees and expenses of the Agent;
and (iii) all expenses and taxes incident to the sale and delivery of the Common
Shares to be sold by the Selling Stockholders to the Underwriters hereunder.
SECTION 7. Conditions to 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 by Company
officers on behalf of the Company and by the Selling Stockholders made in
instruments delivered to you pursuant to the provisions hereof, to the
performance by the Company and the Selling Stockholders of 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., 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 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 changes to, or inclusion of
additional information in, the Registration Statement, 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 of the Company, other
than upon the sale
-19-
of the Common Shares hereunder and as contemplated by subsection 5(h) above, or
any change in the indebtedness (other than in the ordinary course of business)
of the Company, (ii) except as set forth in or contemplated by the Registration
Statement or the Prospectus, no verbal or written agreement or other transaction
shall have been entered into by the Company, which is not in the ordinary course
of business or which could result in a material reduction in the future earnings
of the Company, (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 against the Company which if adversely determined would have a
material adverse effect on the Company or which materially affects or may affect
the transactions contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any change in or affecting the
condition (financial or otherwise), business, management, properties, results of
operations or prospects of the Company which, in the judgment of the
Representatives, is so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or the delivery of the Common
Shares as contemplated hereby.
(c) There shall have been furnished to you, as Representatives of the
Underwriters, on each Closing Date, in form and substance satisfactory to you,
except as otherwise expressly provided below:
(i) An opinion of Xxxxx, Xxxx & Xxxxx LLP, counsel for the
Company, 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 the
Commonwealth of Massachusetts, and has full corporate power and authority to own
its properties and conduct its business as described in the Prospectus; the
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing under the laws of Massachusetts;
(2) The authorized capital stock of the Company is as set
forth in the Prospectus; all necessary corporate proceedings have been taken in
order to validly authorize such capital stock; all outstanding shares of Common
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of or subject to any preemptive
rights or other similar rights to subscribe for or purchase any securities and
conform in all material respects to the description thereof contained in the
Prospectus; and the shares of Common Stock outstanding immediately prior to the
closing of this offering were issued pursuant to valid exemptions from the
registration requirements of the Act;
-20-
(3) The form of certificate evidencing the Common Shares to
be delivered hereunder is in due and proper form under Delaware law; the Firm
Common Shares to be sold by the Selling Stockholders have been duly authorized
and are validly issued, fully paid and nonassessable, were not issued in
violation of or subject to any preemptive rights or other similar rights to
subscribe for or purchase securities and conform in all material respects to the
description thereof contained in the Prospectus; the Common Shares to be sold by
the Company have been duly authorized and when issued and paid for as
contemplated by this Agreement will be validly issued, fully paid and
nonassessable, will not have been issued in violation of or subject to any
preemptive rights or other similar rights to subscribe for or purchase
securities and will conform in all material respects to the description thereof
contained in the Prospectus;
(4) Except as disclosed in or specifically contemplated by
the Prospectus, to such counsel's knowledge, there are no outstanding options,
warrants or other rights calling for the issuance of, and no commitments or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the Company,
except for shares issuable under the 1993 Employee Stock Purchase Plan of the
Company;
(5) (A) The Registration Statement has become effective
under the Act, and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or preventing the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are pending or threatened 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 and each amendment
thereto and the Prospectus and each supplement thereto (except for the
consolidated financial statements and notes thereto and financial schedules
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 (other than Regulation S-X); each document filed by the Company
pursuant to the Exchange Act (except for the consolidated financial statements
and notes thereto and financial schedules included therein, as to which such
counsel need express no opinion) and incorporated by reference in the Prospectus
complied when so filed as to form in all material respects with the requirements
of the Exchange Act;
(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
-21-
(D) To such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened against the
Company or any of its properties which are required to be described in the
Prospectus and which are not described as required.
(6) The statements under the captions "Description of
Capital Stock" in the Prospectus, insofar as such statements constitute a
summary of the documents referred to therein or of matters of law, are accurate
in all material respects and fairly describe, in all material respects, the
information required to be disclosed with respect thereto.
(7) The Company has the corporate power and authority to
enter into this Agreement and to sell and deliver the Common Shares to be sold
by it to the several Underwriters; and this Agreement has been duly and validly
authorized by all necessary corporate action by the Company and has been duly
and validly executed and delivered by and on behalf of the Company. 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 under the Act and such as may be required under
applicable Blue Sky or state securities laws and the by-laws and rules of the
NASD in connection with the purchase and distribution of the Common Shares by
the Underwriters and the clearance of such offering with the NASD;
(8) The execution and performance of this Agreement by the
Company and the consummation by the Company of the transactions herein
contemplated will not 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 material 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 property may be bound or
violate any of the provisions of the Certificate of Incorporation or Bylaws of
the Company or, 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 that no
opinion need be expressed in this paragraph as to compliance with state
securities laws or the anti-fraud provisions of the federal securities laws or
the by-laws and rules of the NASD); and
(9) To such counsel's knowledge, no holders of securities
of the Company have rights which have not been waived to the registration under
the Act of shares of Common Stock or other securities, because of the filing of
the Registration Statement by the Company or the offering contemplated hereby,
-22-
other than with respect to the Common Shares of the Selling Stockholders to be
included in such offering.
In rendering such opinion, such counsel may rely (i) as to matters of local
law, on opinions of local counsel, and (ii) as to matters of fact, on
certificates of officers of the Company and of governmental officials, provided
that in each such case their opinion states that they are so doing and that they
believe that the Underwriters are justified in relying on such opinions or
certificates and copies of said opinions or certificates are attached to the
opinion or furnished in advance to counsel for the Underwriters. Counsel may
state that its opinion is qualified to the extent that (i) the enforceability of
any provision of any instrument or document or any rights granted thereunder may
be subject to or affected by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar law relating to or affecting the
rights of creditors generally, (ii) the remedy of specific performance or any
other equitable remedy may be unavailable in any jurisdiction or may be withheld
as a matter of judicial discretion, or (iii) equitable principles may be applied
in construing or enforcing the provisions of any instrument or document
(regardless of whether enforcement is sought in a proceeding in equity or at
law). Counsel may further state that, in rendering its opinion, it expresses no
opinion other than as to (i) the laws of the United States and The Commonwealth
of Massachusetts and (ii) the General Corporation Law of the State of Delaware.
Counsel need express no opinion as to the validity or enforceability of the
indemnity or contribution provisions of any agreement.
Such counsel shall also include a statement to the effect that such counsel
has participated in conferences with officers and other representatives of the
Company, counsel for the Underwriters, representatives of the independent
certified public accountants for the Company, and representatives of the
Underwriters, at which conferences the contents of the Registration Statement
and Prospectus and related matters were discussed and, although (except as
specifically covered by this opinion) such counsel is not passing upon, and does
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus and has not
made any independent check or verification thereof, on the basis of the
foregoing (relying as to materiality to a large extent upon the statements of
officers and other representatives of the Company), no facts or information have
come to such counsel's attention that would lead such counsel to believe that
the Registration Statement (excluding the consolidated financial statements and
notes thereto, financial statement schedules and other financial and accounting
data included therein), as of its effective date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that the Prospectus (excluding the consolidated financial statements and notes
thereto and other financial and accounting data included therein), either as of
its date or as of the applicable Closing Date (as the Prospectus may be amended
or supplemented as of
-23-
such date), contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(ii) An opinion of Xxxx XxXxxx, Esq., counsel for the Selling
Stockholders, addressed to the Underwriters and dated the First Closing Date, to
the effect that:
(1) A Power of Attorney and a Custody Agreement have been duly
executed and delivered by each Selling Stockholder and constitute valid and
binding agreements of such Selling Stockholder in accordance with their terms;
(2) This Agreement has been duly executed and delivered by or on
behalf of each Selling Stockholder and constitutes the valid and binding
agreement of such Selling Stockholder in accordance with its terms; and the sale
of the Common Shares to be sold by each Selling Stockholder hereunder and the
compliance by such Selling Stockholder with all of the provisions of this
Agreement, the Power of Attorney and the Custody Agreement and the consummation
by such Selling Stockholder of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any terms or
provisions of, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known to such
counsel to which such Selling Stockholder is a party or by which such Selling
Stockholder or any of its property is bound, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws (or
comparable organizational or governing documents) of such Selling Stockholder,
or any statute, judgment, decree, order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over
such Selling Stockholder or the property of such Selling Stockholder (except
that no opinion need be expressed in this paragraph as to compliance with state
securities laws or the anti-fraud provisions of the federal securities laws or
the by-laws and rules of the NASD);
(3) 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 Selling Stockholders or the consummation by
the Selling Stockholders of the transactions contemplated by this Agreement,
except such as have been obtained under the Act and such as may be required
under applicable Blue Sky or state securities laws and the by-laws and rules of
the NASD in connection with the purchase and distribution of the Common Shares
by the Underwriters and the clearance of such offering with the NASD;
-24-
(4) Each Selling Stockholder has the corporate or trust power
and authority to sell, assign, transfer and deliver the Common Shares to be sold
by such Selling Stockholder hereunder; and
(5) The sale and delivery in accordance with the terms of this
Agreement of the Common Shares to be sold by the Selling Stockholders will pass
good and valid title to such Common Shares, free and clear of all liens,
encumbrances, equities or claims, to each of the several Underwriters who
purchases such Common Shares in good faith and without notice of any such lien,
encumbrance, equity or claim or any other adverse claim within the meaning of
the Uniform Commercial Code.
In rendering such opinion, such counsel may rely as to matters of fact, on
certificates of the Selling Stockholders and of governmental officials, provided
that in each such case their opinion states that they are so doing and that they
believe that the Underwriters are justified in relying on such opinions or
certificates and copies of said opinions or certificates are attached to the
opinion or furnished in advance to counsel for the Underwriters. Counsel may
state that its opinion is qualified to the extent that (i) the enforceability of
any provision of any instrument or document or any rights granted thereunder may
be subject to or affected by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar law relating to or affecting the
rights of creditors generally, (ii) the remedy of specific performance or any
other equitable remedy may be unavailable in any jurisdiction or may be withheld
as a matter of judicial discretion, or (iii) equitable principles may be applied
in construing or enforcing the provisions of any instrument or document
(regardless of whether enforcement is sought in a proceeding in equity or at
law). Counsel may further state that, in rendering its opinion, it expresses no
opinion other than as to (i) the laws of the United States and the state of
Illinois and (ii) the General Corporation Law of the State of Delaware. Counsel
need express no opinion as to the validity or enforceability of the indemnity or
contribution provisions of any agreement.
(iii) Such opinion or opinions of Xxxx and Xxxx LLP, 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 Stockholder 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.
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(iv) A certificate of the Company executed by the chief executive
officer 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 (it being agreed that all such statements are made on behalf of the Company
and not in such officer's individual capacity):
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct 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;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus filed as a
part of the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been issued; and
no proceedings for that purpose have been instituted or are pending or, to the
best of the knowledge of the respective signers, are contemplated by the
Commission;
(3) Each such officer has carefully examined the
Registration Statement and the Prospectus; in his opinion and to the best of his
knowledge, neither the Registration Statement or any amendment thereto nor the
Prospectus or any supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction or event has
occurred which should have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as disclosed
in or contemplated by the Prospectus, there has not been any material adverse
change in or affecting the condition (financial or otherwise), business,
management, properties, results of operations, or prospects of the Company; and
no legal or governmental action, suit or proceeding is pending or, to the
knowledge of such officers, threatened against the Company which if adversely
determined would have a material adverse effect on the Company, whether or not
arising from transactions in the ordinary course of business, or which may
materially adversely affect the transactions contemplated by this Agreement;
since such dates and except as so disclosed, the Company has not entered into
any verbal or written agreement or other transaction which is not in the
ordinary course of business or which could result in a material
-26-
reduction in the future earnings of the Company or incurred any material
liability or obligation, direct or contingent (except in the ordinary course of
business), or made any change in its capital stock, made any change in its debt
that has a material adverse effect on the Company or repurchased or otherwise
acquired any of the Company's capital stock; and the Company has not declared or
paid any dividend, or made any other distribution, upon its outstanding capital
stock payable to stockholders of record on a date prior to the First Closing
Date or Second Closing Date, as the case may be; and
(6) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus and except as disclosed in or
contemplated by the Prospectus, the Company has not sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other calamity (whether or
not insured).
(v) On the First Closing Date a certificate, dated such First Closing
Date and addressed to you, signed by or on behalf of each Selling Stockholder 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, and such Selling Stockholder has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied prior
to the First Closing Date.
(vi) On the date this Agreement is executed and also on the First
Closing Date and the Second Closing Date, a letter addressed to you, as
Representatives of the Underwriters, from Coopers & Xxxxxxx LLP, independent
accountants, the first one to be dated 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
reasonably satisfactory to you.
(vii) On or before the First Closing Date, letters from each
director and executive officer of the Company, in form and substance reasonably
satisfactory to you, confirming that for a period of 90 days from the date of
the Prospectus, such person will not, directly or indirectly, sell, offer to
sell, contract to sell, grant an option to purchase, grant a security interest
in, or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exchangeable for any shares of Common Stock, without your
prior written consent.
(viii) The Common Shares to be issued and sold by the Company
shall have been duly approved for quotation, subject to notice of issuance, on
the Nasdaq National Market.
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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 Xxxx and Xxxx LLP, 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
Representatives 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 as Representatives to the
Company and the Selling Stockholders without liability on the part of any
Underwriter, 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 6 and 8 hereof and except to the extent provided in Section 10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses. Notwithstanding any
---------------------------------------
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 7 or Section 13, or if the sale to the Underwriters of the Common
Shares on the First Closing Date 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 (other than
as a result of a breach of the terms of this Agreement by any Underwriter), 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. Any such
termination shall be without liability of any party to any other party except
that the provisions of this Section, Section 6 and Section 10 shall at all times
be effective and shall apply.
SECTION 9. Effectiveness of Registration Statement. You, the Company and
---------------------------------------
the Selling Stockholders will use your, its and their respective 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 10. Indemnification.
---------------
(a) The Company and the Selling Stockholders, jointly and severally,
agree 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,
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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 Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus or 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, subject to Section
10(c), 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 (i) neither the Company
--------
nor any Selling Stockholder shall 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 an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by an Underwriter
through you expressly for use therein; (ii) neither the Company nor any Selling
Stockholder shall be liable under the indemnity agreement in this paragraph (a)
with respect to any Preliminary Prospectus to the extent that any such loss,
claim, damage, liability or expense results from the fact that an Underwriter
sold Common Shares to a person to whom there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the Prospectus or of the
Prospectus as then amended or supplemented in any case where such delivery is
required by the Act and the loss, claim, damage, liability or expenses results
from an untrue statement or omission of a material fact contained in the
Preliminary Prospectus which was corrected in the Prospectus or in the
Prospectus as amended or supplemented; and (iii) no Selling Stockholder shall be
liable under the indemnity agreement in this paragraph (a) for an amount in
excess of the proceeds, net of the applicable underwriting discount, received by
such Selling Stockholder from the sale of the Common Shares sold by such Selling
Stockholder to the Underwriters pursuant to this Agreement. The Company and the
Selling Stockholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to their respective amounts
of such liability for which they each shall be responsible. This indemnity
agreement will be in addition to any liability which the Company or the Selling
Stockholders may otherwise have.
(b) Each Underwriter, severally, but not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each Selling Stockholder and each person, if
any, who
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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 or proceedings 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 or 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 written information furnished to the Company by
such Underwriter through you expressly for use therein; and will reimburse the
Company, and any such director, officer, Selling Stockholder or controlling
person for any legal and other expenses as such expenses are 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. This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against 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 for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not 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
-30-
one separate counsel (plus any local counsel as may reasonably be
required) 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 accordance with the
proviso to the next preceding sentence 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 receipt of the
indemnified party's 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.
(d) If the indemnification provided for in this Section 10 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) or (c) 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 described in such paragraphs (a) or
(b) 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 discounts and commissions but before deducting
expenses), and in the case of the Underwriters, as the underwriting discounts
and commissions received by them bear to the total of such amounts paid to the
Company and to the Selling Stockholders and received by the Underwriters as
underwriting discounts and commissions. 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,
-31-
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in subsection (c) of this Section 10, 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
subsection (c) of this Section 10 with respect to notice of commencement of any
action shall apply if a claim for contribution is to be made under this
subsection (d); provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under subsection (c)
for purposes of indemnification. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 10 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 this paragraph.
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public, and no Selling
Stockholder shall be required to contribute an amount in excess of the proceeds,
net of the applicable underwriting discount, received by such Selling
Stockholder from the sale of the Common Shares sold by such Selling Stockholder
to the Underwriters pursuant to this Agreement. 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 10 are several in proportion to their respective underwriting
commitments and not joint.
SECTION 11. 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 Representatives 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
one-eleventh 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
-32-
the above fraction and arrangements satisfactory to the Representatives 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 6 hereof and except to the extent
provided in Section 10 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
Representatives 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.
SECTION 12. Termination. This Agreement may be terminated by you by
-----------
notice to the Company and the Selling Stockholders as follows:
(a) At any time prior to the earlier of (i) the time the Common
Shares are released by you for sale by notice to the Underwriters, or (ii) 11:30
a.m., Minneapolis time, on the first business day following the date of this
Agreement (or, if at the time of execution of this agreement the Registration
Statement has not become effective, 11:30 a.m., Minneapolis time, on the first
business day following the effectiveness of the Registration Statement);
(b) At any time prior to the First Closing Date or the Second Closing
Date, as the case may be, if any of the following has occurred: (i) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, any material adverse change in or affecting the condition
(financial or otherwise), business, management, results of operations or
prospects of the Company, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of war
or national emergency after the date hereof or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make the offering or delivery of the Shares impracticable or
inadvisable, (iii) suspension of trading in securities on the New York Stock
Exchange or the American Stock Exchange or on the Nasdaq National Market or
over-the-counter market or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on either such Exchange or on the
Nasdaq National Market or over-the-counter market, (iv) the enactment,
publication, decree
-33-
or other promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental authority which in your reasonable opinion
materially and adversely affects or will materially or adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by either federal or New York State authorities, or (vi) the taking of any
action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States.
Any termination pursuant to subsection (a) or (b) of this Section 12 shall
be 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 Sections 6 and 8 hereof (provided that
Section 8 shall not apply in the case of a termination pursuant to subsection
(a)) and except to the extent provided in Section 10 hereof).
(c) As otherwise provided in this Agreement.
SECTION 13. 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
Stockholder 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 6, 8
and 10 hereof, the Company or the Selling Stockholders, or (ii) purchase the
shares which the Company and the 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
First 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 14. Survival. 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 any of its or their partners, officers or directors or any
controlling person, or the Selling Stockholders, as the case may be, and will
survive delivery of and payment for the Common Shares sold hereunder and any
termination of this Agreement.
-34-
SECTION 15. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Representatives shall be mailed, delivered or telegraphed
and confirmed to you care of Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C. at 000 Xxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Syndicate Department,
with a copy to Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxx, Esq., and if sent to the Company or the Selling
Stockholders shall be mailed, delivered or telegraphed and confirmed to the
Company at 00 Xxxxxxxxxx Xxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Chief Financial Officer, with a copy to Xxxxx, Xxxx & Xxxxx LLP, Xxx
Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx,
Esq. and Xxxxx X. Xxxxxxx, Esq. The Company, the Selling Stockholders or you
may change the address for receipt of communications hereunder by giving notice
to the others.
SECTION 16. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 11 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 10, 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 17. Representation of Underwriters. You will act as
------------------------------
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly as Representatives or by Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C. on behalf
of the Representatives, will be binding upon all the Underwriters.
SECTION 18. 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 19. 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 Minnesota.
SECTION 20. 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, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts,
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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 action taken under this Agreement by the Attorneys-in-Fact will be
binding on the Selling Stockholders.
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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,
DM MANAGEMENT COMPANY
By:___________________________
President
ALLSTATE INSURANCE COMPANY
By:___________________________
(Attorney-in-fact)
CTC ILLINOIS TRUST COMPANY,
AS TRUSTEE FOR ALLSTATE
RETIREMENT PLAN
By:___________________________
(Attorney-in-fact)
CTC ILLINOIS TRUST COMPANY,
AS TRUSTEE FOR AGENTS
PENSION PLAN
By:___________________________
(Attorney-in-fact)
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The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in Minneapolis, Minnesota as of
the date first above written.
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
XXXXXXXXXX SECURITIES
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
By:______________________________
Managing Director
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SCHEDULE A
----------
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C. ....................
Xxxxxxxxxx Securities...................................
_________
TOTAL......................................... 2,752,404
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SCHEDULE B
----------
Number of Firm
Common Shares
Name of Selling Stockholder to be Sold
--------------------------- --------------
Allstate Insurance Company.................... 1,744,920
CTC Illinois Trust Company, as trustee for
Allstate Retirement Plan..................... 3,742
CTC Illinois Trust Company, as trustee for
Agents Pension Plan.......................... 3,742
_________
Total: 1,752,404
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